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Teesday. 29. l957Ths Guardian Page 7

A. V. ROE cannon LIMITED FROM THE 1957 ANNUAL REPORT

AN EXTRACT

Following is the slightly condensed and edited Directors‘ report to the

rim annualmeeting ofA. V. Roe Canada limited, October 24th, 1957,

covering tltefiscal year ending July 31, I957. The report was subndtted

b y Sir Roy H. Dobson, Chairman of the Boardand Crawford Gordon,

President and General Manager.

It is gratifying to report a year of substantial progress. Not only were ales and earnings maintained at high levels but many important steps were taken during the year to further implement the eompany’s established policy of diversification and expansion which promises still higher levels of activity.

When the company was formed in 1945, it had only 300 employees and sales were negligible. For the year under review, employment was in excess of 20,000 and combined sales of all consolidated subsidiary companies were $234,811,024, operating profit $23,937,035, before depre- ciation and certain other charges and net profit was $7,177,001 (equal to 31.50 per share).

EXPANSION AND DIVERSIFICATION

More significant, we believe, than the high level ofcurrent operations was the substantial progress made toward increased activity and growth through the broadening of the operations of existing subsidiaries and the acquisition and formation of new ones.

During the year, two new companies, Canadian Steel Wheel Limited and Canadian Thermo Control Company Limited, were established and a third, Canadian Applied Research Limited, acquired. In addition, certain moveable assets and the railway equipment business of Standard Railway & Equipment Manufacturing Company (Canada) Limited, were acquired and merged with Canadian Car Company Limited. The products of three of these companies are largely commercial. This bring the number of the company's wholly-owned subsidiaries to seven, and partly owned and associated companies to two.

Prior to the year under review, our main products were: aircraft and aero engines; railway rolling stock; buses; heavy steel castings and light alloy products. To these have been added: Budd type stainless steel mainline railway equipment and rail diesel cars; wrought steel wheels for all types of railway rolling stock; highway trailers; diesel powered trucks and tractors; refrigeration equipment for the transportation industry; a wide range of specialized eleetro-mechanical products, equipment and

-systans, automatic computers, flight simulators and specialized motion

picture equipment.

Many of these new lines are now being or will be produced in existing facilities.Productionfacilities have been , ‘ ’-mi ’ ' IheeIparditureofSl0,30l,778 intheyear, resultingin part, in an increase In depreciation from $4,008,200 in 1956 to $8,822,494 in 1957. At the same time, $1,299,607 was expended and charged against current earnings on long-term research and development projects in the aeronautical field, aimed at maintaining the company’: prc-eminent position in Canada in the design and manufacture of aircrstt, aero engines and related products.

All these developments should add measurably to the future stability, strength and profitability of the company.

‘ma Dosco OFFER

Although subsequent to theyear under review, reference snoum ue made

to the offer on August 29, 1957 to acquire control of Dominion Steel

1 .L IIIITIIII7 U-

Basieanytheofi'erwastoacquireDoscoordinaryshareslneonslderation ofll/4 fullypaidA. V.‘l!.oecomsnonshsruplus$l0.25 foruchordinary share of Dominion Steel and Coal Corporation, Limited.

To provide A. V. Roe common shares and cash for the purpose of this offer, the Company's authorised common shares were increased with the approval oftheshareholdersataspeeialgeneralmeetingheldonAugust 29, 1957 from 7,$(Xl,tXI) to 10,000,000 shares and the company issued on September I3, I957 and sold at par 240.0(1), 53/4"/. GmiulativIeConvutrhle Redeemable Preferred shares. ~ (A: of October 9th, 1957 the holders of the equivalent of 2228.817 Ordinary Shares 4 DOSCO had accepted the o_fl'er of A. V. Roe Canada Limited. This repraent: almost 76% of the outstanding ordinary shares if all DOSCO debentures were converted, thereby giving A. V. Roe Canada Limited control of Dominion Steel and Coal Corporation and making it apart of the A. V. Roe Canada Group.)

CANADA’S SELF-SUFFICIENCY

The offer to shareholders of Dosco, and the other phases of the expansion program are designed to provide a broader industrial base which will further assist the Company in playing an important part in Canada’s growing economic self-sufliciency.

Canadian industry has a vital role to _play in the social and economic development of our nation. To the greatest extent practicable industrial independence must be achieved. We must ourselves produce more of the products we need and which we now import, particularly from the United States. Only in this way can we hope to reduce our staggering trade deficit with the U.S., and at the same time piovide employment for our rapidly increasing population. We cannot expect forever to finance this deficit by long-term foreign investment as has been the case so far. ,

This situation poses a challenge to Canadian industry. A review of the company's history and activities indicates the extent to which the manage- ment has met this challenge and seized opportunities for expansion.

