Canadian Manufacturing

Ottawa urges aerospace and defence firms to invest in ‘key industrial capabilities’

by Canadian Staff   

Canadian Manufacturing
Financing Manufacturing Operations Procurement Research & Development Supply Chain Technology / IIoT Aerospace Public Sector

Minister of Innovation, Science and Economic Development Navdeep Bains announced that the government will use its ITB Policy to motivate defence contractors to invest in key industrial capabilities

General Dynamics Canada manufactures several armoured vehicle variants, including the LAV III, pictured above. PHOTO: TKnoxB

OTTAWA—The government of Canada is using its Industrial and Technological Benefits (ITB) Policy as a financial carrot to entice firms vying for federal defence contracts to invest in the five emerging technology areas Ottawa thinks will give Canada’s economy a long-lasting leg up on the competition.

Canada’s defence industry has more than 650 companies that employ more than 60,000 Canadians. It has an R&D intensity 4.5 times the Canadian manufacturing average, and is export-oriented with 60 per cent of its sales in 2016 taking place in the global market.

The Industrial and Technological Benefits (ITB) Policy requires that for every dollar the gobernment spends on big defence purchases, the winning contractor must put a dollar back into Canada’s economy. Ottawa claims the ITB Policy has generated investments of $30 billion in Canada’s economy, and generates around 40,000 jobs annually.

“Canada’s defence industry welcomes [this] as an important policy tool to strengthen our government-industry partnership,” said Christyn Cianfarani, president and CEO of the Canadian Association of Defence and Security Industries. “The capabilities identified today demonstrate the world-class, innovation-led nature of the defence and security industry here in Canada.”


To maximize these opportunities, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, today announced that the government will use the ITB Policy to motivate defence contractors to invest in Key Industrial Capabilities (KIC). These are five areas of Canadian industrial strength in emerging technologies, which have the potential to grow quickly, and 11 established industrial capabilities where Canada is globally competitive or where domestic capacity is considered essential to national security.

The five Key Industrial Capabilities identified by the Canadian government are:

  • Advanced materials
  • Artificial intelligence
  • Cyber resilience
  • Remotely piloted systems and autonomous technologies
  • Space systems

These KIC align with the government’s Innovation and Skills Plan by supporting the development of skills and fostering innovation in Canada’s defence sector.

“Our defence industry asked for a list of Key Industrial Capabilities, and we delivered,” said Navdeep Bains, Minister of Innovation, Science and Economic Development “As a result of promoting investment in areas with potential for rapid growth, our armed forces will be better equipped, we will have a stronger economy and we will create thousands of middle-class jobs.”

The KIC list will evolve over time to reflect technological advances and changing defence requirements, and Bains said it will be reviewed and updated on a regular basis. Adoption of these KIC’s was first recommended in 2013 report.

These are the competencies and critical industrial services Ottawa with which thinks Canada currently enjoys a competitive advantage

  • Aerospace systems and components
  • Defence systems integration
  • Electro-optical and infrared systems
  • Ground vehicle solutions
  • In-service support
  • Marine ship-borne mission and platform systems
  • Munitions
  • Shipbuilding, design and engineering services
  • Sonar and acoustic systems
  • Training and simulation

From 1986 to 2016, the overall portfolio of ITB obligations included 137 contracts valued at $41.5 billion, with $28.3 billion in business activities already completed, $9.4 billion of activities in progress and $3.8 billion in unidentified future work opportunities.


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