Industry and Technology

This committee meeting of the House of Commons Standing Committee on Industry and Technology studied Canada's defence industrial strategy. The witnesses were Arad Gharagozli, Chief Executive Officer of Galaxia Mission Systems; Goran Pesic, President and Chief Executive Officer of Samuel Associates Inc.; Neil Chaulk, Chief Executive Officer of Solace Power Inc.; Mélanie Lussier, President and Chief Executive Officer of Aéro Montréal; Véronique Proulx, Chief Executive Officer of the Fédération des chambres de commerce du Québec; and John Vandenberg, Executive Director of the Western Arctic Marine Training Consortium.

Arad Gharagozli argued that Canada is falling behind in space, ranking last among G7 and OECD countries in defence spending, and that Ottawa must become an anchor client for Canadian defence producers, especially small and medium-sized enterprises (SMEs). He recommended a modern, predictable procurement system that funds projects directly rather than through R&D rebates, and said the government should provide a clear path from demonstration missions to commercial contracts, as the 14- to 15-month contracting cycle is too slow for start-ups.

Goran Pesic proposed a transparent road map to meet a 5% of GDP NATO commitment by 2035, allocating 2% to continental defence with the U.S., 1% to Arctic infrastructure, and 2% to manufacturing and allied support. He recommended creating an office of defence innovation and commercialization to connect customers with producers and help companies navigate grants, security clearances and intellectual property, and also suggested a national day of recruitment to inspire service and a veterans component in industrial benefit programs.

Neil Chaulk argued that technology scale-ups—firms with validated products and revenue—should be the centrepiece of a defence industrial strategy because they can deliver capability rapidly, generate enduring intellectual property and become global champions. He recommended prioritizing scale-ups for procurement-linked support, creating early Canadian Armed Forces adoption and rapid procurement pathways, and maintaining industrial benefits programs, while noting that Canadian capital often avoids hardware companies and that government demand is a powerful catalyst for growth.

Mélanie Lussier, speaking for the Coalition québécoise pour la défense et la sécurité, recommended aligning the defence industrial strategy with regional niches of excellence, moving from transactional procurement to a proactive mode that determines sovereign capabilities in advance, and modernizing the industrial and technological benefits (ITB) policy to be more transparent and enforceable. She also called for facilitating SME access to defence markets by de-risking first certifications, such as ITAR and CMMC, which can cost up to $150,000, and for ensuring that Defence Research and Development Canada works closely with industry to commercialize innovations.

Véronique Proulx, also speaking for the coalition, emphasized that 70% of Quebec businesses feel poorly prepared to seize defence opportunities and 80% have low knowledge of regulatory requirements, so the government must help explain opportunities and simplify processes. She stressed that the ITB policy must be modernized to ensure that money returning to Canada is reinvested in developing expertise and exportable products, and that the government should prioritize local content and manufacturing in procurement, as the U.S. and Europe do.

John Vandenberg highlighted the need for workforce development in the marine sector, which has an 11% job vacancy rate and will need over 8,300 more employees in five years, with the educational system supplying only 42% of required graduates. He recommended funding career awareness initiatives in northern schools, improving financial supports for marine training, providing practical vessel experience for students, and modernizing training methods to reflect Arctic conditions, noting that his consortium is the only Transport Canada-recognized marine training institution north of the 60th parallel.

The committee then debated a motion by Raquel Dancho condemning unjustified American tariffs on the Canadian auto sector and calling on the government to negotiate a win for workers. Gabriel Ste-Marie moved a friendly amendment to add “and that of heavy vehicles” to include the PACCAR plant. Taleeb Noormohamed moved a further amendment to also include steel, aluminum and softwood lumber industries, and to add a clause about the opposition working together in a Team Canada approach. Debate on the amendments and the motion continued.