National Defence Committee on May 27th, 2026

[The Chair, Liberal, Charles Sousa]

I call this meeting to order.

Welcome to meeting number 37 of the House of Commons Standing Committee on National Defence.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, February 23, 2026, the committee is meeting to study the impact of the defence industrial strategy.

Today's meeting is taking place in a hybrid format.

Before we continue, I'll ask participants to consult the guidelines on the table. These measures are in place to help prevent audio and feedback incidents, as well as to protect the health and safety of our interpreters.

As a reminder to the witnesses and the members, please wait until I recognize you before speaking. If you wish to speak, please raise your hand.

I'd like to remind witnesses and committee members that you may ask questions in either French or English. If you need interpretation, please take a moment now to prepare your earpiece and select the listening channel you need in advance in order to take full advantage of the time allotted for questions and answers.

All comments should be addressed through the chair.

I'd like to welcome our witnesses now.

From Aéro Montréal, we have Mélanie Lussier, president and chief executive officer. From the Aerospace Industries Association of Canada, we have Mike Mueller, president and chief executive officer. From the Alliance of Canadian Defence Companies, we have Paul Ziadé, who is the co-chair. From U15 Canada, we have Robert Asselin, chief executive officer.

Folks, welcome. I appreciate your all being here.

Ms. Lussier, why don't we begin with you? You have up to five minutes.

[Mélanie Lussier, President and Chief Executive Officer, Aéro Montréal]

Thank you very much, Mr. Chair.

I thank the members of the committee for the invitation.

What exactly is Aéro Montréal? It is a network of 290 companies and organizations in the aerospace sector in Quebec with 43,000 employees—or, as I like to say, 43,000 aerospace enthusiasts.

The cluster has been in existence for 20 years, and we're the voice of the aerospace industry for Quebec. This industry generates $22.8 billion in sales for the province alone. Two-thirds of the country's aerospace research and development happens in Quebec, and 93% of the aircraft Canada exports is shipped out from the province.

We're here to talk about the defence industrial strategy, and I want to tell you that the Quebec aerospace industry has really welcomed this new strategy, which is a clear step forward for Canada.

Unfortunately, for too long, it has been easier for some Quebec companies to sell their products to foreign armed forces than to the Canadian Armed Forces. The purpose of this new strategy is to work more effectively with local industry by anticipating needs early on. This is really good news for the province. However, we'll be monitoring the implementation very closely to make sure that what's being said is being done.

As such, we're also eagerly looking forward to seeing the new defence investment agency in action.

Recognizing that the aerospace industry is an important contributor to the development of our defence industry is a major vote of confidence. Our industry will play a key role in many of the sovereign capabilities identified in the strategy, which points to a bright future for our ecosystem, one that will benefit the entire Canadian economy.

Quebec has four of the 10 capabilities identified in the strategy: aerospace, space, training and simulation, and uncrewed and autonomous systems.

Quebec's aerospace industry is phenomenally successful, which is surprising given that we are fighting an unfair battle against the rest of the world, which has been using dual-use technologies for many years.

Everywhere else, industries have benefited from lucrative local military contracts, enabling them to develop innovative products with government support, adapt them and transfer them to the civilian sector.

In Canada, companies have sometimes had to do the opposite over the years. They've had to develop civilian products at their own expense and then adapt civilian products to military use. Everyone is very happy and excited about the colossal amounts of money earmarked for the industry.

Despite the challenge I just mentioned, our industry's success is a real testament to our extraordinary resilience and our capacity for innovation, even when conditions have been a little less favourable in the past.

Today, I have a really big ask for the committee. I've said this before, so it won't come as a surprise to anyone. In Quebec, we think that Canada should build on the strengths that are already in place across the country, not just in Quebec. We already have major hubs. We already have existing sovereign capabilities. Let's make sure that our future decisions really support those existing strengths.

As I was saying, we think that the implementation of this strategy should build on existing strengths rather than try to create new hubs from scratch across the country. We would be better off expanding existing clusters and creating more value in regions that already have well-established sovereign capabilities.

