Table Of Contents
- The Report Context
- Economic Impact
- Regional Industrial Strengths
- Obligation Progress Report
- Industrial Activities Related to Key Industrial Capabilities (KICs)
- Scaling-Up Small- and Medium-Sized Businesses (SMBs)
- Academic & Research Organisations R&D and Skills
- Gender and Diversity Plans
- Key Findings
- Annex A – ITB Policy Objectives and Related Metrics
- Annex B – Economic Impact Methodology Principles
- Data Sources
The Report Context
The Industrial and Technological Benefits (ITB) Policy contractually requires companies awarded defence procurement contracts to undertake industrial activity in Canada equal to the value of the contracts they have won
The ITB PolicyFootnote1:
- Supports long-term growth and sustainability of Canada’s defence industry
- Supports the growth of prime contractors and suppliers in Canada, including small- and medium-sized businesses (SMBs)Footnote 2 in all regions of the country
- Enhances innovation through research and development (R&D) in Canada
- Increases the export potential and international competitiveness of Canadian-based firms
- Fills skills and training gaps within the Canadian economy to support a more innovative Canada
ISED publishes two reports each year in an effort to be transparent about the results and status of the ITB Policy
Economic Impact
The ITB Policy is estimated to contribute nearly $4.7B to GDP and close to 40,200 jobs annually in CanadaFootnote3
Figure 1: GDP Economic Impact
Figure 2: Employment Economic Impact
Regional Industrial Strengths
ITB industrial activityFootnote4 aligns closely with regional industrial strengths
Figure 3: BreakdownFootnote5 of ITB Business Activity in Canada by IndustryFootnote6
Obligation Progress Report
Over $64.0B in economic activityFootnote7 result from ITB obligations active in 2023
Figure 4: Economic Activity from ITB Obligations
- More than $15B of economic activities to be identified in the next decade
Industrial Activities Related to Key Industrial Capabilities (KICs)
Defence procurementsFootnote 8 to which the ITB Policy applies stimulate industrial activities related to KICs
Industrial Activities Related to KICs
Close to 40% of the value of ITB obligations from defence contractsFootnote 9 is committed to industrial activities related to direct work on procurementFootnote 10
- Nearly 95% of indirect ITB activity supports the defence, aerospace, land, IT, marine and space industrial ecosystems
Close to 45% of the value of obligations committed to defence industrial activities related to KICs
More than $1.1B in R&D commitments related to KICs
International export strategies on 9 defence procurements related to KICs
Nearly $120M in Skills Development and Training commitments related to KICs
Scaling-Up Small- and Medium-Sized Businesses (SMBs)
More than 720 Canadian organisations, of which close to 65% are SMBs, are recipients of activities from ITB obligations active in 2023
Figure 5: Breakdown of ITB Recipients and SMB ActivityFootnote 11 Volume by TypeFootnote 12
- The vast majority of ITB SMB activity is focused on scaling up through supplier development via direct work on procurement and global supply chain participation
Academic & Research Organisations R&D and Skills
More than 45 Canadian academic and research organisations are recipients of activities from ITB obligations active in 2023
Examples of Academic and Research Organisation Activities
Gender and Diversity Plans
There are 34 ITB obligations active in 2023 with Gender and Diversity plans
- Introduced in May 2018 as a mandatory component in the ITB Value Proposition, the Gender and Diversity Plan requires bidders to describe, at the prime contractor level, their approach to achieving gender balance and increasing diversity within their Canadian corporate structures and broader supply chains in Canada
The Gender and Diversity Plan may include:
- The bidder’s public approach to promoting diversity, inclusion and equality
- The bidder’s corporate anti-discrimination policies
- Training available to educate the bidder’s workforce on diversity and inclusion
- Available statistics on the proportion of designated groups employed at all levels of the bidder’s firm in Canada
- How diversity and inclusion is factored into the bidder’s supplier selection methods in Canada
- Other corporate activities that seek to increase or support diversity in Canada
Key Findings
In conclusion, the application of the ITB Policy:
- Contributes nearly $4.7B to GDP and more than 40,200 jobs annually in Canada
- Is market-driven and aligns closely with regional industrial strengths
- Stimulates industrial activities related to KICs, in the defence industry, in R&D, in Exports, and in Skills Development and Training
- Benefits over 720 Canadian organisations, of which more than 460 are SMBs
- Benefits more than 45 Canadian academic and research organisations focused on skills development, emerging technologies and leading competencies
- Promotes gender equality, diversity, and inclusion in Canada’s defence industry
Annex A - ITB Policy Objectives And Related Metrics
ITB Policy Objective | Related Metric | Reference Slide |
---|---|---|
Supports the long-term growth and sustainability of Canada’s defence industry |
|
Slide 7 |
Supports the growth of prime contractors and suppliers in Canada, including SMBs in all regions of the country |
|
Slide 5 / Slide 8 |
Enhances innovation through R&D in Canada | Volume (in dollars) of R&D commitments related to KICs from defence procurements to which the ITB Policy applies | Slide 7 |
Increases the export potential and international competitiveness of Canadian-based firms | Number of defence procurements related to KICs with International Export Strategies | Slide 7 |
Fills skills and training gaps within the Canadian economy to support a more innovative Canada | Volume (in dollars) of Skills Development and Training commitments related to KICs from defence procurements to which the ITB Policy applies | Slide 7 |
Annex B - Economic Impact Methodology Principles
- ISED’s methodology is informed by subject matter experts from the Organisation for Economic Co-Operation and Development (OECD) and Statistics Canada.
