What’s a Canadian firm under defence industrial strategy? It’s complicated

The government's new defence industrial strategy wants to prioritize Canadian manufacturers and suppliers — but what qualifies as Canadian is 'complicated.'

The federal government’s new defence industrial strategy wants to prioritize Canadian manufacturers and suppliers — but what exactly qualifies as Canadian is “complicated,” experts and the industry itself say.

The $6.6-billion plan unveiled last week aims to boost the number of contracts awarded to Canadian firms to 70 per cent, up from 43 per cent last year.

The strategy itself does not define what qualifies as a “Canadian firm.”

Instead, it focuses on “sovereign capabilities” like aerospace, ammunition and digital services that the government will aim to build in Canada where possible.

A government official told reporters during a technical briefing ahead of the strategy’s public launch that those capabilities “are not defined in terms of Canadian companies or by ownership.”

“They’re really about the capabilities that Canada is seeking to build in Canada,” the official said. “So we would fully expect that any company that is based in Canada with substantive operations here would be in a position to help contribute to the building of that sovereign capability.”

Some of the largest defence companies in Canada are actually subsidiaries of American multinational corporations like Lockheed Martin and General Dynamics. Although the global headquarters for those firms are based in the U.S., the subsidiaries have large production plants and offices in Canada that employ Canadian workers.

That would appear to qualify those companies under the definition of a “Canadian supplier” in the federal Buy Canadian Policy, which the defence industrial strategy seeks to extend into the military production and procurement space.