Col. Charles Davies (Retd)

The Canadian Association of Defence and Security Industries (CADSI) announced on March 31st that its annual trade show in Ottawa, scheduled for May 27-28, has been cancelled due to the COVID-19 pandemic.  This was a necessary decision and will have will come as no surprise to anyone.

The CADSI announcement released by Association President Christyn Cianfarani stated that: “CANSEC is a large event with many moving parts. It has a $10 million impact on the local Ottawa economy and provides significant revenue for dozens of loyal suppliers that are struggling to deal with the economic fallout of COVID-19.  Many of them are small businesses that rely on CANSEC as a key source of income.  We took the time necessary to explore every possible option with the City of Ottawa, their partners, contractors, and suppliers to mitigate losses to our community and secure the long-term viability of CANSEC, which needs these partners and suppliers to be successful.”

It is undeniable that CANSEC is important to the maintenance and development of Canada’s defence industrial base, which in turn is critical to safeguarding our national sovereignty and peace, order and good government.  Most advanced countries maintain a defence industrial base of some kind, although the scope and scale may vary depending on national capacity, security needs, and will. They do so to achieve two objectives:

 

  • Contribute to national security and defence by mitigating the very real risk that access to critical systems, commodities, or services may be substantially reduced or cut off in time of greatest need, with potentially significant impact on the nation’s ability to act in defence of its security and other interests.; and
  • Contribute to economic growth.

It is not widely understood just how relevant to the nation’s interests both of these objectives are.  During periods of the Afghanistan conflict, Canadian ammunition manufacturers as much as quintupled their normal production rates and halved their delivery lead times to keep up with the Canadian Armed Forces’ urgent operational requirements.  This was at a time when American and other international suppliers were struggling to meet their own nations’ surging needs and were simply not exporting (similar to today’s global rush to source medical equipment and supplies to deal with the COVID-19 pandemic).  Had this domestic industry not existed there would have been significant consequences for the troops on the ground in the key province of Kandahar, and Canada may not have been able to sustain the mission during periods of most intense fighting – a national failure that would have had significant political and international security impacts.

More broadly, the capacity to build and maintain advanced systems such as the LAV family of armoured vehicles and the Canadian Surface Combatant free the Canadian Armed Forces, and the nation, from reliance on foreign-based suppliers of critical capabilities.  This provides the government with much greater latitude to independently define Canada’s foreign, national security and defence policies.

The degree to which defence and security industries can benefit a country’s wider economy is also not well understood in Canada.  According to Statistics Canada, the country’s defence industrial base contributes close to $6.2B in GDP and 60,000 jobs to the Canadian economy. The impact is national, with regional specializations in specific defence industrial activities.  Between 2014 and 2016, the country saw a 40% growth in the marine domain across BC, Ontario, Quebec and Nova Scotia.

Further, the defence sector investment in R&D is typically on the order of $400M, an R&D intensity nearly 4.5 times higher than the Canadian manufacturing average.  The systems these companies produce are often leading-edge and involve a wide range of technologies.  Their development can create spin-off opportunities to apply the resulting Intellectual Property elsewhere, including in civilian applications, with benefits for the national technology base and the economy as a whole.  A number of successful Canadian defence and security firms have leveraged relatively modest initial Canadian government procurements to, over time, create world class Intellectual Property and build sustained export businesses.  In the process, they have built supply chains reaching into most parts of Canada, creating a multiplier effect that Independent studies have shown can yield total economic returns vastly exceeding the value of the government’s purchases.

Further, these industries employ proportionally more highly skilled, well-paid technicians, technologists, engineers, scientists, and other professionals than most other Canadian manufacturing sectors.  The Canadian defence industrial sector has a share of STEM occupations three times higher than the Canadian manufacturing average.  In other words, they are exactly the kinds of enterprises that the current Finance Minister’s Advisory Council on Economic Growth has identified as being key to the country’s future prosperity.

It is in this context that the annual CANSEC trade shows take place.  they provide a national venue for companies to show their own products, see the innovation happening in other firms, identify opportunities for teaming to develop new products and Intellectual Property, and gain better insights into emerging requirements across their customer base.  In short, it is a contributor to the process of bringing together the kind of critical mass of ideas and intellect needed to stimulate innovation and invention.

Give the incredible scope of damage being done to Canada’s economy by COVID-19, the impact of the cancellation of CANSEC 2020 will perhaps be negligible in grand scheme, but, it is very much in the nation’s interests that it return strong in 2021 to help shape the efforts of the defence and security sector to effectively contribute to the recovery and future growth of Canada’s economy, and the strengthening of its national security.

 

Colonel Charles Davies (Retired) is a CDA Institute Research Fellow

 

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