National Defence Committee on June 1st, 2026

[Bachar Elzein]

Thank you for the question.

Competition we see as a positive, because it also helps to create an ecosystem. I will talk specifically about launch.

There are three companies that have received funding from IDEaS DND for the launch the north initiative. Multiple companies have applied. If a single company ends up being a champion but that company goes under, we lose that capability. Having competition means that we maintain that capability.

As a country, funding those capabilities means that you have to ensure they are also resilient and sustainable. I will push that even further: That will just make us better companies. It will make any of us three.... I'm happy to have Rahul and Hugh as friendly competitors. We talk a lot and we work together, but also, we all seek the same thing. We want to have that capability developed here in the country. I'll push further: I'd rather have any of us succeed than have our satellites launched on other rockets.

I'll push even further: We do not want satellite companies to launch their satellites on Canadian rockets just because we're Canadian. We want them to launch because we offer the best option. We're already in competition with the international market. We're already competing with SpaceX and Rocket Lab, and that's okay. That's really good.

Having that internal competition in the country means not only that the capability can be maintained and sustained, but that we can also offer the best offering for our commercial partners and for the government.

[James Bezan, Conservative, Selkirk—Interlake—Eastman, MB]

Thank you.

Mr. Kolias, you used to work for SpaceX, if I remember correctly. You talked about talent drain and brain drain. You went to the States, but you came home. If you want to, can you talk from that standpoint and about the importance of having the capacity within Canada?

You talked about the backlog in the international market: Over 82% is controlled by SpaceX right now. What's the actual ability for us to get our rockets in space and take some of that business away from SpaceX and others?

[The Chair, Liberal, Charles Sousa]

If I could, I'll suggest, Hugh, that you answer that question through Mr. Watchorn.

It's over to you, sir.

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

Well, I don't agree to give my time to Mr. Bezan, but anyway....

[Voices]

Oh, oh!

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

Go ahead, Mr. Kolias.

[Hugh Kolias]

Thank you for the question, Mr. Chair.

Just as a quick clarifier, it was my co-founder who came from SpaceX, as well as a number of other engineers.

The exciting opportunity for Canada is that SpaceX and Blue Origin are going to be preoccupied with their own demand: Starlink and data centres in space, as well as the lunar missions that were recently announced through NASA. There's a large opportunity for really any country to come in and replace Falcon 9. That's the global opportunity we see. Canada is right at the precipice of beginning that journey, and I think that's where we've been able to bring in a ton of engineers and experience to make this happen.

We're really focused on being the most un-innovative launch company, at least to start. That's because getting to space is a very difficult challenge. Even if you procure the IP and you purchase the plans, it's really important that you bring in the experience of folks who have seen it and done it before, and that's a key part to our strategy.

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

Thank you, Mr. Chair.

It's such a great panel today, with all these innovating Canadian companies. These industry leaders and new companies are really going to take us to space. I have a lot of confidence in you for that.

I'd like to start with one of the pillars of the strategy, which is to change the paradigm. National Defence used to buy 75% of our military equipment from the United States. The strategy calls for a change in that regard with 70% of Canadian content.

Mr. Pyun, I'd like to know how you're going to operationalize your approach to achieve Canadian content in the contracts you're going to get.

[Pierre Seïn Pyun]

Thank you for the question.

To start with, I would say supply chains are very integrated in the aerospace sector. We don't necessarily see these objectives as mutually exclusive. As we diversify our partnerships, we can continue to strengthen the very important partnerships we have, for example, with Americans. We also have obligations within NORAD and NATO, regarding Arctic sovereignty, and for the defence of the north or North America.

Our supply chains are already highly integrated with the U.S. and Mexico, to a certain extent, and with very large suppliers elsewhere, such as in Europe. It's not a zero-sum game for us. This is an opportunity to reach multiple goals simultaneously. I'm thinking about what happened a few years ago in the context of the Canadian multi-mission aircraft project.

We have turned the page on this. We're looking into the future. What has changed is this focus on sovereign capabilities. Of course, for a country like Canada, we cannot be a jack of all trades. We'll have to be very focused on areas where Canada has competitive strengths, comparative advantages and where we want to focus to develop sovereign capabilities. That requires an earlier engagement with the industry even pre-RFP.

