2023 Annual report

ITB Annual Report 2023

The Report Context

  • The Industrial and Technological Benefits (ITB) Policy requires companies that are awarded defence and Canadian Coast Guard procurements to undertake market-driven business activity in Canada equal to the value of the contracts they have won
  • The ITB Policy:
    • Supports long-term growth and sustainability of Canada’s defence industry
    • Scales up small and medium-sized business (SMBsFootnote1) 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
    • Supports skills development and training to advance employment opportunities for Canadians
    • Promotes gender equality, diversity, and inclusion

    ISED publishes two reports each year in an effort to be transparent about the results and status of the ITB Policy

    1) ITB Annual Report
     
    Highlights the economic and innovation impact of ITB obligations active in 2022
    2) Report on Contractor Progress
     
    Demonstrates contractors’ progress in fulfilling their ITB obligations active in 2022

Economic Impact

The ITB Policy is estimated to contribute nearly $5.0B to GDP and more than 44,700 jobs annually in CanadaFootnote 2

Figure 1: GDP Economic Impact

GDP Economic Impact. Long description below.

A donut chart showing the five-year annual average GDP impact of the ITB Policy, broken down by ITB recipients, Canadian suppliers to ITB recipients, and consumer spending by associated employees.

Text version of Figure 1
GDP Economic Impact
5-Year Annual Average Impact of 2017-2021 ITB Business Activity from Obligations Active in 2022
ITB Recipients $2.4B
Canadian Suppliers to ITB Recipients $1.4B
Consumer Spending by Assoicated Employees $1.2B
Total $5.0B

Figure 2: Employment Economic Impact

Employment Economic Impact. Long description below

A donut chart showing the five-year annual average employment impact of the ITB Policy, broken down by ITB recipients, Canadian suppliers to ITB recipients, and consumer spending by associated employees.

Text version of Figure 2
Employment Economic Impact
5-Year Annual Average Impact of 2017-2021 ITB Business Activity from Obligations Active in 2022
ITB Recipients 21,000
Canadian Suppliers to ITB Recipients 12,800
Consumer Spending by Assoicated Employees 10,300
Total 44,700

Regional Industrial Strengths

ITB business activityFootnote3 aligns closely with regional industrial strengths

Figure 3: BreakdownFootnote4 of ITB Business Activity by IndustryFootnote5

Breakdown of ITB Business Activity in Canada by Industry. Long description below

Five charts showing the breakdown of ITB business activity in Canada by industry. One donut chart shows the national perspective, and four bar charts demonstrate the regional perspectives: Western Canada, Ontario, Quebec, and Atlantic Canada. The charts are segmented by the following industries: aerospace, marine, information technology (IT) and land, space, and other industries.

Text version of Figure 3
BreakdownFootnote4 of ITB Business Activity by IndustryFootnote5
ITB Obligations Active in 2022
Industry Canada Western Canada Ontario Quebec Atlantic Canada
Aerospace 49% 35% 47% 68% 30%
Marine 24% 52% 12% 8% 64%
Information Technology (IT) & Land 22% 10% 34% 20% 5%
Space 2% 2% 3% 2% <1%
Other Industries 3% 1% 4% 2% <1%
Total 100% 100% 100% 100% 100%
 

Obligation Progress Report

Over $48.1B in economic activityFootnote6 result from ITB obligations active in 2022

Figure 4: Economic Activity from ITB Obligations

Economic Activity from ITB Obligations. Long description below

A donut chart showing the economic activity from ITB obligations, broken down by completed, in progress, and to be identified.

Text version of Figure 4
Economic Activity
from 99 ITB Obligations Active in 2022
Completed $33.8B
In Progress $7.4B
To be Identified $6.9B
Total $48.1B
ITB Obligations Active Between 2021 and 2022:
13 new ITB obligations added
$2.9B in new economic activity
28 ITB obligations updated
$1.2B in new economic activity
2 ITB obligations closed
$0.07B in economic activity fulfilled
  • Nearly $7.0B of economic activities to be identified in the next decade
 

Business Activity Across Strategic Areas

The introduction of Key Industrial Capabilities (KICs) has leveraged 103 commitments from 40 ITB obligations active in 2022

Figure 5: Number of KICs Commitments by Strategic AreaFootnote 7

ITB Obligations Active in 2022
Number of KICs Commitments by Strategic Area: . Long description below

A bar chart showing the number of commitments in KICs. The chart is broken down by strategic area: Direct Work, R&D, Skills & Training, Supplier Development, Defence and Exports.