- Foundation data is based on ITB credits and commitments of ITB obligations active in 2023, over the 2018–2034 15-year period, as specified on each slide.
- All analyses are based on 2018–2022 credits and 2023–2034 commitments of ITB obligations active in 2023.
- Annual average economic impact analysis is based on ITB transactions credited over the 2018–2022 period, with adjustments reflecting the ITB Policy’s credit multipliers and intangible industrial activities. This five-year period reflects the timeframe required to better capture industrial activity under the ITB Policy, notably Banking Transactions that are mostly credited prior to contract award.
- ISED’s model measures Canada’s economic structure through Statistics Canada’s 2019 Input-Output (I/O) economic impact multipliers.
- NOTE: While ISED normally uses the most current multipliers, the latest (2020) multipliers were not used due to Statistics Canada guidance which indicates that:
- Due to the COVID-19 pandemic in 2020, the structure of the economy was significantly altered. The 2020 I/O multipliers and I/O models should be used for analysis of economic impacts that occurred in 2020. For economic impact analysis for more current periods, the 2019 I/O multipliers and models may be considered as more reflective of current economic structures.
- Each ITB activity has been linked to the closest related specific economic impact multiplier.
- I/O multipliers have been adjusted to reflect the ITB Canadian content requirement (only Canadian Content Value is counted under ITB).
- NOTE: While ISED normally uses the most current multipliers, the latest (2020) multipliers were not used due to Statistics Canada guidance which indicates that:
- Total economic impact of the ITB Policy includes the activities that occur within ITB recipients (direct economic impact from enterprises that benefit from the ITB Policy), their Canadian suppliers (indirect economic activity from ITB recipients’ value chain partners), as well as consumer spending by associated employees (induced economic activity) across the Canadian economy.
- GDP impact is reported on an annual average basis.
- Jobs impact is reported on an annual average basis and is measured in terms of full-time equivalent (FTE) employment.
- Jobs cannot be additive as they are maintained for an extended period after creation.
- Economic impact estimates are reported at the national level and cannot be broken down at the regional level.
- Inflation adjustment:
- Statistics Canada’s I/O multipliers are in 2019 dollars; accordingly, all dollars are adjusted to 2019 using ISED estimates, derived from Statistics Canada’s Gross Domestic Product (GDP) Price Index.
- All totals are in Canadian dollars. Foreign currency amounts were converted to Canadian dollars using the Bank of Canada’s annual exchange rate for 2023.
Data Sources
- Economic Impact
- ISED economic model estimates based on ITB administrative data (2018–2022 credits from ITB obligations active in 2023) and Statistics Canada’s 2019 Input-Output multipliers, 2024
- Regional Industrial Strengths
- ITB administrative data (2018–2022 credits and 2023–2034 commitments from ITB obligations active in 2023), 2024
- Obligation Progress Report
- ITB administrative data (ITB obligations active in 2023), 2024
- Industrial Activities Related to Key Industrial Capabilities (KICs)
- See 3(a)
- Scaling -Up Small- and Medium-Sized Businesses (SMBs)
- See 2(a)
- Academic & Research Organisations R&D and Skills
- See 2(a)
- Gender and Diversity Plans
- See 3(a)