As global conflict and security demands reshape the landscape of international procurement, Canada is taking steps to secure a larger stake in the evolving defence industry. Driven by geopolitical instability and supply chain vulnerabilities, nations are prioritizing domestic production and alliance-based procurement. Canada, through both its public and private sectors, is beginning to seize the opportunity.
Major global players in defence are shifting strategies. Traditional arms exporters like the United States and European nations are increasingly redirecting inventory toward domestic use and strategic partners. Simultaneously, governments are re-evaluating their procurement pipelines, placing greater value on resilient, allied manufacturing bases. This presents Canada with a chance to scale up its role as a trusted supplier within NATO and Five Eyes partnerships.
NATO Spending Increases Open Doors for Canadian Firms
The current global environment—marked by heightened military spending, supply chain bottlenecks, and the war in Ukraine—has prompted NATO countries to increase defence budgets substantially. Canada’s defence sector is aligning itself with these priorities, with companies seeking to become integral links in the transatlantic supply chain.
By focusing on specialized components and systems, such as aerospace parts, sensors, and communications equipment, Canadian firms are increasingly contributing to allied readiness. The government has also indicated that it will pursue more defence contracts in collaboration with NATO nations, particularly those that enhance interoperability and reinforce joint capabilities.
This strategic participation means Canadian manufacturers are being vetted not just for capability but also reliability, cybersecurity standards, and political alignment—areas in which Canada traditionally scores well.
Domestic Manufacturing at the Core
While Canada has often relied on foreign equipment, the current shift is prompting a renewed emphasis on local defence manufacturing. Companies such as General Dynamics Canada, CAE Inc., and Magellan Aerospace are positioning themselves to expand capacity, upgrade facilities, and accelerate innovation.
Several federal programs are helping to support this momentum. Investments through the Strategic Innovation Fund, combined with defence-specific R&D grants, are catalyzing growth in areas like drone technology, cybersecurity, and advanced materials. Canadian SMEs, particularly in Quebec and Ontario, are also stepping into niche roles, offering parts and engineering services that feed into larger allied supply chains.
Strategic Imperatives in the Indo-Pacific and Arctic
Beyond economic opportunity, there is a strategic imperative for Canada to bolster its defence manufacturing footprint. The country faces growing pressure to modernize its forces and infrastructure in response to increasing tensions in the Arctic and the Indo-Pacific region.
With the federal government investing in upgrades to NORAD systems and Arctic surveillance, Canadian defence contractors are expected to play a significant role. Projects tied to radar systems, cold-weather technologies, and joint-force mobility will depend on local engineering expertise.
These regional priorities offer a dual benefit: improving Canada’s national defence posture while also creating long-term industrial capability.
Navigating Challenges in a Complex Ecosystem
Despite the potential, challenges remain. Labour shortages in high-tech sectors, regulatory hurdles, and export restrictions can slow growth. Additionally, Canada’s defence procurement process has historically been slow and bureaucratic, causing delays in project execution and contractor payments.
To compete globally, Canadian firms will need faster adoption of innovation, simplified compliance structures, and stronger government-industry collaboration. Industry leaders have called for a clearer long-term vision and procurement strategy aligned with national security priorities.
A Global Shift, A National Opportunity
As countries seek to de-risk their defence supply chains and prioritize procurement from trusted allies, Canada stands to benefit—if it acts strategically. With robust industrial capacity, political stability, and alliance membership, it is well-positioned to scale its role as a key contributor to global security.
This evolving landscape may redefine how Canada approaches defence—not just in terms of policy, but as a driver of jobs, R&D, exports, and geopolitical influence. For Canadian businesses in aerospace, cybersecurity, and advanced manufacturing, the time to act is now.
