I was looking at the Hansard records on military spending, and that 70% target for domestic procurement is a massive mountain to climb. The Prime Minister recently admitted that 75 cents of every capital defence dollar flows directly to the United States. Reversing that trend through the new Defence Investment Agency (the upcoming standalone procurement hub) sounds great. However, Canadian companies lack the scale to absorb $180 billion in new demand. We need real infrastructure, not just advisory forums.
Unfortunately it seems like the people in the CAF are still hooked on US suppliers and use specs based on US systems to narrow their choices and are not interested in anything else. For example they want HIMARS produced and controlled by the US when the delivery times are years away and require American target data for long range accuracy, there is also a shortage of ammunition for their system and a cheaper and comparable Korean system is available cheaper and sooner with production now set in several NATO countries. Norway just announced their purchase of the system after Poland made the decision a while ago.
A few months ago, the CAF could have worked with and supported a Canada/Sweden solution for Maritime Patrol aircraft but instead the CAF insisted to procure the "proven" P8 from Boeing. We will never develop our own solutions if we keep spec-ing American products. We have spent a lot of money developing Canadian capabilities for the construction of warships based on foreign designs but I doubt if we'll ever sell any to other countries.
Good to have a clear-eyed assessment from a seasoned expert. Keep it up Phil- the noise around defence spending is much louder than it has been for 40 years and getting louder. We all benefit from clear and reputable analysis of the state of play today and the challenges that await us.
I teach biotechnology and have been complaining for years about Canada's intangible asset problem. Here's hoping that DIA will help Canadian banks to see the value of intellectual property and buy into the mission to help grow Canadian start-ups into SMEs. This way we won't continuously send our tech companies and our educated talent to the US.
It’s a plan for a plan - while it’s nice they’ve acknowledged the painful and broken procurement system, there wasn’t much said on how they plan to streamline the immense middle bureaucracy they’ve built.
I agree. Phil as usual provides a solid analysis and it leads us to that very point, as he notes himself: this document had very little to say on how we might ever accelerate our snail pace procurement, in fact if anything it suggested a DIA that grew to be effective and vigorous would run head on into Treasury obstruction. Beyond that, when we do commit funds it takes forever to get them out the door; no sign here of that being specifically addressed.,
The document is noticeably silent when it comes to defining what counts as a Canadian company. This is noteworthy given recent ministerial remarks that foreign subsidiaries with a large Canadian presence could be considered Canadian under the Buy Canadian policy.
It is not just ownership... it is control, where the company is really headquartered, and does it own the intellectual property and have the right to export?
Canada has been held back by a branch plant economy, though at times, foreign ownership did not matter that much. The US auto branch plants were major exporters, before 1960 or 1965, just not to the US. Meanwhile, AVRO was owned in the UK, but developed the Arrow.
There was a great book in the 1990s by Glen Williams, I think it was, called "Not For Export". On top of branch plants, Canadian companies often licensed technology, but it was licensed only for Canada, and the Canadian company could not export it to the US or other countries, except maybe with permission.
So, imagine we develop a great drone design that relies on parts or IP that is licensed, so it can only be sold in Canada.
A former CDS called the Public Service the Official Opposition only last week. I have lived it and the bureaucrats at ISED are the tail wagging the dog. Don’t they know there is a (hybrid) war on and the clock is ticking? Thanks for bringing some realism to the fore in a storm of gushing.
Very insightful commentary Philippe. I hope this more than just window dressing, but I am a sceptic when it comes to any Liberal administration (although to be fair, the Conservatives haven't been much better). There are a few comments about the whole process I would like to make. Some of this reminds me of the Avro Arrow controversy. Canadians tend to wax rhapsodic about the dear departed Arrow, while conveniently forgetting the horrendous cost overruns and expenses associated with the aircraft. There's a reason that the American defence budget is so humongous (for 2025 it is reported to be almost 900 billion. For comparison, according to google, ours is about 35 billion). The American invest heavily in the sector, and naturally it costs a lot of money. If we want a 2026 version of the Arrow, we will have to be willing to pay for it (something I remain to be convinced of). With any luck, the Americans will have a new President in a 2028. What if it is a Democrat, who promises to play nice with Canada, and try to convince us they can supply all of our military hardware (and software) far cheaper than we can build it ourselves? What if in trade negotiations the Americans offer some relief to our auto sector (which seems to be favoured over many others) if we promise to buy their weapons systems, aircraft, etc? There is also the matter of efficiency and quality. I recall many years ago there was an effort to create our own infantry rifle, the "Ross". It turned into a fiasco, as the weapon was a complete failure. Are we going to be able to ensure that doesn't happen again? I suspect that may be one reason why the military brass are hesitant to have us striking out on our own. There is the interoperability concern. If we are going to continue our membership in NATO, we are going to have to conform to some type of standardization in equipment. It is impractical from a logistics point of view for all of the member states to have everything unique to themselves. The biggest problem IMHO is whether or not the government will actually commit to supporting the industry for the long term, and ensuring the products are up to snuff. Once defence spending starts to interfere with any our sacred cows, it will be politically expedient to cut spending. I trust PM Carney to hold the line, but isn't going to be around forever.