In this regard, a strategy specific to aerospace, similar to what Quebec has been doing for the past decade, would also be a huge asset in helping the ecosystem navigate the coming years. We need a lot more information about the future aerospace strategy.

In closing, outside of aerospace, Quebec has created the Coalition québécoise pour la défense et la sécurité, a coalition of people in the aerospace and shipbuilding industries, federations of chambers of commerce and the business association Manufacturiers et Exportateurs du Québec.

The coalition has come up with five recommendations that have achieved consensus across the province. Some of those recommendations are already covered in the defence industrial strategy.

We want to focus on areas in which we excel. The core capabilities identified by the federal government largely align with these areas, which include aerospace and shipbuilding, naturally.

We recommend reforming the defence procurement strategy to maximize benefits for the country. The “build-partner-buy” model we've heard about is very much in line with this approach. However, once again, the way these principles are implemented will be absolutely crucial. The work really has to happen early on with local suppliers during needs assessment so as to minimize the “buy” component and maximize the “build” component.

There are other measures in our recommendations, which I will be happy to discuss with you later during the question period.

Thank you.

[The Chair, Liberal, Charles Sousa]

Thank you.

Thank you for your presentation.

Mr. Mueller, we'll go over to you for five minutes, sir.

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

Thank you, Mr. Chair and members of the committee, for the opportunity to appear today.

I'm here on behalf of Canada's aerospace industry, including the Quebec industry, which is a major engine of our country's economy and national defence. This industry supports more than 225,000 Canadians and their families while contributing more than $34 billion annually to Canada's GDP.

The release of Canada's defence industrial strategy was an important and welcome milestone for our industry. It's one that AIAC has long been calling for. This is a very important policy announcement, and I want to thank each and every one of you, and your colleagues from all political parties, for your support and encouragement for this very important document.

The strategy provides a strong foundation and road map for strengthening Canada's defence industrial base, and it appropriately recognizes aerospace as a sovereign capability and strategic national asset. As Prime Minister Mark Carney recently stated, aerospace is among the most important industries in Canada, if not the most important. We couldn't agree more. Canada's aerospace industry earned this reputation through decades of ingenuity, innovation, investment and political leadership that recognized the importance of this strategic sector.

Today, Canada remains one of a select few countries in the world with the ability to design, build, certify and sustain complex aerospace systems and platforms. These capabilities are foundational to the readiness of the Canadian Armed Forces and to our commitments to NORAD, NATO and our allied operations. Canada's aerospace industry already supports defence platforms, sustainment training, simulation and advanced technologies that are critical to Canada's security and global competitiveness.

Canada's civil and defence aerospace sectors are deeply interconnected, relying on a shared workforce, supply chains, industrial base and innovation ecosystems. One cannot thrive without the other. That interconnectedness also makes aerospace a uniquely strategic dual-use sector. Here, investments in civil aviation, defence and space reinforce one another while generating broader economic, technological and security benefits for Canada.

If the government is serious about delivering on the strategy—and we feel it is—as well as strengthening Canada's industrial base and translating commitments into capability for Canadians and our allies, the following priorities, in our opinion, should be addressed through a renewed and enhanced relationship between government and industry. We're very pleased to see pillar one of the strategy reiterate that.

First is procurement reform and speed. We support the establishment of a stand-alone ministry with full responsibility and dedicated staff to ensure faster, more predictable procurement processes. The establishment of the Defence Investment Agency is an important step and should serve as a key pillar for executing the objectives laid out in the strategy. The agency has the opportunity to champion a more agile, responsive and outcome-driven approach. For far too long, defence procurement discussions have focused primarily on being fair, open and transparent, without an equal emphasis on outcomes. In today's environment, procurement systems must also be efficient, effective and timely. Timely delivery is itself a strategic advantage and can help deter potential threats.

Second is long-term demand signals and industrial certainty. Companies invest, scale and retain talent when governments provide stable long-term procurement visibility and policy certainty. That includes creating opportunities to build in Canada where domestic capabilities already exist and ensuring that procurement planning supports our standards and long-term industrial development objectives.

