Why Canada Needs a Defence Industrial Strategy

Each spring Canadian Defence Industry gathers at the annual CANSEC event in Ottawa. Under the leadership of CADSI, representatives of industry, government and others gather for a few days to showcase the incredible technology, talent, and innovation available within Canada. I contend however, that despite the recurring enthusiasm around the event, there is a significant fracture in Canadian (Defence & Security) industrial affairs and this is much more troubling than the inability of government to update our Defence Policy.

I consider much of the latter years of my time in uniform to be an “apprenticeship” in defence industrial relations; since my retirement I have also had the pleasure to work with several industry clients. Additionally, over the past 3 years in particular, I have been honoured to lead nearly 50 senior executives from Canadian defence industry through an extensive private sector engagement with NATO HQ in Brussels.

WASTED POTENTIAL

My assessment, regrettably, is that Canada is failing its own defence industrial sector and the result is that we are squandering our considerable potential as a reliable, credible, and potentially cost-effective supplier of defence and security products and services. This failure is as much about failing to meet our own domestic defence and security requirements as it is about missed opportunities overseas for the sale of superior Canadian goods and services. This is both bad economics and bad defence.

At the NATO level, the alliance is aggressively looking to bolster its industrial capacity and is quickly realizing that both its traditional “euro-centric” perspective and the broader industry practice of “just in time” delivery and other tight-margin practices are not optimized for the emerging security problems facing the Alliance. Time is not on our side, and there is a realization that things need to change, and they need to change quickly. Furthermore, the mechanisms for integrating Canadian industry into the alliance are virtually non-existent and dysfunctional. There are many contributors to this problem, but the key failure is the lack of a Defence Industrial Strategy for Canada.

The relationship between the machinery of government and Canadian (Defence) industry is fundamentally broken and is adversely impacting both our ability to procure vital capabilities for our own needs, but also our ability to effectively contribute to the alliance or even compete on a global scale. The punitive and ideologically biased policies of the current government in particular are having an enormously negative impact on the ability of Canadian business to “help” Canada and our allies. One need only consider the ongoing issue of restricted export permits to see the banal and damaging nature of the current “policy” framework of this government. Furthermore, the entire ITB process is flawed and fails to deliver the scale of benefits imagined when it was created.

LACK OF CONFIDENCE

Additionally, I think it’s safe to say that there is absolutely no confidence within industry that any of the key government organizations actually understand what is at stake or whether they can act in the best interest of the country. Defenders of the status quo are completely out of touch with what is actually going on and, I believe that the entire set of processes, mechanisms, and organizations needs to be “blown up” and completely rebuilt from first principles. This will be extremely difficult, but no doubt worth the extra effort. Previous political statements - by both major parties - have simply paid lip service to fixing the underlying structural problems. The current stakeholders within the machinery of government have too much “skin in the game”, so to speak, and cannot be sufficiently objective to produce an alternate construct. The solution must come from outside the current process-holders.

There is also growing concern that the political class in this country, as well as government officials, do not see the inherent (strategic) value of Canadian defence industry. As a result, there might well be unintended consequences of any future policy/strategy that fails to consider how Canadian Defence Industry can help (not hinder) Canada’s ability to rebuild the CAF and improve our international reputation and standing. Any inference that industry is (fully or partially) to blame for Canada’s procurement woes is erroneous and unhelpful - the bulk of responsibility lies with process owners within DND and across broader government.

There are lots of specific areas that warrant further exploration, but I’m mindful of the space constraints of this column. Sadly, the ongoing events of the past couple of years remind us that, despite our naive belief as Canadians that we are protected by vast distances from the troubles elsewhere, the world is much smaller and more dangerous, and that we can no longer pretend we are immune. Our capacity to produce or support many - but not all - of the capabilities essential to protect our national interests is severely compromised. This is both a serious security vulnerability as well as a missed economic opportunity.

I would caution any potential future government that is looking for SERIOUS options to enhance the security and defence of Canada, to ensure that a robust Defence Industrial Strategy be included in whatever suite of policies or strategies that might be considered.