Canada is undergoing a significant shift in its defense industry, boosting spending and fostering domestic companies to lessen its dependence on U.S. suppliers. This initiative is driven by Prime Minister Mark Carney's strategy to enhance the country's economic self-sufficiency, particularly as relations with Washington face strain, including recent tariff escalations.
The Canadian government has committed an additional $60 billion over the next five years to defense funding. This investment aims to bolster domestic capabilities and support local businesses in entering defense and security supply chains. Companies like Wuxly, a luxury parka maker, are expanding into defense contracting, producing items such as helmet covers and military parkas for the Canadian Armed Forces. Wuxly has also supplied equipment, including specialized female uniforms, to Ukraine's military.
Prime Minister Carney's defense industrial strategy, released earlier this year, represents a substantial change for Canada. The plan includes increasing spending by tens of billions of dollars to enhance military capabilities in the Arctic, asserting sovereignty over the region. It also prioritizes developing key sovereign capabilities in areas like aerospace, robotics, and unmanned systems.
The strategy envisions investments that could exceed half a trillion dollars over the next decade, with the goal of creating 125,000 jobs and tripling the size of the nation's defense industry. This involves steering contracts toward Canadian companies and accelerating research and development. Canada has also begun diversifying its procurement, announcing deals for radar planes from Sweden's Saab and submarines from Germany's ThyssenKrupp, opting for international partners over American competitors.
Canadian startups are also seeking to capitalize on this boom. New Frontier Robotics, for example, is developing an AI-powered mobile manipulator robot, a dual-use technology with potential military and civilian applications. The company sees a growing need for such robots in supporting roles at military bases, especially in challenging environments like the Arctic, where the use of robots can mitigate risks to human operators.
Drone maker Volatus Aerospace, based near Montreal, is another company expanding its presence in the defense sector. While Canada's defense industry has historically been limited, Volatus leverages its expertise in drones for both commercial uses, such as delivering medicine to remote communities, and defense applications, including first-person-view drones. The company has demonstrated drones capable of carrying significant payloads and operating autonomously, with potential applications for resupplying soldiers or delivering munitions.
However, Canada's modernization efforts face potential challenges. Opposition parties may target the spending plans in future elections, and Canadian companies developing advanced technologies could be drawn to the larger defense market in the United States. Competing against American counterparts with significantly larger research and development budgets also presents a hurdle.
Philippe Lagassé, an associate professor at Carleton University specializing in defense policy, noted that the scale of investment is significant by Canadian standards. The defense sector is experiencing a boom, with defense shows selling out and attracting new companies from various industries.