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This article is part of our SPOTLIGHT ON CANADA

Canada’s defence industry is innovative, technology rich, export intensive, and globally competitive. In this special 10-page feature, we gain insights into Canada’s defence-focused industries and some of its leading players.

In distinct neighbourhoods at opposite ends of the Pacific, New Zealand and Canada have long shared a relationship characterised as philosophical close yet geographically distant. The upgrade of HMNZS Te Mana and HMNZS Te Kaha in Victoria by Lockheed Martin Canada as part of the Anzac Frigate Systems Upgrade (FSU) project, however, may present as something of a turning point.

As Grant Wyeth noted in The Diplomat in early 2020, the two RNZN vessels are the first foreign warships to be modernised in Canada since World War II, “making the contract not just an important bilateral development between the two countries, but also an important component of Canada’s involvement in Indo-Pacific security.”

As the same time, Canada’s defence industry, deeply integrated into the North American defence industrial market since the 1940s, has been significantly challenged by the US International Traffic in Arms Regulations (ITAR) and constrained market opportunities in Europe.

Canada’s defence industry

“Canada’s defence industry comprises approximately 640 firms generating $10.7bn (CAD) in sales, 54 percent of which is from exports, and contributing approximately 64,000 jobs across Canada,” Nicholas Todd, VP Policy and Communications at the Canadian Association of Defense and Security Industry (CADSI) told the New Zealand Defence Industry Association (NZDIA) Member Meeting in March.

Canada’s defence industrial base includes but is not limited to shipbuilding and marine industries, aerospace industry, automotive sector, munitions, electronics, simulation and training, information and communications technologies, textile industry, in-service support and satellite and space technologies.

Some of the areas in which the sector is seen to possess uniquely specialist capabilities are in munitions, arctic and cold weather capabilities, maritime domain awareness, intelligence and surveillance functions, cyber security, surveillance and control of borders and ports, soldier survivability, and C4ISR.

“We are known for the light armoured vehicle, and also for several components or systems, including sonar navigation, outer space exploration, satellite technology, PPE, and commercial applications for what might have started off as military capabilities,” said Todd [CADSI has created a searchable capabilities database at www.gatewaycapabilities.ca]

HMNZS Te Kaha sailing past the historic Fisgard Lighthouse at the mouth of Esquimalt Harbour in Colwood, British Columbia, as she commences intensive sea trials off Canada’s West Coast following systems upgrade at CFB Esquimalt. Image: RNZN.

By the numbers

According to Innovation, Science and Economic Development Canada’s (ISED) Statistical Overview of Canada’s Defence Industry in 2018, Canada’s defence industry:

• Increased its jobs, revenues and export volume over the 2014-2018 period

• With $415m worth of activity, was 4.5 times more R&D intensive than the broader manufacturing sector—led by industry funded R&D (with around 15 percent of funds coming from government)

• STEM-related occupations’ share of its employment more than 3.5 times that of the manufacturing sector

• Was globally engaged and export oriented

• Varied greatly by firm ownership in terms of sourcing from

Canadian suppliers

Players within the industry include the Canadian operations of several international primes, large local suppliers, including Davie Shipbuilding, Seaspan Shipyards, MDA, CAE, Irving Shipbuilding, PAL Aerospace, IMP Aerospace and Defence, and a host of SMEs.

Over 90 percent of the industry are, in fact, classed as SMEs (250 employees or less), who are responsible for generating 23 percent of defence industry sales, 31 percent of employment, 22 percent of R&D, and over 19 percent of exports.