2024 Annual report

ITB Annual Report 2024

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

1) ITB Policy Annual Report
 
Highlights the economic impact of the ITB obligations active in 2023
2) Report on Contractor Progress
 
Demonstrates contractors’ progress in meeting their ITB obligations active in 2023

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

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 2018-2022 ITB Business Activity from Obligations Active in 2023
ITB Recipients $2.2B
Canadian Suppliers to ITB Recipients $1.4B
Consumer Spending by Associated Employees $1.1B
Total $4.7B

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 2018-2022 ITB Business Activity from Obligations Active in 2023
ITB Recipients 18,000
Canadian Suppliers to ITB Recipients 12,600
Consumer Spending by Associated Employees 9,600
Total 40,200

Regional Industrial Strengths

ITB industrial activityFootnote4 aligns closely with regional industrial strengths

Figure 3: BreakdownFootnote5 of ITB Business Activity in Canada by IndustryFootnote6

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 and Northern Canada, Ontario, Quebec, and Atlantic Canada. The charts are segmented by the following industries: aerospace, marine, land, space, information technology and other industries.

Text version of Figure 3
BreakdownFootnote5 of ITB Business Activity in Canada by IndustryFootnote6
ITB Obligations Active in 2023
Industry Canada Western and Northern Canada Ontario Quebec Atlantic Canada
Aerospace 49% 27% 47% 74% 30%
Marine 29% 65% 14% 7% 65%
Land 17% 6% 30% 14% 5%
Space 2% 1% 2% 2% <1%
Information Technology 1% <1% 3% <1% <1%
Other Industries 2% 1% 4% 3% <1%
Total 100% 100% 100% 100% 100%
 

Obligation Progress Report

Over $64.0B in economic activityFootnote7 result from ITB obligations active in 2023

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 103 ITB Obligations Active in 2023
Completed $35.6B
In Progress $13.1B
To be Identified $15.3B
Total $64.0B
ITB Obligations Active Between 2022 and 2023:
13 new ITB obligations added
$15.1B in new economic activity
38 ITB obligations updated
$4.1B in new economic activity
7 ITB obligations closed
$3.4B in economic activity fulfilled
  • 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

 

KIC_icon1

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
KIC_icon2

 

Close to 45% of the value of obligations committed to defence industrial activities related to KICs

 

KIC_icon3

 

More than $1.1B in R&D commitments related to KICs

 

KIC_icon4

 

International export strategies on 9 defence procurements related to KICs

 

KIC_icon5

 

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

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 SMBs. A donut chart shows the breakdown of SMB activity volume by type, segmented by direct work on procurement, global supply chain participation, investment, collaborative innovation, and skills development and training.

Text version of Figure 5
Breakdown of ITB Recipients by Type
ITB Obligations Active in 2023
Recipient Type Share of Recipients Number of Recipients
Small- and Medium-Sized Businesses (SMBs) 64% 461
Academic Organisations 6% 46
Large and Other Organisations 30% 215
Total 100% 722
Breakdown of SMB Activity Volume by Type
ITB Obligations Active in 2023
Activity Type Share
Direct Work on Procurement 51%
Global Supply Chain Participation 37%
Investment 10%
Collaborative Innovation 1%
Skills Development and Training <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 45 Canadian academic and research organisations are recipients of activities from ITB obligations active in 2023

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
Examples of Academic and Research Organisation Activities
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
Shipbuilding Skills Excellence Autonomous Vehicles Icebreaking Technology 
Women in Skilled Trades Clean Propulsion Technology Marine Industrial Research
  Electric Aircraft Natural Disaster Prevention
  Low Earth Orbit Technology Sensing, Engineering and Analytics
  Marine Cybersecurity Space Robotics
  Quantum Computing Underwater Acoustics

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
  • Share of the value of ITB obligations committed to direct work on procurement from defence contractsFootnote 13 to which the ITB Policy applies
  • Share of the value of ITB obligations committed to defence industrial activities related to KICs from defence procurementsFootnote 14 to which the ITB Policy applies
Slide 7
Supports the growth of prime contractors and suppliers in Canada, including SMBs in all regions of the country
  • Breakdown of ITB Industrial Activity by Region
  • Breakdown of ITB Recipients by Type
  • Breakdown of SMB Activity Volume by Type
    • Global Supply Chain Participation
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).
  • 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

  1. Economic Impact
    1. 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
  2. Regional Industrial Strengths
    1. ITB administrative data (2018–2022 credits and 2023–2034 commitments from ITB obligations active in 2023), 2024
  3. Obligation Progress Report
    1. ITB administrative data (ITB obligations active in 2023), 2024
  4. Industrial Activities Related to Key Industrial Capabilities (KICs)
    1. See 3(a)
  5. Scaling -Up Small- and Medium-Sized Businesses (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)