Finally, there's supporting innovation and industrial scale-up. Canada has a skilled workforce, advanced technologies and the industrial expertise required to compete globally. The federal government needs to continue to work with provincial governments on a national skills program to ensure alignment, including from universities and colleges, on industry objectives and needs. Government also has an important role to play as a first buyer, helping de-risk, validate and scale Canadian solutions while providing innovative companies with the credibility needed to compete in global markets.

Mr. Chair and members of the committee, the strategy represents a strong and important foundation, but strategy alone will not determine success—execution will. The opportunity now is to move quickly from strategy to implementation, converting policy commitments into real operational readiness, industrial strength and economic growth for Canada.

Canada's aerospace industry—from the very small to the large—stands ready to partner with the government and the Canadian Armed Forces to help deliver these objectives.

Maybe I'll make a final offer. We're heading into the summer season, and we'd love to have each of you tour one of our facilities. We're located right across the country.

Thank you, and I look forward to the discussion.

[The Chair, Liberal, Charles Sousa]

Thank you, Mr. Mueller.

Mr. Asselin, I'll turn the floor over to you for five minutes, sir.

[Robert Asselin, Chief Executive Officer, U15 Canada]

Thank you, Mr. Chair.

Canada's defence industrial strategy arrives at a consequential moment. The international environment that shaped decades of Canadian prosperity and security has changed profoundly. Great power competition has returned. Trade, technology and talent are increasingly being used as instruments of strategic leverage. In this environment, Canada cannot assume that the capabilities we need will always be available from others when we need them and on terms that serve our national interests.

That is why the defence industrial strategy matters. It recognizes that defence policy, industrial policy, innovation policy and economic security can no longer be treated as separate files. If Canada is serious about sovereignty, resilience and operational readiness, we must build more of the capabilities that matter here at home.

The central question is this: Will Canada simply spend more on defence, or will we use this moment to build lasting technological and industrial capacity? Our view is that the answer must be the latter.

Sovereign capabilities are not built on spending alone. They are built on the architecture that enables partnerships. A truly sovereign capability requires depth across an entire value chain—basic research, applied science, engineering, manufacturing and the highly qualified talent to sustain it. Canada has real strengths to build on.

Our leading research universities are among the most important assets in Canada's innovation system. They generate the ideas, talent, technologies and partnerships that underpin long-term competitiveness and sovereign capability. U15 universities conduct nearly $9 billion in research each year. They are also deeply connected to industry. The private sector invests roughly $900 million per year in research at U15 universities.

Canada's challenge is not the absence of research strength; it is the weakness of the interfaces that connect that strength to defence outcomes. Collaboration among defence, universities and industry happens, but it is too often small in scale, episodic and bespoke. We lack the standing mechanisms that would allow Canada to move from research to testing, validation, demonstration, procurement and deployment in a predictable way.

The data are clear. Canada allocates less than 5% of federal R and D spending to defence, compared with an OECD average of roughly 21%. In the U.S., the figure is above 50%. Even within Canada's modest defence R and D effort, only about $40 million annually flows through higher-education institutions, less than 1% of federal support for university research. In the U.S., by contrast, roughly 15% of federal academic R and D expenditures are defence-funded. This is a structural gap. It means that Canada is not yet making full use of one of its strongest national assets: its research enterprise. That matters because early scientific leadership is a predictor of downstream technological advantage.

Canada has built world-class research strengths in areas directly relevant to dual-use innovation. For example, since 2015, over 11,000 researchers at U15 universities have received $188 million in federal funding for research into uncrewed and autonomous underwater systems, working with over 350 partner organizations.

This is also an economic issue. Defence industries are highly research-and-development intensive, but Canada has not been able to convert that intensity into sufficient domestic innovation capacity. Since 2014, Canadian defence industry revenues have increased by roughly 55%, while investment in research and development has grown by only 11%. This is not the trajectory of a country building the technological depth required for a more dangerous world.