It's through that lens that I see the changes that have occurred in the last few years and the opportunities for Canada. There are many areas where we'll need to keep partnering, and we'll also need to keep buying from other countries.

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

Ms. Hébert, I'm going to continue with you on the same topic.

We're fortunate in Mirabel to have a beautiful ecosystem, companies integrated into the aerospace industry. We try to integrate as many Quebec businesses as possible. I'm from near Mirabel, and we advocate for these companies.

How do you use the defence industrial strategy to go after these small businesses and bring them into your value chain?

[France Hébert]

Thank you for the question.

Our value chain already has over 400 companies, many of which come from the aerospace sector in Quebec.

Ninety per cent of CAE's revenue comes from exports. The big upside of that is it gives us a link, a global market. What we've done traditionally, and what we'll continue to do, is bring our suppliers along with us, the whole ecosystem, as we grow. Sometimes, SMEs also become exporters, because they're part of our ecosystem at that point. Essentially, with the defence industrial strategy, we'll continue to do that and more.

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

That's excellent.

The companies here today represent exactly what we want to do with the defence industrial strategy, especially those looking at space. I'm sure my colleagues will tell you a little more about that.

Mr. Elzein, I'm sure my colleague from Longueuil will ask you questions about your company.

I'd like to focus on the three companies that want to go into space.

Mr. Kolias, tell us how the competition is going. Between the three of you, how will you make it to space? How will you operationalize that?

[Hugh Kolias]

As Bachar was mentioning, competition is always welcomed. At some point, we as a group will need to find a way to work together, not just as a group but also with the industry here at this table and those who are not. We're all taking very different approaches. Ours is medium-lift, a much larger capable vehicle for deploying Telesat Lightspeed into orbit. We view this as being of very strategic importance for the country as well as from a commercial business model perspective. We look forward to seeing how all the teams progress, and we'll find a way to get into orbit one way or another.

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

Thank you, Mr. Chair.

[The Chair, Liberal, Charles Sousa]

Thank you, Mr. Watchorn.

Christine Normandin, welcome back to the committee.

You have six minutes.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you very much, Mr. Chair. I'm happy to be back at the Standing Committee on National Defence.

Thank you to the witnesses for joining us. We do have a very nice panel.

Every time I ask a question, regardless of who it's directed at, I invite the other witnesses not to hesitate to raise their hand if they wish to add something. All the witnesses are interesting.

My first question relates to one of your comments, Mr. Greenley. You stressed the importance of properly laying out the needs of the Canadian Armed Forces so the industry can keep up, and also chart the links we have with allies. I'd like to hear your thoughts on that.

Regarding the defence industrial strategy, isn't that putting the cart before the horse, in a way? We don't have an up-to-date defence policy that makes it possible to fully understand the armed forces' needs and the operational needs in relation to our allies.

It would have been interesting to have this document before we had the defence industrial strategy, no?

[Mike Greenley]

I don't think we needed it before we had the DIS. What I was referring to was the importance of keeping our heads up about what capabilities we need on the different horizons into the future. Some of the excuses that will be used to not buy from Canadian industry will be for interoperability or for speed. There is no excuse for interoperability. We can have sovereign interoperability. There's a requirement in the systems that are delivered by Canadian industry. Also, if we're looking ahead, there should be no excuse for speed.

Today, a lot of the activities that are going on. To answer Mr. Bezan's question, we have a strategic agreement. We signed it in November with the Defence Investment Agency. It's absolutely working to provide satellites for enhanced polar communications in the Arctic. We are moving with speed. This procurement is going much faster than anything I've seen in 35 years. It is excellent, and it works for Canadian industry. There are examples of where this is really working.

To do that for the next generation of capabilities, we have to be looking ahead because in some cases.... Maybe mine's working today because I have 100% of the capability necessary to deliver. Maybe there's a Canadian industry today that's at 60% or 70% capability to deliver. If we're looking ahead on the road map of what we're going to buy next, then those types of firms can be getting seed money to be able to complete the operational building of their systems and have them ready for procurements when they come.

If we're committed to Canadian industry and are looking ahead at the next things we need, we can make sure that we're funding and seeding industry to be ready for the next things we need. Then there's no excuse not to go to Canadian industry to meet the need that Tim was talking about in terms of making sure that 70% of those dollars are being applied to Canadian firms.

[Christine Normandin, Bloc, Saint-Jean, QC]

Thank you very much.

