Physics of the Canadian Defence Market
Walking the floor at CANSEC this week, it’s impossible not to look at the Canadian defence ecosystem through the lens of pure Newtonian mechanics. After all, the best problems are solved starting from first principles.
Newton’s second law of motion states that the net force applied to a body is equal to the object’s mass multiplied by its acceleration:
F=ma
In the case of the Canadian defence industry:
· Force (F) is the government strategic mandate / policy.
· Mass (m) is the industry capability.
· Acceleration (a) is the delivery of procurement contracts.
For a long time, the defence sector in Canada has operated with a steady, yet small velocity vector. Without massive domestic fleets, the ceiling remained capped on new products, services, and operational support while the legacy procurement cycles became deeply entrenched. A month ago, I visited with a defence company that has succeeded internationally while stating that Canada was not on the radar in a certain capacity from a procurement standpoint, simply because the fleet in that capacity did not exist to service.
However, at CANSEC this week, there was a distinct change in the air. The physics of the industry are shifting. We saw this explicitly on day one with the Prime Minister's major announcement that Canada is entering formal negotiations to procure Sweden’s Saab-Bombardier GlobalEye platform, a massive development that projects a multi-billion-dollar domestic pipeline and shifts assembly work directly into Canadian aerospace hubs. Simultaneously on the global stage, Boeing on the same day cleared a critical hurdle with the FAA to lift its narrow-body production cap to 47 jets per month, signalling a massive operational stabilization and cash-flow acceleration for the enterprise.
When I was speaking with a cross-section of CEOs and VPs across the prime, mid-tier, and start-up sectors this week, the overarching theme was clear: the external forces pushing for modernization have hit conversational critical mass and the system is starting to show signs of acceleration. Most notable on the CANSEC floor were the number of companies, number of people, and number of innovative solutions. It was evident that the future of defence is unmanned (air, ground, or sea), its synchronized through AI detection and analytics, and its dual-use to empower economies of scale both for the company and the end user.
Another key announcement at CANSEC was the government policy formation around selecting Canadian defence “champions” to help rebuild industry, unveiling a framework aimed at boosting investment supply chains in the sector. Through a selection of key firms, those firms are then empowered supply the product needed. The secondary opportunity is through a modernized Industrial Technology Benefits policy for small-to-mid-size local companies to win business and grow.
One of the most fascinating talks was from a person who served four deployments to Ukraine as part of their drone division. The aspect of operational reality in contrast with a exhibit show hall displaying picturesque marketing conditions was an interesting thread to explore further. A few key themes appeared that translate across defence beyond drones with what was seen on the exhibit floor:
Battle is disposable. There is always place for expensive kit, but the $1,000 to $4,000 unmanned device empowers the advancement of the modern front-line by providing repeater communications, reconnaissance, or even direct targeting.
Battle-tested product is paramount. Many companies show up with off-the-shelf drone communication spectrum that is disabled in 30-minutes, low-treaded tires on unmanned vehicles that get stuck in the mud, or inability to train operators for battle conditions.
Humans are a bottleneck, but always necessary. Training is the most critical aspect of a company's product and often the least invested. Drone operators for example require 4 weeks training. That timeline is incompressible.
Precision is required. With objects flying 300-to-400km/h, simply put, there is little opportunity for missing. Movement = detection.
Tactical dominance beats better strategy, at least short-term. Iterative design, testing, and deployment has shifted from silicon valley to the front-line. However, it brings challenges from integration into the broader capabilities and with keeping staff trained.
CANSEC delivered a strong conference that showcased an increasing Force (F), and improved and robust mass (m) made up of a higher number of SME and big players. What's remaining to see is if the acceleration continues in procurement. More funding award announcements in 2026 will be the sign.
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