Industry and Technology Committee on Oct. 22nd, 2025

[The Chair, Liberal, Ben Carr]

Good afternoon, everybody.

Welcome to meeting number nine of the House of Commons Standing Committee on Industry and Technology.

As a quick note to begin, all witnesses have completed the required connection tests in advance of the meeting.

Welcome to our witnesses who are here with us today.

By way of a very quick prompt, should you be using the earpiece and it's plugged in but not on your ear, make sure it's placed on the sticker in front of you. If it's not plugged in, there's nothing to worry about.

Colleagues, we're going to be continuing with our defence industrial strategy meeting today. Following that, as you are aware, we will have a 106(4) conversation, which will occur immediately following the conclusion of the second hour of today's defence industrial strategy meeting.

We have two witnesses with us for the first hour here. I would like to welcome, from Aerospace Industries Association of Canada, Mike Mueller, president and chief executive officer, and from the Canadian Association of Defence and Security Industries, Christyn Cianfarani, president and chief executive officer.

Welcome to you both.

You will have up to five minutes. We have a pretty strict timeline today, so I'll give you a little wave when you're getting close. If you have rehearsed remarks that go significantly over five minutes, I might have to give you a gentle cut-off. I'll apologize in advance for that.

Following that, there will be rounds of questions allotted based on a particular proportion of the represented political parties at the table here. If you have questions at any time, feel free to let us know.

Mr. Mueller, we'll begin with your introductory remarks for up to five minutes. The floor is yours.

[Mike Mueller, President and Chief Executive Officer, Aerospace Industries Association of Canada]

Thank you very much, Mr. Chair and committee members. Thank you for the opportunity to appear before you today.

I am here representing Canada's aerospace sector, a strategic industry and national asset with world-class companies of all sizes in every region of the country. For more than a century, aerospace has been a cornerstone of our national defence and a driver of economic growth. We have consistently delivered the capabilities and services our armed forces depend on while supporting hundreds of thousands of Canadian workers across the country.

We have been calling for an industrial strategy for a number of years. We have been encouraged to see the commitments from Prime Minister Carney and the federal government, and it's good to see all parties supporting increased defence spending. This is and needs to remain a non-partisan issue.

With Parliament now back in session, this is Canada's moment to turn commitment into action, and action will deliver long-term industrial strength and security. The choices we make now will determine whether we seize this opportunity to build up the defence industrial base and provide the capabilities our armed forces need to protect Canadians and our sovereignty. With the federal government focused on defence and significant new spending commitments—2% of GDP this year and 5% by 2035—we are on the cusp of a generational opportunity.

A strong industrial base isn't just about jobs and growth; it's also about providing our armed forces with what they need. It's about ensuring that Canada has the autonomy and capability to deter threats and defend our way of life. A strong industrial base, guided by a strong industrial strategy, is key to deterrence for our armed forces and to ensuring we are, as the government says, building the strongest economy in the G7. This is something Canada has been missing, and we cannot afford further delays.

The forthcoming defence industrial strategy must flow from Canada's national security strategy and act as a road map to inform and guide the new Defence Investment Agency and ensure that investments are made in a way that develops desired domestic capabilities and meets long-term priorities for both defence and the economy.

The recent announcement of the Defence Investment Agency is a welcome step towards clarity and accountability, but the new agency alone won't deliver the capabilities Canada's armed forces need while building our industrial base without that industrial strategy. For industry to be a true partner of the government and our armed forces and to help achieve our collective goals for defence, we need a clear demand signal that translates into commitments through a defence industrial strategy, including the capabilities and capacities we need in Canada. To quote the former NATO secretary general, “without industry, there is no defence”. Industry is ready to step up to the plate and deliver timely, relevant capabilities.

I am pleased to see the committee playing a role in this important work. If effective defence procurement is to succeed, it must embrace a culture shift and focus on outcomes that strengthen Canada's security and competitiveness. In order to achieve this, we require a system that is rooted in early, formal, ongoing engagement and collaboration among the government, CAF and industry, ensuring strong engagement that enhances readiness, strengthens the industrial base and creates high-value jobs right across this country.