A recent EKOS poll shows a high level of support for increased military spending with 75% of respondents indicating that we should be spending more on defence. Like you I think the support is a mile wide and inch deep, we will see what happens when tradeoffs have to be made.
If we do want to see ongoing support for increased defence spending among Canadians one thing we need to have is for that spending benefiting the Canadian economy and if they don’t see that support will crater.
It is also about sovereignty. Do we want to continue to depend on the US even if they give us the best “deal”. Even if Democrats are elected in 2028 what about 2032 and beyond?
Trump may be gone in 2028 but MAGA now controls the Republican Party and in any 4 year period we may have to deal with an administration that holds the same core beliefs. They might be more polished (see Rubios recent Munich speech after which he went off to meet with Orban) but the America First ideas are here for the foreseeable future.
PS the Ross rifle was withdrawn from service in June 1916.
As USA sides with Russia, it tells you one thing, they no longer are a trusted ally.
What we sell to ICE may come back over the border to bite us as the Presidents private army.
When Canada was building jets, we built 1800 F86 Sabres, our variant was more powerful with our own Canadian designed and built engine. Sweden wants to have us built equipment for their markets world wide. They don't have the manpower they need!
Canada's land mass matches Russia's, our GDP is roughly equal, our self confidence and ambition is the problem.
If you've added a layer instead of collapsing layers of bureaucracy, you've made the problem worse, not better.
And everyone leaves the hard part unsaid. The reason CAF wants US gear is that the US makes the best gear, because scale + money + experience. Given enough time, China will probably catch up, because scale + money (and eventually experience). Russia is still riding scale + money from USSR days, and degenerating. EU had and has everything they need, but have chosen other priorities (until recently). The US also takes on all the front-end risk and proves the solutions, which is a huge benefit to everyone else. It's like the risk/benefit difference between being a Venture Capitalist vs buying mutual funds.
Pride alone can't create the best products. We will have to pick our spots where we can excel, and I have no idea if there are $180B worth of spots to pick. The more realistic core underlying strategy would be similar to how we've managed our specializations in NATO:
- Team up with EU to define an overall strategy
- Pick our spots where Canada specializes (like we do in Special Forces with snipers, and more broadly in Arctic operations - and maybe AI and quantum)
- Diversify our Partner/Buy side to be more EU-centric
Well done. Time to level set expectations. CD Howés ghost did not have input into this document.
I was looking at the Hansard records on military spending, and that 70% target for domestic procurement is a massive mountain to climb. The Prime Minister recently admitted that 75 cents of every capital defence dollar flows directly to the United States. Reversing that trend through the new Defence Investment Agency (the upcoming standalone procurement hub) sounds great. However, Canadian companies lack the scale to absorb $180 billion in new demand. We need real infrastructure, not just advisory forums.
Unfortunately it seems like the people in the CAF are still hooked on US suppliers and use specs based on US systems to narrow their choices and are not interested in anything else. For example they want HIMARS produced and controlled by the US when the delivery times are years away and require American target data for long range accuracy, there is also a shortage of ammunition for their system and a cheaper and comparable Korean system is available cheaper and sooner with production now set in several NATO countries. Norway just announced their purchase of the system after Poland made the decision a while ago.
A few months ago, the CAF could have worked with and supported a Canada/Sweden solution for Maritime Patrol aircraft but instead the CAF insisted to procure the "proven" P8 from Boeing. We will never develop our own solutions if we keep spec-ing American products. We have spent a lot of money developing Canadian capabilities for the construction of warships based on foreign designs but I doubt if we'll ever sell any to other countries.
Good to have a clear-eyed assessment from a seasoned expert. Keep it up Phil- the noise around defence spending is much louder than it has been for 40 years and getting louder. We all benefit from clear and reputable analysis of the state of play today and the challenges that await us.
I teach biotechnology and have been complaining for years about Canada's intangible asset problem. Here's hoping that DIA will help Canadian banks to see the value of intellectual property and buy into the mission to help grow Canadian start-ups into SMEs. This way we won't continuously send our tech companies and our educated talent to the US.
It’s a plan for a plan - while it’s nice they’ve acknowledged the painful and broken procurement system, there wasn’t much said on how they plan to streamline the immense middle bureaucracy they’ve built.
I agree. Phil as usual provides a solid analysis and it leads us to that very point, as he notes himself: this document had very little to say on how we might ever accelerate our snail pace procurement, in fact if anything it suggested a DIA that grew to be effective and vigorous would run head on into Treasury obstruction. Beyond that, when we do commit funds it takes forever to get them out the door; no sign here of that being specifically addressed.,
You seem like a very thoughtful and well informed student. I guess you are indeed ready for Grade 6.
Note this:
The document is noticeably silent when it comes to defining what counts as a Canadian company. This is noteworthy given recent ministerial remarks that foreign subsidiaries with a large Canadian presence could be considered Canadian under the Buy Canadian policy.
It is not just ownership... it is control, where the company is really headquartered, and does it own the intellectual property and have the right to export?
