Canada making progress on defence strategy, but key aspects remain a challenge, industry members say

Canada is furthering the implementation of its Defence Industrial Strategy as it continues to learn from the war in Ukraine, but industry members say key aspects of a sovereign sector, such as testing facilities and financing, remain a challenge.

An event hosted by The Globe and Mail in Ottawa on Wednesday brought together Industry Minister Mélanie Joly, the Commander of the Canadian Army, Lieutenant-General Michael Wright, and executives from some of the country’s most notable defence companies for a discussion about the boom in Canadian defence spending and its implications for national security.

Lt.-Gen Wright said Canada is moving with “aggressiveness” and urgency toward the North Atlantic Treaty Organization’s target for members to spend 5 per cent of their gross domestic product on defence by 2035 – something he said should be expected of a founding NATO member and G7 country.

“A lot of what we’re doing is not only based on moving towards those NATO capability targets, but also ensuring that we are paying attention to lessons learned that we see coming out of the war in Ukraine,” Lt.-Gen. Wright said in conversation with journalist Gavin John.

He said Canada must prepare for threats such as misinformation, drone incursions, sabotage and even the weaponization of migration. He added that’s why the army is undergoing a massive restructuring and modernization effort; to ensure that, if needed, the Canadian Army understands understand what it means to “fight tonight.”

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Ms. Joly stressed to The Globe’s Ottawa bureau chief Mercedes Stephenson that the speed at which she’s seeing the federal government move is presently unlike anything she’s seen before, referencing decisions made in procurements such as Canada’s incoming new fleet of up to 12 submarines.

She highlighted that 860 businesses have used the National Research Council’s new Defence Industry Assist initiative, launched in January to help smaller Canadian companies find connections, funding and advice within the growing sector.

However, when asked for an update on the number of defence contracts going to Canadian companies or how far along the country is in meeting its goal of boosting Canadian defence exports by 50 per cent, Ms. Joly did not provide a clear answer.

Canadian companies participating in a different Wednesday panel about industrial growth in the country applauded the speed at which government is moving, but mentioned major hurdles such as finding a bank or places to test their technologies.

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Niru Somayajula, chief executive of Ontario-based acoustics company Sensor Technology Ltd., said she has to take her products to the U.S. Naval Undersea Warfare Center in Rhode Island for testing because layers of red tape make comparable facilities in Canada too difficult to access. “It’s really unfortunate,” she said.

Kath Intson, CEO of Sentinel R&D, a drone company based in Ontario, reiterated Ms. Somayajula’s testing woes. Her company requires electronic warfare environments for testing to ensure her drones can operate in the degraded conditions currently being seen in Ukraine. But that type of research and development simply doesn’t exist in Canada.

“You can’t design a system that is capable of electronic warfare without it being illegal, and this is just not the operational reality on any battlefield,” she said, adding that her company also tests in the U.S.

Despite a flurry of recent announcements from the Canadian banking sector on defence, both Ms. Intson and Ms. Somayajula spoke about the difficulties they continue to face in terms of finding banks who are willing to lend to their companies.

“It comes back to this Canadian culture question of: Do we even want to be involved in this, or do we just want to outsource it to the Americans and pretend that we don’t do it?” Ms. Intson said.