Canada's defence industry & Ukraine
This past week marked another year in the war in Ukraine. While it’s hard at this moment to think about anything other than Iran, we wanted to release our deep-dive into Canada’s defence industry aid to Ukraine on this important anniversary week.
As always, feel free to reach out with corrections!
Let’s get into it.
Canada, Ukraine, & SMEs
Canada has been at the forefront of supplying Ukraine’s defence efforts since the war began. According to the Kiel Institute’s data tracking, Canada is a top-5 donor to Ukraine and ranks #3 in total financial allocations (and #1 as a % of GDP). Within the numbers, the contributions to Canada’s material aid by SMEs shouldn’t be understated.
To date, Canadian defence SMEs have stepped up covering a diverse range of goods and services to support Ukraine. Categorized by subsector, these companies are:
Small arms, ammunition, and weapons systems:
Colt Canada: Small arms & ammo
Prairie Gun Works: Sniper weapons systems
Magellan (with DRDC): CRV7 rocket motors + CRV7 warheads
Rheinmetall Canada: Nanuk Remote Weapons Systems
These firms account for a considerate quantity of direct equipment donations sent to Ukraine. The total value of their contributions is estimated at around $264.8M, which includes the $146.3M value of goods from Colt and the market estimate of between $58M-$116M from Rheinmetall.
Vehicles systems:
Roshel: Armoured vehicles (Senator series)
GDLS: Armored Combat Support Vehicles
Zodiac Hurricane Technologies: Multi-engine rigid hull Inflatable boats
Additional vehicle donations were delivered through these companies with total goods sent to date valued at just over $1 billion. This figure includes the $895M worth of goods sent by GDLS.
Communications and sensors:
Twenty20 Insight Inc.: Morskito thermal imager units (Safran)
L3Harris Wescam: High-resolution drone cameras (EO/IR), incl. MX-15 and MX-20 systems
Teledyne FLIR: SkyRanger R70 unmanned aerial systems
Telesat: Satellite communications services (joint project with DND and CAF)
Other Canadian Industry: PPE / winter gear / Anti-jammer kits / Uniforms
Put together, the value of these firms’ contributions to date is estimated at around $568.8M of direct equipment donations.
Winter gear/clothing:
In total, these companies have donated around 400,000 units, worth around $15M.
Instructors and simulators:
Top Aces Inc.: Civilian instructors, planes, and support staff for F-16 training
CAE: Flight simulators for F-16 training
The total known value of these contributions lies at around $15M.
*Note – This information was sourced from Canadian government data. Public attribution is also incomplete; many contributions are aggregated under allied platforms or classified.
Keeping Pace
As the table demonstrates, Canadian firms play a significant role in supplying Ukraine, and Canada’s defence base is very SME-heavy. Many Canadian firms operate as tier-2 and tier-3 suppliers, supplying materials and manufacturing components, and aren’t captured in this product-level table.
Like many of our allies, Canada’s limited surge manufacturing capacity has been exposed by the war in Ukraine. In some cases, domestic industry hasn’t been able to keep pace with heavy new demand.
The Canadian government shouldn’t be discounted in this either. Long contracting timelines, a fragmented alignment on export controls, a fragmented departmental system that lacks the business intelligence to contribute, limited advance purchase commitments, a strange approach to sole-source contracts, an over-reliance on multilateral decision-making structures (such as Prioritized Ukraine Requirements List), and an industrial policy out of sync with the war’s tempo have all limited Canada’s ability to deliver materiel.
Canada’s inability to deliver equipment is also reflected in the Kiel numbers. Despite its status as a G7 nation and the ninth-largest economy in the world (sixth in NATO), Canada is surpassed by smaller nations such as Denmark and Sweden in per capita military hardware allocations. At the same time, Finland and Norway trail closely behind.
While Canada is undoubtedly a trusted NATO industrial (and political) partner, we still need to expand our partnerships with European industry to scale. Allies talk about the Danish model for a reason.
Canadian SMEs also need to lean in to opportunities to diversify into Europe: co-production with EU firms to scale, MRO sustainment and training hubs, and deeper integration into Ukraine’s reconstruction supply chains.
Canada-Ukraine FTA & SMEs
The 2023 Modernized Canada-Ukraine FTA laid strong foundations for increased SME activity in supplying Ukraine’s defence. While Defence is typically excluded from FTA, Defence firms should still note the provisions of the deal on industrial cooperation, services, digital trade, and government procurement.
Through the agreement, SMEs can expect to increase their access to knowledge sharing on best practices related to access to capital and credit, networks, digital capacity-building programs, and information on SME-related cybersecurity programs.
The FTA also includes provisions to facilitate SME participation in government procurement and aims to include subcontracting with SMEs when considering the structure, size, and design of procurements.
The big takeaway: the war in Ukraine unveiled Canada’s NATO credibility, the untapped potential of Europe’s scale, and the necessity of transatlantic industrial integration. It also opened Europe’s defence market to more allied non-EU players. Our firms are trusted exporters, and Canada is now a SAFE country. The defence sector should continue to push for more.
Pictured - Canadian Prime Minister Mark Carney and Ukrainian President Volodymyr Zelenskyy meeting in August on Ukraine’s Independence Day.
So let’s end with this. The scale of aid to Ukraine is surprising and surpasses expectations. However, in typically Canadian fashion, it lacks ambition to put Canadian technology and industry at the forefront. Allies talk of the Danish model, not the Canadian one. From an industry perspective, more can be done.
P.S. Here’s Prime Minister Mark Carney’s note on the 4 year anniversary, based on an excerpt from his Aug 2024 speech:
Mr. President, dear friends, my message today is simple: Canada will always stand in solidarity with Ukraine.
Canada will be always with you so your many sacrifices lead to the peace, security, and prosperity that all Ukrainians – that all peoples – deserve.
Canada is under no illusions about the importance of your struggle.
And you should have no doubts about the commitments of Canadians to your cause.
Because your cause – freedom, democracy, sovereignty – is our cause.
Thank you for listing specific Canadian companies that have donated materials like cold weather clothing to Ukraine. We can support those businesses.
Does the Canadian government procure materiel from allies to donate to Ukraine as well? L3Harris is an American firm, for instance.