Canada Unveils Ambitious Defence-Industrial Strategy with Major Economic Goals
Canada is launching a comprehensive defence-industrial strategy designed to dramatically transform its military procurement landscape while generating substantial economic benefits. The plan aims to more than triple revenue within the Canadian defence industry, boost defence exports by 50 percent, and create approximately 125,000 new jobs over a ten-year period.
Shifting Procurement Priorities Toward Domestic Firms
At the core of this strategy is a significant shift in how Canada spends its growing military budget. The government has established a target of awarding 70 percent of defence acquisitions to Canadian companies, marking a substantial departure from historical reliance on United States military contractors for equipment and technology.
This strategic pivot is expected to unleash more than $500 billion in investment over the coming decade, providing a much-needed boost to Canada's manufacturing sector, which has faced challenges from international tariffs and global competition.
Addressing Geopolitical Realities and Sovereignty Concerns
The strategy document explicitly addresses changing global dynamics that have prompted this military buildup, which represents Canada's largest in decades. "Long-held assumptions have been upended—about the end of imperial conquest, the durability of peace in Europe, and the resilience of old alliances," the document states. "It is more important than ever that Canada possess the capacity to sustain its own defence and safeguard its own sovereignty."
This approach responds to mounting concerns about Russian activity in the Arctic region and reflects Canada's commitment to meeting NATO spending targets. Alliance members have agreed to allocate 5 percent of gross domestic product toward defence and security by the middle of the next decade.
Building Canadian Champions in Defence Technology
To cultivate domestic capabilities, the government will identify select firms as strategic partners, offering them research funding, capital-spending support, and export promotion assistance. In exchange, these companies must commit to on-time delivery and prioritize Canadian supply chains.
The strategy identifies several "sovereign capabilities" where Canada aims to reduce supply-chain vulnerabilities, including:
- Aerospace systems and components
- Ammunition production and development
- Advanced digital systems and cybersecurity
- Sensor technology and surveillance equipment
- Autonomous systems including drones and robotics
New Institutional Framework for Defence Investment
A newly established Defence Investment Agency, led by former Royal Bank of Canada executive Doug Guzman, will implement a "build-partner-buy" framework. This approach prioritizes building capabilities domestically when possible, partnering with allied nations when beneficial, and purchasing from international sources only when necessary.
While the strategy acknowledges Canada's long history of defence cooperation with the United States, it also reflects concerns about recent trade policies. The document notes that "Canada has a long history of working closely with the United States and looks forward to a continued strong Canada-U.S. defence relationship," while simultaneously addressing the impact of U.S. tariffs on Canadian producers.
Overcoming Historical Procurement Challenges
The promised investment windfall has already triggered significant interest from companies seeking government and investor backing. However, the strategy acknowledges that Canada has historically faced challenges with sluggish procurement processes and export barriers—issues the new framework specifically aims to address.
Prime Minister Mark Carney had originally planned to unveil the strategy earlier but postponed the announcement following a tragic mass shooting in British Columbia. The delayed release underscores both the sensitivity and significance of this comprehensive approach to national security and economic development.
This defence-industrial strategy represents a fundamental reorientation of Canada's approach to military spending, with profound implications for both national security and economic prosperity in the coming decade.