The strength of Canada's defence industrial base will also depend on a strong civil sector. Canada's aerospace ecosystem is deeply integrated. Dual-use technologies, exports and innovation all flow across civil and defence lines. A strong industrial base is critical to equip, upgrade and maintain CAF requirements. That's why a broader aerospace industrial strategy to complement the defence industrial strategy is essential.

I would humbly suggest that, as one of the few countries that can design, manufacture, certify and maintain aircraft from tail to nose, aerospace be identified as a sovereign capability. The world wants what Canada already has. We need to ensure that we are leveraging our capability for the benefit of Canada and our economy. That's why AIAC continues to call for a defence industrial strategy, procurement reform, culture change and an aerospace industrial strategy. This will help secure our long-term strength and competitiveness.

Canada's aerospace sector stands ready to work with government, the CAF and Parliament to turn those commitments into action.

Thank you, Mr. Chair.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Mueller.

Ms. Cianfarani, you have up to five minutes. The floor is yours.

[Christyn Cianfarani, President and Chief Executive Officer, Canadian Association of Defence and Security Industries]

Thank you for inviting me.

The Canadian Association of Defence and Security Industries, which I lead, represents over 1,000 firms that make up Canada's defence and national security industrial base.

The government's commitment to establish a defence industrial strategy—the DIS—is the right course of action at this historic time. This is overdue given the threats to Canada's territorial sovereignty. The government's investment of over $9 billion this fiscal year to get Canada to the NATO 2% of GDP requirement, plus the commitment to achieve 3.5% within the next decade, risks being squandered without an underpinning strategy.

Canada has not had a DIS in living memory. This is one of the sharp distinctions between us and our closest allies. Both the U.K. and Australia have had defence industrial strategies for decades and are constantly adjusting them in partnership with their domestic industries to meet evolving national defence and domestic economic objectives. This initiative is a very big deal for Canada and we need to get it right.

The leading expertise on the Canadian defence industrial base and its technologies and services, as well as the motivations to incent business leaders to invest in our future, resides within companies. To date, CADSI has not seen a fulsome draft document in written format that describes the strategy's objectives, tools, instruments and frameworks, or what capabilities the strategy intends to sustain, grow and create in Canada.

We would expect to be able to review and provide feedback on a document that holds such transformational power, as is common practice in other nations. Instead, we've been asked in a non-structured way for inputs on various elements or concepts that may or may not find their way into the DIS. The simplest way to put it is this: We've seen some of the ingredients, but we haven't seen the cake.

If Canada's DIS is to deliver the outcomes the Prime Minister has articulated, it will need to be adjusted over time with recurring industry input. This is why we've recommended the establishment of a defence industry ministerial forum where executives from Canadian defence firms would meet with the Minister of National Defence and the Minister of Industry on a regular basis to discuss and resolve major impediments and map out and grow the industry to meet the needs of the government and the Canadian Armed Forces.

Any good strategy pursues clear objectives. For the DIS, those objectives must be aimed at enhancing Canadian sovereignty, independence of action and economic health. As the Prime Minister said in his speech at the University of Toronto this past June, a strong economy is foundational to national defence and security. That basic point should guide this strategy.

Another core objective must be the health, growth and resilience of the Canadian defence industrial base. More than a decade ago, a previous government had an initiative to improve economic outcomes from defence procurements. They set an explicit target to leverage defence procurement and grow the defence industrial base by over 40% over a decade—set at a time of zero growth in the defence budget. That target, which was met, is far too modest given the massive increase in defence spending and the Prime Minister's ambition to get as much as possible out of that spending for the Canadian economy. We suggest a growth target of 100% over 10 years.

One foundational issue that I know has been tricky for the people working on the DIS is the concept of sovereign capabilities. This is the idea that Canada will decide on a set of defence and national security capabilities that it will have some control over or be able to supply independently. We wouldn't need to rely on another country to deliver them in an emergency or otherwise. These could be services and technologies that we know Canadian firms are good at producing now or that we need more control over. This list will evolve over time.

To conclude, I want to be blunt about something that some find controversial. Any meaningful Canadian DIS must give procurement preference to Canadian firms that produce or could produce what the CAF and other national security agencies need. It's that simple. This means that it is integral to and informs the work of the Defence Investment Agency. The government needs the mindset and the tools to operate on that basis. If the defence industrial strategy does not embody that philosophy, I don't think it will meet the Prime Minister's ambitions.

