Business Brief: The great Canadian backcheck

Good morning. In today’s newsletter, we’re looking at a few ways Canada’s new domestic defence manoeuvres are coming into sharper view.

Up first

In the news

Debt deadline: Telesat faces showdown with American creditors over debt

Private tech: Vancouver’s Hiive changes name to Clarity as private stock marketplace plans expansion

Pipeline price: Ottawa reviewing its approach to selling Trans Mountain pipeline

In focus

Preparing for the ‘preposterous’

At the beginning of September, the commander of the United States Indo-Pacific Command seemed incredulous when he was asked whether he’d obey an order to launch military action against Canada.

The country is a close ally, U.S. Pacific Command Admiral Samuel Paparo said, which would make the scenario “preposterous.”

He dismissed the question as “needlessly emotional,” telling a Global News reporter that he might as well ask what his plans were to attack the Martians.

The difference being, of course, that U.S. President Donald Trump hasn’t threatened to annex a civilization on Mars. (That we know of! Perhaps the President is very good at keeping secrets.)

We hope Paparo isn’t actually faced with this dilemma – especially after he sought to clarify his response by saying “I follow the orders of the President” – but Canada is, nevertheless, snapping out of decades of assumptions made over military protection.

The federal government has committed to an estimated $180-billion in defence procurement by 2035, part of a much broader military buildup as Ottawa works toward NATO’s target of spending 5 per cent of GDP on defence and security. The scale of that expansion is setting off a scramble among Canadian companies and institutions for contracts, workers and investment.

Pippa Norman, The Globe’s innovation reporter, spends a lot of her time covering Canada’s defence sector. You’ll see her byline atop a string of recent stories on how corporate Canada and political leaders are responding to a rapidly changing world.

Call of duty

This week, a story by Norman on the Royal Canadian Air Force explained why it’s outsourcing aircraft technician training to civilian schools for the first time.

At 10 locations across the country, the partnerships could expand a training system that has struggled to produce technicians quickly enough.

A shortage of skilled workers – and capacity to train them – is a familiar story in Canada. In this case, the effort is bringing military training closer to the standards used in a civilian aviation industry facing its own shortage of aircraft maintenance workers.

Before a two-day strike by WestJet aircraft-maintenance workers in 2024, the airline acknowledged during contract negotiations that it could not fill dozens of open positions, according to the union. (Compensation was a big part of that job action.)

In Nova Scotia, Irving Shipbuilding is warning that Ottawa’s planned submarine fleet could cannibalize the skilled workforce it needs to build the government’s new warships.

Digital sovereignty

As the world reckons with the promise and peril of artificial intelligence, Canada’s military leadership is seeking to seize on one and protect against the other by partnering with domestic artificial-intelligence companies.

The Department of National Defence launched the MAIple Stack (AI see what they did there), an initiative aimed at supporting personnel who operate in “complex, data-rich environments,” to improve situational awareness, and support faster, better-informed decision-making, a spokesperson said. AI wasn’t able to help me much with drafting a fantasy baseball team, but I suppose the DND has smarter people asking it do things.

The federal government has pitched military spending as a way to improve Canada’s economy, which is moving more at the pace of molasses than maple syrup. Companies involved with the initiative have been chosen to expand Canada’s burgeoning sovereign AI ecosystem, the spokesperson said.

Banking on it

For as long as Canada assumed the U.S. would come to this country’s defence (it still would, we’d imagine, but it remains to be seen what that relationship looks like), our financial institutions haven’t exactly been pouring money into the domestic defence industry.

Over the past year or so, Norman reports, several Canadian banks have taken steps to signal they are behind the sector. Earlier this year, Canada’s Big Six signed on to support the Defence, Security and Resilience Bank, a new multinational bank to be headquartered in Canada. In May, The Globe and Mail reported that Royal Bank of Canada is advising Ontario on a $500-million bond to fund defence projects and, in August, National Bank tapped retired general Rick Hillier as a strategic defence adviser.

Ahead of the Canada Investment Summit, Bank of Nova Scotia announced plans to issue Canadian defence bonds to help raise capital for the country’s industrial defence base.

A flurry of defence news from September alone also includes:

Ottawa awarding contracts worth up to $50-million to Canadian companies through its new drone marketplace; the Business Development Bank of Canada joining the North Atlantic Treaty Organization’s defence technology investor network; Canada and Ukraine signing an optimistic 100-year agreement to work together on defence, energy and trade; and Britain talking with Ottawa about joining the Canadian-led defence financing bank.

Would Canada ever need to use these agreements, technologies and advancements to defend itself from a U.S. attack? Preposterous! But just in case …

Charted

Capital Power’s Avik Dey is at the centre of an electrical storm in Alberta. The CEO of Canada’s largest independent energy producer is facing resistance as the push for data centres in the province is sure to drive up electricity costs for consumers.

Quoted

The B.C. Premier called a snap provincial election yesterday, sending voters to the polls two years early. (Ask a B.C. friend how successful Prohibition was in curbing excessive drinking.)

Morning update

Global markets were mixed as oil prices eased for a sixth straight session, while a ​fresh wave of AI optimism lifted tech stocks globally.

Wall Street futures were muted, while TSX futures were in the red.

Overseas, the pan-European STOXX 600 was down 0.16 per cent in morning trading. Britain’s FTSE 100 rose 0.03 per cent, Germany’s DAX declined 0.43 per cent and France’s CAC 40 slipped 0.04 per cent.

In Asia, Japanese markets were closed for a holiday, while Hong Kong’s Hang Seng closed 1.01 per cent lower.

The Canadian dollar traded at 70.99 U.S. cents.