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Prime Minister Mark Carney and Industry Minister Melanie Joly arrive at Canadian Aviation Electronics (CAE) on Montreal on Tuesday. Ms. Joly said the government’s new strategy is about building industrial sovereignty.ANDREJ IVANOV/AFP/Getty Images
Ottawa’s new defence industrial strategy will give a boost to major public companies and champion earlier-stage enterprises by jump-starting private investment in Canada-based firms and helping them reach foreign markets, industry leaders and analysts say.
Autonomous-vehicle makers, space-based companies and munitions manufacturers are among those who stand to gain from the new strategy announced Tuesday, as Canada aims to reduce its reliance on foreign arms manufacturers.
Numerous small and large companies praised the strategy, though many said its success will ultimately depend on its execution. The strategy aims to more than triple Canadian defence-industry revenue, boost defence exports by 50 per cent and create 125,000 jobs over the next decade.
“This will help us attract investment, but it will also help us sell,” said Julie Angus, chief executive officer and co-founder of Open Ocean Robotics. “Early domestic procurement really creates global champions.”
Open Ocean’s products – solar-powered autonomous boats – serve both civilian and defence uses, including underwater threat detection, illegal-fishing enforcement and border surveillance.
Carney says new defence industrial strategy will reduce reliance on U.S. for gear
They also fit into multiple priority areas identified in the new defence strategy, including marine sensors and autonomous systems. More capital could help the company scale its Victoria-based manufacturing output to 70 vehicles a year, from the current 24, and expedite export growth, Ms. Angus said.
Central to the defence strategy is a procurement framework that aims to prioritize building domestically before partnering with international companies, and buying from other suppliers only when the other options aren’t possible. The strategy’s target is to award Canadian firms 70 per cent of defence spending by 2035, up from around 40 per cent currently.
In a note to investors Tuesday, Desjardins analyst Benoit Poirier called the announcement “highly constructive,” given the strong Canadian focus, the targeted sectors, the scale of the planned investment and the decision to designate private-sector firms as strategic partners.
Mr. Poirier identified Bombardier Inc. BBD-B-T, CAE Inc. CAE-T, Calian Group Ltd. CGY-T and MDA Space Ltd. MDA-T among the companies that will likely benefit. All of these companies’ shares closed up on the Toronto Stock Exchange on Tuesday.
The strategy is a major reversal for the defence sector in Canada, which has long suffered from a lack of private-sector enthusiasm, said Marek Lorenc, a partner at Aird & Berlis LLP leading the law firm’s space tech group.
Ottawa plans to double defence exports, create 125,000 jobs in next decade
It also balances two priorities that are somewhat in tension: supporting Canada’s defence industry and ensuring its military is properly equipped, despite some gaps in what can currently be produced in Canada, said Mina Mitry, CEO of Toronto-based satellite company Kepler Communications Inc.
For Industry Minister Mélanie Joly, the strategy is about building industrial sovereignty in the face of economic coercion from U.S. tariffs. She said it will create jobs in engineering, welding, research and other trades.
Ms. Joly said Canada could one day look to export heavy icebreakers, highlighting Norway, Sweden, the United States, Britain, South Korea and Japan as potential markets. Canada does not currently produce heavy icebreakers at a scale where exporting is feasible.
By no later than this summer, Ottawa has promised to identify “champions,” or companies that will be supported with various perks such as export promotion and directed procurement. Ms. Joly said the federal government will consider companies that have “70 per cent of the value of their products” in Canada.
Ottawa said it will also select the first round of research projects to be funded through its Bureau of Research, Engineering and Advanced Leadership in Innovation and Science, or BOREALIS, by the third financial quarter of 2026.
BDC targets rockets, semiconductors as first investments under new defence strategy
However, the strategy is light on more specific dates and timelines with which to hold the government accountable and help companies understand when contracts will start flowing, said Christyn Cianfarani, president and CEO of the Canadian Association of Defence and Security Industries.
She said she will be pressing Ottawa for particulars.
While Canada’s allies have noted the government’s defence spending commitments, they are still waiting for it to start signing cheques – a process that is at risk of being bogged down in bureaucratic processes, said Erin O’Toole, president and managing director of risk-advisory firm ADIT North America and former leader of the Conservative Party of Canada.
“The Davos speech talked the talk. Now we need to walk the walk,” he said, referring to Prime Minister Mark Carney’s speech at the World Economic Forum, in which he said that the world’s middle powers need to work together to ensure their sovereignty.
When it comes to investment, Tuesday’s strategy shows that defence is no longer a dirty word, said Bachar Elzein, CEO of Quebec-based rocket company Reaction Dynamics.
The strategy, he said, gives him clarity to confidently plan out his business for the next three years. If deployed the right way, Ottawa’s new spending could prompt a “golden age of reindustrialization” in an increasingly polarized and fragmented world.
“We have to be able to fend for ourselves,” he said.
