Ottawa’s recently published Defence Industrial Strategy (DIS) is one of the most significant developments in the Canadian

defence

ecosystem in decades. As is true in any ambitious undertaking, the promulgation of the plan is just the beginning.

In summary, the government has laid out an ambitious agenda to invest $6.6 billion over the next decade in a series of initiatives intended to bolster our domestic industrial capacity in several key areas, reduce our dependence on foreign suppliers for military equipment, stimulate domestic

job

growth and fundamentally transform the mechanisms by which Canada acquires and sustains military capabilities. Ultimately, the aim is to more efficiently and productively mobilize nearly $500 billion in planned spending toward equipment, preparedness,

infrastructure

and downstream capacities.

The DIS identifies ten priority sovereign capabilities central to Canada’s growth and long-term resilience, ranging from aerospace and ammunition to sensors, space and

critical minerals

. This list also includes several areas where Canada already demonstrates capacity, competence and export potential such as shipbuilding, communications, space, aerospace and autonomous systems. The goal being to grow those sectors to not only satisfy our own needs but to potentially scale up as competitive exporters of Canadian competence and capabilities.

I will add to the chorus of support as I genuinely believe this is an essential, unprecedented and long-overdue expression of national ambition and intent. No such strategy has existed in recent memory, and our defence industrial capacity has suffered from decades of incoherence and neglect. Born out of the historical necessity and urgency of our current geo-strategic circumstances, the DIS is a major step in the right direction.

This is the start-point for what will no doubt be a decades-long effort to not only rebuild our Armed Forces, but to build much needed autonomy, resilience and opportunity into critical sectors of our economy. I don’t envy Doug Guzman and his nascent team at the Defence Investment Agency as their “to-do list” rapidly outpaces their current capacity. This is going to be hard work and any expectation of miracles in the near-term is unrealistic.

The government has however set a wide range of explicit targets. My instinct is that many of these are “stretch goals” and as such we should try not to be overly focused on, or distracted by, the specifics of the numbers and the associated timelines despite the overwhelming compulsion to do so. There will be mistakes, and potentially some failures. The inherent risks of such a complex undertaking are massive; so too are the potential rewards. The lesser alternatives would be to continue to bumble our way forward by way of the status quo ante, or to take a more cautious path toward incremental change. Neither of these would meet the compelling needs of the current strategic context.

From a strictly economic perspective, there are some who will argue the inherent inefficiency of using public funds in a “Keynesian” strategy to artificially stimulate an industrial sector that might not otherwise survive on its own. This argument is flawed for a couple of reasons. First, given the critical need to rebuild the Armed Forces and meet our alliance commitments, the money must be spent anyway. This key principle underlies

PM Carney

’s central maxim: Why would we spend these funds elsewhere if we can spend more of them at home? Secondly, many of the core capabilities identified as priority investment areas are vital to our national interests and will not magically materialize without serious public investment. Therefore, keeping our cake while we eat it makes sense in this context; it’s simply smart policy.

Notwithstanding its merits, the strategy has some shortfalls and vulnerabilities that could potentially complicate or undermine the achievement of the stated intent. Some of these weaknesses are are being actively addressed, while others still need attention.

The most compelling area of concern is the urgent requirement to reset the legacy processes, approvals and administration of government machinery that are unfit for purpose as they were built to control expenditures and not deliver capabilities. More specifically, the legacy processes are set up to challenge not endorse, and as such everyone behaves as if they are entitled to a veto as opposed to having a shared responsibility to find a path to “yes” — which is what is desperately needed now. The planned creation of multiple new mechanisms and governance structures risks further bureaucratization and new points of friction and overhead within the system. There are at least five new structures, committees, or processes listed in the strategy. Each of these will require some type of administrative support such as a secretariat. The risk is that these new structures will simply replace the old ones and end up slowing these down in a different way and detracting from the intent.

The definition of what constitutes a “Canadian” company also requires both clarity and sophistication in order to avoid detrimental impacts on the intended objectives of the strategy or manipulation and abuse. There have been conflicting descriptions of the intended criteria from ministers and officials. This is a key enabler to success as it is essential to have a clear understanding of how different ownership, production and supply-chain arrangements will be either incentivized or penalized under this new regime.

I am especially concerned that, to date, dialogue with industry appears to have been biased toward the larger primes and international subsidiaries. Small to mid-size companies appear to have been relatively absent from the conversation and, if true, this is problematic as they are the ones that are carrying the bulk of the risk, and offering the biggest potential returns. The specific needs of these smaller players in relation to how to scale production, access capital and navigate the export approval processes do not appear to have been adequately addressed. These are exponentially difficult challenges for such smaller companies as they don’t have the same credit, access to capital, supply chains, or influence and as a result they will face unfair obstacles if this is not properly addressed.

Lastly, the human-factors associated with this strategy require further elaboration. There needs to be a specific focus on skills-development and the attraction of talent into the defence sector, which has traditionally been stigmatized as an inferior or undesirable career path. Despite the significant funds being allocated to the sector in the coming years, employers could struggle to compete on compensation alone. There will need to be a concerted effort to bring enthusiasm and incentives into the mix. This will not happen on its own, and without this critical enabler, the strategy will fail.

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Mark Norman is a retired vice-admiral who commanded Canada’s Navy and was vice-chief of Defence. He advises several Canadian defence companies.