Our allies have learned this lesson. The United States, the United Kingdom, Australia and France have all built mechanisms that connect universities, industry and defence missions. Their models differ, but the lesson is consistent: Defence innovation depends on standing interfaces, mission-driven research mandates and clear pathways from research to deployment.

The defence industrial strategy paves the way for the implementation of such mechanisms. The real test now will be our ability to move from principles to an operational model.

Thank you.

[The Chair, Liberal, Charles Sousa]

Thank you.

Paul Ziadé, it's over to you for five minutes, sir.

[Paul Ziadé, Co-Chair, Alliance of Canadian Defence Companies]

Thank you.

Mr. Chair, vice-chairs and honourable members of the committee, thank you for the invitation to appear before you today.

My name is Paul Ziadé. I am a former professor of mechanical engineering at the University of Calgary, as well as a co-founder and CEO of Calgary-based North Vector Dynamics. We are proud to be building Canada's first and only full-spectrum air defence company that is owned and controlled in Canada. We are currently focusing on low-cost, precision-guided counter-drone missiles.

I am testifying today in my capacity as co-chair of the recently launched Alliance of Canadian Defence Companies, or ACDC. The ACDC network has over 200 members in advanced manufacturing, artificial intelligence, sensors, cybersecurity and the space sector, giving the ACDC a cross-cutting perspective on Canada's defence industrial base.

A month prior to the launch of ACDC, the Prime Minister argued that sovereignty depends on Canada’s ability to withstand pressure and build strategic autonomy. That is also the logic of the defence industrial strategy. The strategy makes it clear that we are no longer content to be the passive consumer of other nations' defence systems.

This is not only a government position. It reflects a broader public expectation. ACDC recently commissioned a national poll, which found that 82% of Canadians believe Canada should defend itself without relying too heavily on other countries. It also found that 74% want Canadian-owned companies to supply Canada’s defence equipment and technology, compared with less than half who say the same of foreign companies operating in Canada. Among seniors, the preference for Canadian-owned companies reaches 90%.

ACDC's members agree with Canadians: We strongly support the shift from reliance to resilience and the vision of moving from buy to partner to build. As Canadian-owned builders, ACDC's members believe the definition of a Canadian bidder under the new buy Canadian policy must be tightened. There is a fundamental difference between Canadian assembly of foreign-controlled systems and Canadian-owned firms that develop and own proprietary Canadian intellectual property.

For that reason, I would propose to you that the government integrate sovereign alternative assessments into procurement decisions. When perceived capability gaps exist, procurement authorities should explicitly consider the long-term strategic value of emerging Canadian-owned and controlled vendors. We also suggest a sovereignty fast track within the Defence Investment Agency, or DIA, that would be a dedicated stream to acquire defence technologies that are ready for fielding or close to operational validation.

That brings me to the second issue: Canada must become its own best customer. For too long, Canadian businesses have had to explain to allied customers and governments that, yes, DND helped develop our products, but no, Canada is not first in line to buy it. We must move faster if Canada wants to see homegrown firms scale into the champions that DIS envisions. Now is the time to move from words on a page to orders on the books. The DIS targets 70% domestic acquisitions and more than $5.1 billion in annual revenue growth for Canadian SMEs. Those targets are not achievable without procurement reform that puts Canadian companies first.

ACDC recommends three practical measures. First, allow SMEs to benefit from expedited procurement by removing or significantly lowering the current $100-million threshold for DIA-led procurements. Second, ensure that Canadian-owned and controlled companies, including disruptive and innovative SMEs, are designated as strategic partners for sovereign capability areas. A strategic partner framework that designates foreign-controlled firms as sovereign capability development partners undermines sovereignty. Third, implement sovereign production guarantees for strategic SMEs. This can give companies the demand certainty required to secure financing and build domestic manufacturing capacity.

Canada has the talent to defend itself on its own terms. What it needs now is a procurement pathway that transforms Canadian-developed defence technology into Canadian-fielded operational capabilities. That's what we are asking you to support today.

Thank you, and I'm happy to answer your questions.