Thank you.

[The Chair, Liberal, Ben Carr]

Wonderful. Thank you both very much for your introductory remarks.

Madam Dancho, the floor will be yours for six minutes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair.

Thank you to both of the witnesses for being here. It's excellent to have your informed expertise at this important study.

I think you were saying, actually, a lot of similar things, which is really important in crafting the recommendations we will make to government.

We all share concerns around the challenges we've seen in our armed forces, in procurement and many others, in the last decade. I know as a patriotic Canadian that hearing our allies call us freeloaders in the allied defences is very hard to hear. I think we all agree we need to change that internationally. Certainly at home, I'm very happy to see that Canadians are putting sovereignty as a top issue for them, probably for the first time since the Cold War era. This is good news on that front—that Canadians are putting that forward as a main issue.

You both mentioned the importance of sovereign capabilities. We've had some challenges in this area over the last number of years. I'll first focus on aerospace and then speak generally. In aerospace, of course, we have a large sector in Winnipeg that we're proud of and we would like to see grow.

To Mr. Mueller, what do you think it will take, from where the issues are today and the struggles we're having, to have clear sovereign capabilities on aerospace? What are the top two things you can give to this committee?

[Mike Mueller]

I would maybe bring it back one more step, which is what I mentioned in my opening remarks. I would agree that Winnipeg is a huge hub for aerospace. There are a lot of phenomenal companies there doing amazing things. When we look internationally as to how this is done, first you need that national security strategy to identify what those risks are to the country and to the CAF. Then that industrial strategy needs to flow from that and identify out some of the capabilities that are required and that respond to that threat.

One of the pieces we've been talking to government about for a while is a full index of the capabilities and capacities we have here in the country. You need that full understanding of what we have. We have a high-level understanding, but there's so much amazing capacity in this country that I don't think the government even fully recognizes. If we take a look at aerospace, I can go through the list. We're leaders in simulation, engines, maintenance, overhaul and production. We're one of the very few countries in the world that can design, build, certify and maintain an aircraft from nose to tail. It's something we need to preserve throughout that industrial strategy.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I appreciate how you said that. We do really have so much to be proud of in aerospace, and generally in the defence space. It seems like we get gummed up a little bit in procurement and the lack of strategy, which you both outlined.

To you, Ms. Cianfarani, just more generally, as an overview, do you see the issues that aerospace is experiencing as a bottleneck issue? How do the procurement problems we've seen for a while in government play into that, and how do we solve it, in two minutes, if you could?

[Christyn Cianfarani]

I'll do my best.

First and foremost, we actually have a lot of really good sovereign capability already residing within Canada. That's one of the fundamental problems—that we think we don't have as much as we really do.

I would draw your attention to the fact that we study this sector every couple of years. There is a very detailed Statistics Canada and Department of Industry, or ISED, study that goes into the capabilities we have in the country, right down to microdata, which may or may not be available to you but is certainly available to the departments.

It is foundational, since procurement is the biggest lever, that we mindfully decide to procure sovereign capability through our procurement process. I would argue that one of the challenges we have is that our procurement process wants to, by nature, compete many things. We don't often use tools we have available to us, which are called, generally speaking, national security exceptions or “not in the public interest”, where you can very expeditiously procure a sovereign capability should you want to.

Those would be a couple of things: We need to inform ourselves on what's already within the country, and data exists on that. Then, secondly, we need to prepare ourselves to procure these things without eroding the base we already have.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

It sounds like you're both in agreement that we have so much expertise, so much to be proud of. Of course, on the other side, we have incredible armed forces members. We have everything we need. It just sounds like we don't have this strategy where we're all rowing in the same direction. The government may not even fully recognize the capabilities that we have already.

To summarize, is that what you're both saying—that we need to recognize what we have and use it strategically, to put it simply?

[Mike Mueller]

The only thing I would add is to find out what the threat is and draw the linkages between the threat and the capabilities that are required here in the country. I think we have to be realistic. We're not going to do everything—we're a country of 40 million people—but we can sure do a lot. We have the capabilities and capacities here, and we need to double down to continue to grow that.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

We basically need to lean into what we're already doing really well, which is a lot of things, from what you're both saying. It's just not organized in the way we could be doing it.