I'll move on to my next question. I know everyone will be watching out for their own interest, because this is a very aerospace-focused panel.

This sector is part of the sovereign capabilities highlighted in Canada's defence industrial strategy. However, the list of sovereign capabilities is very long. Sometimes, when you have a lot of priorities, it can seem like you don't have any real priorities.

How can we make sure the aerospace sector is clearly seen as a priority among priorities? Could an aerospace policy, for example, be something to renew in the short, medium or long term?

[Pierre Seïn Pyun]

I can comment on that.

I want to go back to your question about mapping. I think it's also important to do a better job at mapping the skills that exist in Canada, particularly those in the aerospace sector. As I mentioned, there are very few countries that have the capacity Canada has. Over 220,000 people work in this sector in Canada, including 90,000 direct jobs. It's also a much more intensive sector on average in terms of research and development compared to other manufacturing sectors. On average, it's 2.6, so almost 3 times more intensive in terms of R and D.

It'll be important to go beyond mapping to very clearly identify the areas in which Canada really has a comparative advantage and the gaps that exist and that could be filled by investing more. I think those are the next steps in implementing Canada's defence industrial strategy, and it's very encouraging. We had to start somewhere, and it's good that we have. Obviously, implementation is really the key for this strategy.

You suggest a strategy for the aerospace sector. Some of the panellists here represent member companies of the Aerospace Industries Association of Canada. The association does advocate a more targeted strategy for the aerospace sector. We definitely have very strong comparative advantages in this area. It's a lever that can be used to build the nation and increase Canada's defence industrial capacity.

Historically, there's been a very strong link between military aviation and civil aviation in Canada. Unfortunately, that has been lost over time. Our peers in the industry all have a very strong defence division, and a flow of technologies between the two aviation fields. A lot of civilian technology comes from military programs, and more and more it's the other way around. That's what we do. We leverage our business aircraft as platforms for defence applications.

We have an opportunity to build closer ties and create and encourage those synergies between the civilian and military fields.

[The Chair, Liberal, Charles Sousa]

Thank you.

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

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Thank you very much.

The pace of adaptation in Ukraine is.... We can see it's entirely different. Symmetrical warfare has changed radically over the last two years. I don't see anything in the defence industrial strategy to keep up with or to maintain that nimbleness. We are always building for the last war. It's an adage that's true. Clearly, it's been true up to now. Our procurement strategy right now is quite hidebound. We want to change that.

I'll start with you, Mr. Pyun.

What is there that's built into the industrial strategy? Is there any proactive nimbleness built into your R and D?

[Pierre Seïn Pyun]

From a procurement framework point of view and from the point of view of the defence industrial strategy, it's really good and welcome to see a focus on R and D investment. I think this is one of the pillars of the defence industrial strategy.

However, to be quite frank, I think Canada is starting from afar. If you look at the U.S. as an example, 15% of its defence investments are going to R and D and innovation. They have programs like DARPA, DIU and others where they are working very closely with the industry upstream to develop the next generation of technologies.

In Canada, with our procurement system and procuring innovation, we don't have the risk-taking culture or the processes in place to really work much more upstream with the industry in the back-and-forth way that I think you were alluding to. It's a building-block approach. There is more trial and error as well, instead of the traditional way, which is where the government and armed forces come up with very defined requirements and then do an RFP.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Do you find that the DIS addresses this problem?

[Pierre Seïn Pyun]

It talks about R and D, but as I was saying, the key will be implementation. In my view, this is an area where more work needs to be done in order to go beyond our traditional ways to support R and D. Include innovation and dual-use technologies as well. Come up with other ways to engage with the industry more upstream in a building-block kind of approach.

I think that, by and large, it doesn't exist, or the programs that exist are small-scale programs. I think we need to scale up. I haven't seen any reliable stats, but I've seen some indications that in Canada, the percentage of investment in defence going to R and D is below 5%, whereas in the U.S., it's 15%. In other countries, I've seen figures hovering around 15% to 20%.

I think we have some distance to go here in terms of procuring innovation and coming up with different types of models to engage with the industry and innovate at the speed of relevance.

[Scott Anderson, Conservative, Vernon—Lake Country—Monashee, BC]

Is there anything in the DIS—I haven't seen it—that envisions a crossover with the CAF and the things we're learning in Ukraine right now in order to direct the development?