[The Chair, Liberal, Charles Sousa]

Thank you all.

We are going to our first round of questions. We're going to start with Mr. Kibble for six minutes.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Thank you Mr. Chair. My questions are through you.

Thank you to our witnesses for being here and for supporting Canada's defence industry and, more importantly, those in uniform.

Mr. Chair, the defence industrial strategy is a 2030-onward or even 2035-onward instrument, but the operational reality and requirements are right now.

Canadian Armed Forces members in the national capital region were recently directed, on May 13, to return field kit because of critical equipment shortages. There are 2,000 Canadians in Latvia leading a brigade, and Russia threatened Latvia at the Security Council last Tuesday.

The U.S. paused the Permanent Joint Board on Defence last week, with the Under Secretary of War saying, “A strong Canada that prioritizes hard power over rhetoric benefits us all.” The Canadian Press reported that the Pentagon has given Ottawa a classified paper “laying out priorities for a collective North American defence pact” but that, according to a senior U.S. defence official, “Ottawa did not deliver a ‘credible’ response.” They cited the F-35 delays as another major irritant.

The point I'm trying to make is that the U.S. defence industrial base needs allied production capacity that Canada can credibly provide, including 155-millimetre shells, propellant, energetics, missile subcomponents and counterdrone technology.

I'm going to start with a soft question for Mr. Ziadé, just to warm him up for our panel.

Specifically looking at the immediate operational needs of Canada, I understand that Ukraine and our allies, and in fact our own personnel over there, are all eager to see modern battlefield disruptive munitions. I'll refer to North Vector's hypersonic or drone intercept missiles. They'd like to see these in their inventories and, perhaps more importantly, for our Canadian men and women.

As a small business from western Canada, what do you need to see from this government to quickly build, deploy and train this sovereign capability for Europe and for this critical need right now?

[Paul Ziadé]

Thank you for the question.

I'm going to answer the question as the CEO of North Vector Dynamics, but I believe that my views reflect those of the ACDC membership as well.

Fundamentally, we want to have a very close relationship with our men and women in uniform. A lot of these new defence companies that are popping up across the globe, not only in the United States but in Europe, have this concept of the forward-deployed engineer. It's having engineers from these SMEs, from these defence companies, embedded with our war fighters, developing the capability alongside them by taking their feedback and then iterating very quickly—in a matter of days and weeks instead of years.

We are definitely hearing very loudly from our membership that they are ready to work with the CAF.

In addition, I think any SME in this space will say that we need very strong signals from the government. These signals include contracts—fast contracts. The most efficient use of taxpayer money is contracts, not grants, because we, as disruptive SMEs, then take these relatively small contracts and multiply them by 10 and even 20 in the private markets. I can tell you right now that a lot of private capital wants to come in and support this defence renaissance in Canada.

We need to see strong signals and strong integration with our Canadian Armed Forces.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Thank you very much.

Mr. Mueller, what partnership infrastructure does not exist today that needs to be developed in the next 12 to 24 months to bridge between current operational reality and the long-term aspirations of the Defence Investment Agency? Quickly, could you give me a couple of specific instruments?

[Mike Mueller]

Thank you for the question.

I'm very encouraged by the defence industrial strategy and the Defence Investment Agency being stood up. Some of the work that still needs to be done by the government to give industry that long-term credibility is defining out the sovereign capabilities very specifically. We're very pleased to see aerospace as one of the listed sovereign capabilities.

Industrial mapping tied to the procurement goes along with that to ensure that we are supporting the industry in all the different regions of the country. We've had a transactional approach to procurement for the last 10 or so years, so it is absolutely required to get in place that strategy and then have the pieces flow from that, which will give the certainty to the industry.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Thank you very much.

Ms. Lussier, would you agree? Or do you wish to add a comment to that?

[Mélanie Lussier]

Yes, absolutely, and I want to add to what Mr. Ziadé said.