PROGRESS IN AERONAUTI6

Cur " ‘ ‘ "' ' ‘ ' ‘ 'thattheyean,inCansda, design, develop and produce aeronautical products of the highest quality and most advanced design and sell them both at home and in international markets. Belgium selected the Avro CF-I00 over all others. The Orenda jet engine is being exported to West Germany, South Africa, Colombia and now Belgium. Their successors, the Avro Arrow and the Orenda Iroquois are both in the supersonic class and are considered to be in advance of anything in their fields.

AnimportantrcsnltofthispioneeringisthattheRCAPisnolonger completely dependent upon sources of supply outside Canada which could be and have been cut oil‘ in times of greatest need. At the same time, it has had a secondary but important effect of reducing our imports of

military aircraft and to this extent has improved our trade position. In.

terms of Canadian growth, it has perhaps had an even greater result by creating engineering and manufacturing facilities and employment op- portunities which previously did not exist. A network of more than 3.500

Canadian subcontractors and suppliers has been established stretching

from coast-to-coast. It has been clearly established that the degree of aeronautical inde- pcndencewhichhas bcenachievedtodatehas beengoodforCanadaand

webelieveitshouldbe%deIunrsllytolneludealltypradarmB‘ _rnesr'ala'naaII.Al*latitmIAi!eIh:yvlddsvrouldaioonrage¢hI devclopmentieeuentisl. 'l'herewouldappeartobenoinaIrmountablereasonwhyCanadisn operatoreshouldcollinueloqaaldmilliorlofdollarsforairtzafillde outidecanada is deweI‘tl7neeutry'edenonstratcd techninlell

PROGRESS IN OTHER FEEDS

Thecorwanycanalsopoirnnoothu'cxarnplesofgrowingInd&H maturity.InpartnershipwithBritishintereets,wewillbeprodIIcs'Q wrought steel wheels for railway rolling stock, and in the near future we will be manufacturing Budd equipment. We are also gearing up to prodru a wide variety of railway equipment and many other products including refrigeration equipment for the transportation industry. Few of tlfi produas have previously bear made in Canada.

In terms of the Canadian economy generally, this kind of industrial development is of paramount importance if for no other reason than its impact on our increasingly unfavourable balance of trade.

A RARE OPPORTUNITY The recognized need of Canada to produce more and import less presents both a challenge and a rare opportunity. It will mean tackling vigorous competition which will require vision, courage, and determination. 'lhe rewards could be three-fold: - I. A marked increase in Canadian manufacturing industries which will mean greater economic activity and more jobs. 2. A proportionate decrease in Canada‘s deficit. 3. Increase in Canadian exports as volume and range of products increase.

THE OUTLOOK

The outlook for the company in the light of these developments and opportunities is favourable, and continuing satisfactory results are indi- cated in both commercial and defence fields.

On the aeronautical side, production is continuing on the (‘F-100 and the Orenda jet engine for both domestic and export markets. The research, engineering and design resources which enable us to conceive and successn fully produce these products are now engaged in development of three of the most advanced projects of their type in the ucslcrn uorld.

On the industrial and commercial side, there is good rc.1:.or1for confidence as new products are brought into production thereby bringing a greater degree of strength, balance and stability to the Company‘s position within the economy of the country.

APPRECIATION

In this first annual report we have attempted to record something of the history, achievements and corporate philosophy of the company and to point up its significance in the Canadian economy. None of its achieve- ments would have been possible without the people v\ ho work in its plants —the thousands of men and women in management, in the oilices, in the shops. To them we say thanks, for in the final analysis, they are responsible for_the company's progress and for the contribution it is making towards Canada's growth.

=l<THESE COMPANIES CONSTITUTE THE A. V. ROE CANADA GROUP

WHOLLY OWNED SUBSlDlARlE8t

AVRO AIRCRAFT LIMITED. MALTON. ONTARIO

CANADIAN APPLIED RESEARCH LIMITED, ronouro. ONTARIO

CANADIAN CAR COMPANY LIMITED. MoN1'n¢At..¢ueeao CANADIAN STEEL FOUNDRIES (1956) LIMITED, MONTREAL. Quzazc CANADIAN STEEL IMPROVEMENT LIMITED. TORON1'0.0N1'ARlO CANADIAN THERMO CONTROL COMPANY LIMITED. uourIeaAt..ouznec

ORENDA ENGINES LIMITED. MAl.1'ON.ON'|'ARlO

PARTIAL-LY OWNED OUIOIOIARYI

CANADIAN GENERAL TRANSIT COMPANY. LIMITED, MONTREAL. QUEBEC

ASSOCIATE COMPANY!

CANADIAN STEEL WHEEL LIMITED. MONTREAL. Quenao

IIA. V. Roe Canada has acquired the equivalent of 2.228.817

Corporation tlnerebygehbu 76% control QfDOSCO andnraking it apart ofthe A. V.

A. V. ROE CANADA LIMITED

170 UNIVERSITY AVENUE. TORONTO 1. ONTARIO MEMBER HAWKER SIDDELEY GROUP

TRANSPURTMIUN.

HEAVY

INDUSTRY

ordinary shares of Dominion Steel and Coal Roe Canada Group.

AND

METALL-URGY