Canada Needs Industrial Strategy
TIM PAGE
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Jul 15, 2006

The Harper government’s new plans to rapidly reinvest in Canada’s military and security forces will leave a lasting and positive legacy for the Canadian Forces. An equally positive legacy is possible for Canada’s economy by effectively leveraging meaningful industrial benefits from the upcoming capital procurements. This will require the government to think and act strategically from a whole-of-government perspective in relation to Canada’s long term economic, industrial, trade and technology interests.

In fact, this is the best opportunity in 30 years to develop a national defence and security industrial strategy that will complement defence procurement decisions, enhance Canadian security and contribute to growth in our high technology economy.

Does the Conservative government have a clear industrial strategy in mind that will provide Canada’s military and security forces with the capabilities they require and, at the same time, leverage a strengthened national economy and industrial base in key strategic areas of long term national interest?

In the view of the Canadian Association of Defence and Security Industries (CADSI), it is only through a strategic plan with defined objectives, that Canada will make optimal use of the billions of dollars to be invested by offshore suppliers of new equipment under their respective Canadian Industrial Benefits (CIBs) obligations.

Benefits of an Industrial Strategy for Canada
Through the development of a defence and security industrial strategy structured around strategic, long term national interests, the Conservative government will be promoting a viable, knowledge-based, export-oriented segment of the Canadian economy that:

  • supports innovation and knowledge-based jobs in Canada;
  • contributes competitive, world-class capabilities to the operational requirements of the Canadian military and security forces for the next 20 years with concomitant high technology job growth for Canadians,
  • contributes to the defence and security requirements of Canada’s allies on a sustainable basis;
  • prosecutes international niche markets with Canadian-made technology, equipment and service solutions;
  • becomes meaningful direct contributors to the supply chains of major contractors for current and future programs.

Creating a Positive Industrial Environment
Canada’s defence and security industries employ 70,000 Canadians and have developed world-class capabilities in a variety of land, sea, air, and security related technologies, equipment and services, despite the lack of an industrial strategy in the past. Canada’s defence and security industries have grown and sustained themselves largely through their ability to earn international business. In other words, these domestic industries’ strengths have been defined more by the national security priorities of other countries than by Canada’s.

This is an unusual and sub-optimal reality for an industrialized country like Canada. Circumstances that have led to this situation include:

  • a decades-old absence of consistent and clear direction from the federal government as to a strategic, long-term national security vision for Canada;
  • the related absence of stable and predictable funding for Canada’s defence and security forces;
  • the resulting uncertainty in conducting long term defence and security capabilities planning;
  • the difficulty therefore to predict, with any dependable accuracy, the types of technologies, equipment and services required or desired of Canada’s defence and security industrial base;
  • a consistent lack of adequate time for the domestic industry to prepare itself for anticipated procurement opportunities; and
  • procurement policies and regulations that have often disadvantaged Canadian suppliers and rarely paralleled other nations whose policies and regula­tions consistently support their indigenous defence and security industries.

Decisions in the months to come will determine if the Conservative government intends to break with past practices and thereby create a much more positive environment for Canadian defence and security industries, or whether, in the absence of a clear industrial path forward, they will relegate Canadian suppliers to become marginal players in our own domestic market.

Coherence and Coordination
A good place to start in developing a coherent domestic industrial strategy would be to understand the requirements and activities of the various federal departments and agencies that have a defence and security mandate. It is important to make sure that those requirements, deemed to be of strategic long term national interest, are linked to Canada’s industrial base.

The Department of National Defence is working hard to develop a Defence Capability Plan that will define Canada’s military requirements of capital equipment for the next 15 years. There should be a chapter in that document that describes a role for the domestic defence and security industries as was done through similar exercises in Britain and in Australia.

Industry Canada has produced a list of technologies that it will use in industrial benefit negotiations with offshore suppliers. To produce sustainable results, the list must span the breadth and depth of Canada’s long term defence and security interests. It should reflect both current and future military and national security requirements based on changing threats. It should consider areas where Canada can prosecute international niche markets and contribute in a meaningful way to supply chain opportunities.

Defence Research and Development Canada (DRDC) is developing a Science and Technology strategy for DND that presumably will identify key capabilities and sub-technologies. These should be considered also by the federal government in the context of an industrial strategy and industrial benefit obligations.

The leadership at Public Safety, the RCMP, Correctional Services, Coast Guard, Transport Canada, the relevant border and port agencies, and Canada’s Intelligence Services should all have a well-defined sense of their operational requirements for the coming decade to secure our borders, cities, ports, critical infrastructure and to affirm Canadian sovereignty in the North. Elements of those requirements, based on national interests, should be considered in the context of a strengthened domestic industrial base.

International Trade Canada collects data on key global growth markets for Canadian industry. These should be identified, considered in the context of an industrial strategy, and advanced through negotiated Canadian Industrial Benefits.

There are further examples of federal activity that should be part an industrial plan. For example, Canada’s science and technology policy, the future of Tech­nol­ogy Partnerships Canada, and a role for Canadian industry in the North American Security and Prosperity Partnership led by Public Safety.

All of these elements are on-going realities of the federal government and would be logical contributors to and beneficiaries of an industrial strategy.

A Call to Action
CADSI calls on the Prime Minister to articulate the role he expects Canada’s defence and security industries to play in meeting his government’s national security priorities, and what decisions will be made around those priorities, through the upcoming procurement cycle, that will involve Canadian industry in a meaningful and strategic way.

In developing a strategic industrial framework for the defence and security sector, the government has a variety of assets and capabilities to choose from including: Munitions; integrated soldier systems; communications capabilities; bio-metrics technologies; light armored vehicles; shipbuilding and support; remotely piloted air, sea, and land vehicles; maritime defence and surveillance capabilities; avionics and defence electronics; surface radar systems; value-added in-service support of land, sea and airlift equipment; cold weather capabilities; intelligence/surveillance/detection technologies; net-centric integration systems capabilities; systems design and engineering services; equipment and operations simulation and training; adequate domestic infrastructure for new military and security product research and development; chemical, biological, radiological and nuclear risk mitigation and response capabilities; mission control capabilities.

It is indeed a long list, and under the old adage “if you don’t know where you are going, any road will get you there,” CADSI invites the government to declare what strategic industrial capabilities it envisages for Canada over the long term. CADSI members are ready, willing and able to support the government as it chooses the direction and the road it intends to follow to secure Canada against threats, contribute to international security efforts and promote a sound and competitive national economy.

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Tim Page is the President of CADSI
(the Canadian Defence and Security Industries Association).
© FrontLine Defence 2006

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