Text version of Figure 5
Number of KICs Commitments by Strategic AreaFootnote 7
ITB Obligations Active in 2022
Strategic Area Number of Commitments in KICs
Direct Work 34
R&D 20
Skills & Training 17
Supplier Development 16
Defence 11
Exports 5
  • KICs foster a competitive and resilient defence industry, and ensure that defence procurements drive economic activity in targeted areas of:
    • Emerging technologies
    • Leading competencies and critical industrial services
 

Scales-up small and medium-sized businesses (SMBs)

ITB obligations active in 2022 include more than 730 Canadian organisations, of which close to 65% are SMBs

Figure 6: Breakdown of ITB Recipients and SMB ActivityFootnote 8 Volume by TypeFootnote 9

Breakdown of ITB Recipients and SMB Activity Volume by Type. Long description below

Two charts showing the breakdown of ITB recipients and SMB activity. A bar chart shows the breakdown of ITB recipients by type, segmented by large and other organisations, academic organisations, and small and medium businesses (SMBs). A donut chart shows the breakdown of SMB activity volume by type, segmented by direck work on procurement, global supply chain participation, investment, and collaborative innovation.

Text version of Figure 6
Breakdown of ITB Recipients by Type
ITB Obligations Active in 2022
Recipient Type Share of Recipients Number of Recipients
Small and Medium Businesses (SMBs) 63% 461
Academic Organisations 6% 43
Large and Other Organisations 31% 232
Total 100% 736
Breakdown of SMB Activity Volume by Type
ITB Obligations Active in 2022
Activity Type Share
Direct Work on Procurement 47%
Global Supply Chain Participation 44%
Investment 8%
Collaborative Innovation 1%
Total 100%
  • 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 40 Canadian academic and research organisations are recipients of activities from ITB obligations active in 2022

Examples of Academic and Research Organisation Activities

Examples of Academic and Research Organisation Activities. Long description below.

A table showing examples of academic and research organisation activities, broken down by skills development, emerging technologies, and leading competencies.

Text version of Figure 7
Academic & Research Organisations R&D and Skills
Skills Development Examples Emerging Technologies Examples Leading Competencies Examples
Cultural Training Adaptation Models Additive Manufacturing Algorithmic Development for Visual Analytics
Indigenous Students Skills Development Artifical Intelligence Flight Simulation Systems
Mechanic Apprenticeship Program Autonomous Vehicles Ice Breaking Technology
Shipbuilding Skills Excellence Clean Propulsion Technology Marine Industrial Research
  Electric Aircraft Natural Disaster Prevention
  Low Earth Orbit Technology Sensing, Engineering and Analytics
  Quantum Computing Video Processing Algorithmic Development
  Marine Cyber Security Space Robotics
  Quantum Computing Underwater Acoustics

Gender and Diversity Plans

There are 21 ITB obligations active in 2022 with Gender and Diversity plans

  • Introduced in 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 ITB Policy drives innovation and fosters economic growth in Canada

  • The application of the ITB Policy:
    • Contributes nearly $5.0B to GDP and more than 44,700 jobs annually in Canada
    • Is market-driven and aligns closely with regional industrial strengths
    • Stimulates business activity across strategic areas, notably KICs in Direct Work, R&D, Skills & Training, Supplier Development, Defence and Exports
    • Includes more than 730 Canadian organisations, including close to 460 SMBs
    • Comprises more than 40 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: 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 2022, over the 2017–2033 15-year period, as specified on each slide.
    • All analyses are based on 2017–2021 credits and 2022–2033 commitments of ITB obligations active in 2022.
    • Annual average economic impact analysis is based on ITB transactions credited over the 2017–2021 period, with adjustments reflecting the ITB Policy’s credit multipliers and intangible business activities.
  • ISED’s model measures Canada’s economic structure through Statistics Canada’s latest (2019) Input-Output (I/O) economic impact multipliers.
    • 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).
  • 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 the Bank of Canada’s 2% inflation target for the 2020–2021 period.
  • All totals are in Canadian dollars. Foreign currency amounts were converted to Canadian dollars using the Bank of Canada’s annual exchange rate for 2022.

Data Sources

  1. Economic Impact
    1. ISED economic model estimates based on ITB administrative data (2017–2021 credits from ITB obligations active in 2022) and Statistics Canada’s latest (2019) Input-Output multipliers, 2023
  2. Regional Industrial Strengths
    1. ITB administrative data (2017–2021 credits and 2022–2033 commitments from ITB obligations active in 2022), 2023
  3. Obligation Progress Report
    1. ITB administrative data (ITB obligations active in 2022), 2023
  4. Business Activity across Strategic Areas
    1. See 3(a)
  5. Scaling-Up Small and Medium Business (SMBs)
    1. See 2(a)
  6. Academic & Research Organisations R&D and Skills
    1. See 2(a)
  7. Gender and Diversity Plans
    1. See 3(a)