In representing a lot of SMEs in Quebec—230 SMEs—there's always the chicken or the egg effect. Do I get my first contract and then get my certification? Do I get the certification, which is very costly and very long, and then get the contract? We need, in both cases, either to secure the contract in advance or to help the SME get the certification that it needs to play in that new field. That would be my first answer.

Then, on the translation part, on being a civilian talking to the army, talking to the people in the forces, you need experts to do that. There are a lot of people retiring from the army right now. We need to get these people to work in the SMEs, but they will need support to access this talent. That would be my two cents on the SMEs especially.

[The Chair, Liberal, Charles Sousa]

Thank you.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Do I have some time left?

[The Chair, Liberal, Charles Sousa]

No, Mr. Kibble.

[Jeff Kibble, Conservative, Cowichan—Malahat—Langford, BC]

Okay. Thank you.

[The Chair, Liberal, Charles Sousa]

Mr. Watchorn, it's over to you for six minutes.

[Tim Watchorn, Liberal, Les Pays-d'en-Haut, QC]

Thank you, Mr. Chair.

I would like to thank the witnesses for being here today.

I have had the pleasure of speaking with Ms. Lussier and Mr. Mueller at several events where the aerospace sector was discussed. This will come as no surprise to any of you: I would like to talk about Mirabel.

The Aéro Montréal aerospace industrial cluster has three hubs: Saint-Hubert, Montreal and Mirabel. An event for small and medium-sized businesses was specifically designed to guide them regarding future military spending and to explore how they could integrate into the supply chain.

I'd like you to tell us how companies should get involved in the supply chain. We're here to support them.

[Mélanie Lussier]

I'll repeat what I said before: We need to know how those huge needs will be translated. Mr. Mueller talked about this earlier. We need to ensure that sovereign capabilities are truly in line with concrete demands and concrete needs. Small businesses need to decipher these signals a bit, and they need help doing that. They need predictability. As we know, that means a lot of investment, and it weighs heavily on their balance sheets and their finances.

The government has to be able to give businesses predictability. What we hear from small and medium-sized businesses is that they don't necessarily want things like low-interest loans; they want contracts. As we heard earlier, they want access to that first contract.

You mentioned Mirabel. It's worth noting that this is one of the key hubs of the innovation zone. It's important to be able to integrate innovation into research and development, together with Defence Research and Development Canada. From the word go, the focus has to be on developing intellectual property here—even within small businesses—and securing long-term contracts.

[Tim Watchorn, Liberal, Les Pays-d'en-Haut, QC]

Mr. Mueller, I have the same question for you.

[Mike Mueller]

To complement what my colleague said, there's a lot of opportunity right now. I'm very encouraged by the Prime Minister's focus on defence. The defence industrial strategy and the announcements today on some of the policy pieces are very encouraging.

We're encouraging companies to make sure they understand the defence supply chain. Money isn't going to be falling from everywhere. Companies really need to identify and take a look at the strategy. More work needs to be done on the strategy to identify where things are going so that companies can take a look at that.

There are high barriers to the defence side of things. You have cybersecurity pieces: AS 9100 and security clearances that have to be in place to be in this. It's very important for government to come alongside those companies, especially the small and medium-sized companies right across the country. Contracts are important, but a lot of these pieces need to be in place in order for companies to contribute to the broader defence play that's happening right now.

[Tim Watchorn, Liberal, Les Pays-d'en-Haut, QC]

Thank you.

Personally, I would argue that Canada's industrial strategy is already operating in Mirabel. I'd like to tell you about two or three contracts we've already announced.

The first is the CC‑330 Husky maintenance contract. It's worth $1.5 billion for L3Harris and Avianor, a Drakkar affiliate. Another contract involves upgrading Griffon helicopters by Bell Textron Canada. That's another great announcement we made. Lastly, this morning, we made an announcement about the GlobalEye aircraft, which will be ordered in the near future. That one isn't in Mirabel, but I think it's important to mention it.

When we meet with these companies, they tell us about their biggest challenge: the workforce. Can you tell us how we can help businesses? How will they ensure that they have the workforce needed to fulfill these contracts in the future?