Canada has been held back by a branch plant economy, though at times, foreign ownership did not matter that much. The US auto branch plants were major exporters, before 1960 or 1965, just not to the US. Meanwhile, AVRO was owned in the UK, but developed the Arrow.
There was a great book in the 1990s by Glen Williams, I think it was, called "Not For Export". On top of branch plants, Canadian companies often licensed technology, but it was licensed only for Canada, and the Canadian company could not export it to the US or other countries, except maybe with permission.
So, imagine we develop a great drone design that relies on parts or IP that is licensed, so it can only be sold in Canada.
A former CDS called the Public Service the Official Opposition only last week. I have lived it and the bureaucrats at ISED are the tail wagging the dog. Don’t they know there is a (hybrid) war on and the clock is ticking? Thanks for bringing some realism to the fore in a storm of gushing.
Very insightful commentary Philippe. I hope this more than just window dressing, but I am a sceptic when it comes to any Liberal administration (although to be fair, the Conservatives haven't been much better). There are a few comments about the whole process I would like to make. Some of this reminds me of the Avro Arrow controversy. Canadians tend to wax rhapsodic about the dear departed Arrow, while conveniently forgetting the horrendous cost overruns and expenses associated with the aircraft. There's a reason that the American defence budget is so humongous (for 2025 it is reported to be almost 900 billion. For comparison, according to google, ours is about 35 billion). The American invest heavily in the sector, and naturally it costs a lot of money. If we want a 2026 version of the Arrow, we will have to be willing to pay for it (something I remain to be convinced of). With any luck, the Americans will have a new President in a 2028. What if it is a Democrat, who promises to play nice with Canada, and try to convince us they can supply all of our military hardware (and software) far cheaper than we can build it ourselves? What if in trade negotiations the Americans offer some relief to our auto sector (which seems to be favoured over many others) if we promise to buy their weapons systems, aircraft, etc? There is also the matter of efficiency and quality. I recall many years ago there was an effort to create our own infantry rifle, the "Ross". It turned into a fiasco, as the weapon was a complete failure. Are we going to be able to ensure that doesn't happen again? I suspect that may be one reason why the military brass are hesitant to have us striking out on our own. There is the interoperability concern. If we are going to continue our membership in NATO, we are going to have to conform to some type of standardization in equipment. It is impractical from a logistics point of view for all of the member states to have everything unique to themselves. The biggest problem IMHO is whether or not the government will actually commit to supporting the industry for the long term, and ensuring the products are up to snuff. Once defence spending starts to interfere with any our sacred cows, it will be politically expedient to cut spending. I trust PM Carney to hold the line, but isn't going to be around forever.
A recent EKOS poll shows a high level of support for increased military spending with 75% of respondents indicating that we should be spending more on defence. Like you I think the support is a mile wide and inch deep, we will see what happens when tradeoffs have to be made.
If we do want to see ongoing support for increased defence spending among Canadians one thing we need to have is for that spending benefiting the Canadian economy and if they don’t see that support will crater.
It is also about sovereignty. Do we want to continue to depend on the US even if they give us the best “deal”. Even if Democrats are elected in 2028 what about 2032 and beyond?
Trump may be gone in 2028 but MAGA now controls the Republican Party and in any 4 year period we may have to deal with an administration that holds the same core beliefs. They might be more polished (see Rubios recent Munich speech after which he went off to meet with Orban) but the America First ideas are here for the foreseeable future.
PS the Ross rifle was withdrawn from service in June 1916.
I know. After it was ordered removed by Sir Douglas Haig.
As USA sides with Russia, it tells you one thing, they no longer are a trusted ally.
What we sell to ICE may come back over the border to bite us as the Presidents private army.
When Canada was building jets, we built 1800 F86 Sabres, our variant was more powerful with our own Canadian designed and built engine. Sweden wants to have us built equipment for their markets world wide. They don't have the manpower they need!
Canada's land mass matches Russia's, our GDP is roughly equal, our self confidence and ambition is the problem.
Canadians mistakenly think once Trump leaves, that we go back to the 'Way We Were', NOT any time soon (if ever)!
Biden didn't get rid of all tariffs from Trumps first term. America will continue to naval gaze, as they turn away from the world stage.
If you've added a layer instead of collapsing layers of bureaucracy, you've made the problem worse, not better.
And everyone leaves the hard part unsaid. The reason CAF wants US gear is that the US makes the best gear, because scale + money + experience. Given enough time, China will probably catch up, because scale + money (and eventually experience). Russia is still riding scale + money from USSR days, and degenerating. EU had and has everything they need, but have chosen other priorities (until recently). The US also takes on all the front-end risk and proves the solutions, which is a huge benefit to everyone else. It's like the risk/benefit difference between being a Venture Capitalist vs buying mutual funds.
Pride alone can't create the best products. We will have to pick our spots where we can excel, and I have no idea if there are $180B worth of spots to pick. The more realistic core underlying strategy would be similar to how we've managed our specializations in NATO:
- Team up with EU to define an overall strategy
- Pick our spots where Canada specializes (like we do in Special Forces with snipers, and more broadly in Arctic operations - and maybe AI and quantum)
- Diversify our Partner/Buy side to be more EU-centric