I hope I'm saying that... Okay, yes.

[Mike Mueller]

Perhaps there's something we're not doing that we need to do, and we need to have those discussions.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Would you agree?

[Christyn Cianfarani]

Yes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I think that's all the time I have.

Thank you.

[The Chair, Liberal, Ben Carr]

Thanks very much, Madam Dancho.

Madam O'Rourke, the floor is yours for six minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you very much, Chair Carr.

Thank you very much for being here.

We heard a few weeks ago from an associate deputy minister that we don't have time for silos because we are not in peacetime, and it was quite jarring to hear that. There is an urgency to get this defence industrial strategy right both because of the global context and because of the need to expand our industrial base and supercharge our economy. Can you help me understand what the trade-off is?

Ms. Cianfarani, you fleshed out that we should know all of these things and we should basically have an organization that oversees it. What's the trade-off between moving quickly and getting all those ducks in a row? How do we build and sail at the same time? That is my question.

[Christyn Cianfarani]

First, I don't know whether the ADM—I assume it was Hadwen—expressed that they have been working on the defence industrial strategy for almost 12 months now. I would argue the sense of urgency has been happening for almost over a year and, I would assume, given there have been many interventions to ask for information, they would be in a position where they could at least launch some elements of a defence industrial strategy, whether it was fully baked or not, at this particular point in time.

I also think we have procurements that are already within pipelines for which we have companies that are sovereign and are supplying goods and services to the Department of National Defence or that can be put under contract in a very quick period of time. A good example would be that we have companies that are already supplying things, whether they be ships or munitions, that are generally recognized as sovereign capabilities. I don't think we need new contract vehicles to be able to turn on the juice and start preparing ourselves for expediting contracts through vehicles that are already there.

That's one way you could start, by quick-hitting many procurements that are in the pipeline and then looking to the future—10 years, 20 years—as to how you would sustain this pipeline for the volume of spending that we're going to get, which you have to keep cueing up because the volume is going to far surpass anything we've seen in recent history.

[Dominique O'Rourke, Liberal, Guelph, ON]

Mr. Mueller, I'll put the same question to you.

[Mike Mueller]

I have a couple of comments on the urgency required.

Absolutely, we need to get on with this. One of the things that we've really been calling for, for a long time, is political leadership. We didn't see that under the previous government. Under this government, we see that political leadership, and I think that is sending the signal throughout the bureaucracy that this is something that needs to happen, so that's very much appreciated by all parties across the spectrum on this. We need to get moving; we need to do it.

What Christyn said is absolutely correct. There are certain ones in the pipeline and we need to move on them, but there has to be that cultural shift with engaging early and often with industry and making sure industry has a voice at the table as these policies are being developed. There's been a flurry of activity, in fairness to the government, throughout the summer on this, but we need formalized input into these types of strategies.

Then, when the strategy is released, ongoing revision will be needed. The world is changing at an increasingly rapid pace. Innovation technology is also changing at a rapid pace, and that strategy has to evolve and keep up with that. You have to bring industry into that conversation.

[Dominique O'Rourke, Liberal, Guelph, ON]

Okay.

We are going to have a budget on November 4, which is going to fund these essential initiatives. I'm wondering whether you want to speculate on what the cost of inaction on this file might be. How might an increased reliance on foreign supply, or missed innovation opportunities or an immature industrial supply chain, impact our opportunities as a country and our development in the coming years? Why is there the urgency to act and fund it now, for this moment, and also in the medium and longer term?

[The Chair, Liberal, Ben Carr]

You have 60 seconds for a collective response.

[Mike Mueller]

In aerospace in particular, there are very long lead times for product development pieces that are happening, so we need the clarity and the certainty as soon as possible. When companies are evaluating investment decisions across the board, that certainty is absolutely required. The cost of not doing it is the loss in creating high-paying, good-paying jobs right across the country and in developing that capacity and capability from a domestic perspective.

[Christyn Cianfarani]

I think the cost of not doing it is a bit different from Mike's answer. I think we have been signalling, on the world stage, that we are going to be prepared to meet our 2% of GDP commitment to the rest of the world, and failure to do so would result in serious reputational damage to Canada. We're already being looked at as a partner that doesn't, perhaps, put in its fair share.