Leaders of Canada’s battered automotive and steel industries on Tuesday welcomed Prime Minister Mark Carney’s $6.6-billion “defence industrial strategy,” which aims to create 125,000 jobs over the next decade while hiking defence spending on Canadian firms to 70 per cent from a current 30 per cent.
Industry watchers say the announcement is an opportunity for companies that are able to quickly pivot, but warn Ottawa shouldn’t lose sight of the ultimate goal of providing the military with the equipment they need to defend Canada.
David Pierce, the Canadian Chamber of Commerce’s vice-president of government relations, said the strategy presents a “big opportunity” for the steel sector, if it can shift into producing military equipment. However, the government should outline to the industry in the next six to 12 months what it is procuring and what is already out there, he said.
“With those conditions, I think there’s a real opportunity for Canadian companies that aren’t necessarily in the defence sector to get into it,” Pierce said, “but the government really needs to tackle those issues almost urgently.”
Defending Canada’s sovereignty, Pierce added, is a primary goal.
“The key for us is to make sure that we don’t lose sight of that first objective,” Pierce added, “which is arming our military with the equipment that they need, and making sure that we’re able to really protect and defend Canada’s sovereignty.”
He added that the announcement reflects long-standing practices by governments around the world to focus on markets that “sustain building out” the military.
The strategy seeks to increase Canada’s defence exports by 50 per cent within a decade — just as the European Union looks to massively scale up defence spending in response to Russia’s war on Ukraine.
“We will be very deliberate and open in terms of defence and security partnerships we sign with allies throughout the world and what opportunities that opens up, and be clear about what the guardrails are around … the types of exports we would envision with those countries,” Carney said.
Ryan Robinson, automotive research leader at Deloitte Canada, said the strategy presents a “significant opportunity” for companies that are able to switch gears, such as auto parts suppliers for Canadian assembly facilities, though not necessarily vehicle assemblers themselves.
With U.S. tariffs adding to the “attrition of vehicle assembly” taking place in Canada over the last 10 to 15 years, suppliers have come under intense pressure, he said, something he doesn’t foresee stopping completely with CUSMA (Canada-U.S.-Mexico Agreement) talks.
Between 80 and 90 per cent of vehicles made in Canada are sent to the U.S., and if the White House says it doesn’t want to buy cars from Canada, “it sets up a bit of a problem because all of the current investments in auto manufacturing in Canada have been made under the assumption that we had a free-trade agreement across the three markets in North America.”
That’s why he sees the prospect of creating or protecting 125,000 jobs as “very impactful for the economy overall.”
Some automotive suppliers have already “diversified into adjacent sectors,” he said, like construction and agriculture, “so this would be in the same vein.”
Catherine Cobden, president and CEO of the Canadian Steel Producers Association, said that it welcomes the strategy’s commitment to the ‘Buy Canadian’ policy.
“Overall, we see this strategy creating new opportunities, across the entire supply chain, in the medium and long term for Canada’s steel producers,” Cobden said. “Our members are eager to contribute to the projects that will support Canada’s national security.”
Within a decade the government says the strategy will more than triple annual revenues in Canada’s defence sector, which was $14.3 billion in 2022.
It promises a new strategy on expanding production of critical minerals tied to defence and the creation of a new program to support domestic production of ammunition and explosives.
The strategy said by 2029, Ottawa will stand up a new plant to produce nitrocellulose, which is a propellant used in munitions.
With files from Alex Ballingall and The Canadian Press
