Canada Creating 125,000 Jobs by Shifting Away From US Defense

Canada is betting big on building its own defense industry, and the payoff could be enormous for job seekers. On February 15, 2026, Prime Minister Mark Carney unveiled a sweeping $6.6 billion defense industrial strategy designed to create 125,000 new jobs over the next decade. The plan marks a dramatic shift in how Ottawa procures military equipment, moving away from heavy reliance on American defense contractors and toward a "Build at Home" approach that prioritizes Canadian manufacturers, workers, and innovation. For anyone looking for stable, well-paying work in Canada's growing defense sector, this announcement could be a game-changer.

What Is Canada's New Defense Industrial Strategy?

At its core, the strategy introduces a "Build-Partner-Buy" procurement framework that fundamentally changes how the Canadian government acquires military equipment. Under this new model, building domestically becomes the default option, particularly in areas where Canada already has deep strengths or where sovereign capability is at stake. When domestic production is not feasible, the government will explore co-development partnerships with trusted allies. Purchasing from foreign defense contractors will be the last resort, and even then, contracts will require benefits to flow back into Canada's domestic industry.

The numbers behind the strategy are striking. The government is targeting 70 percent of defense-procurement contracts to be awarded to Canadian firms within a decade, a significant leap from the current rate of roughly 50 percent. The strategy also aims to increase Canada's defense exports by 50 percent and boost total Canadian defense industry revenues by more than 240 percent. Officials project that the 125,000 jobs created through these investments will carry average salaries exceeding $75,000 annually, and the plan is expected to generate an additional C$5.1 billion in annual revenue among Canada's small and medium-sized defense firms.

The strategy also promises to restructure Ottawa's Industrial and Technological Benefits (ITB) policy, which is the scoring system used to evaluate defense contractors based on how much they contribute to the Canadian economy. Under the revamped system, companies that invest more in Canadian jobs, research, and manufacturing will be given stronger preference in contract awards.

Why Is Canada Shifting Away From US Defense Contractors?

For decades, Canada has relied heavily on the United States for military equipment and defense technology. American contractors have supplied everything from fighter jets to armored vehicles, and the defense relationship between the two countries has been one of the closest in the world. But a perfect storm of geopolitical and economic pressures is forcing Ottawa to rethink this dependency.

The most immediate driver is the escalating trade war between Canada and the United States. President Donald Trump's tariff policies have hit Canadian manufacturing sectors hard, and the broader trade tensions have underscored the risks of being overly dependent on a single trading partner for critical defense needs. The strategy document itself describes the shift as a response to "an over-reliance on foreign suppliers, notably the United States."

At the same time, NATO allies have been pressuring Canada to increase its defense spending. Canada has historically fallen short of NATO's 2 percent GDP spending guideline, a source of persistent friction with the United States and other alliance members. Canada's defense expenditures are now slated to reach approximately CAD $62.7 billion for the 2025-2026 fiscal year, finally bringing the country to the 2 percent threshold. More recently, NATO leaders have agreed to push toward a 5 percent GDP defense spending target by 2035, creating even more urgency for Canada to build a robust domestic defense industry that can absorb the massive increase in military investment.

There is also a sovereignty argument. When a country depends on foreign suppliers for its military equipment, it is vulnerable to supply chain disruptions, political leverage, and delays. Building domestically gives Canada greater control over its own defense readiness and the intellectual property that comes with advanced military technology.

Which Sectors Will See the Most Job Growth?

The strategy identifies several key sectors where Canada plans to shore up its domestic supply chain and create significant employment opportunities. These sectors represent the building blocks of a modern military, and each one carries the potential for thousands of new positions across the country.

Aerospace is at the top of the list. Canada already has a strong aerospace sector, anchored by companies like CAE, one of the country's largest defense contractors and a global leader in simulation technology and training solutions with roughly 13,000 employees. The strategy seeks to expand this base significantly, with increased investment in aircraft manufacturing, maintenance, and advanced avionics systems. The government's target of raising air force equipment serviceability rates to 85 percent will require a substantial workforce of skilled aerospace technicians and engineers.

Drones and unmanned systems represent another major growth area. As modern warfare increasingly relies on unmanned aerial vehicles for reconnaissance, surveillance, and combat operations, Canada sees an opportunity to develop a domestic drone manufacturing capability that can serve both its own military and allied nations. This sector is expected to generate jobs in engineering, software development, and advanced manufacturing.

Ammunition production is a critical focus area. Military readiness depends on reliable ammunition supplies, and Canada's current domestic production capacity has been insufficient to meet growing demands. The strategy calls for expanding ammunition manufacturing facilities, which would create jobs in chemical engineering, quality assurance, logistics, and factory operations.

Sensors and surveillance technology form another pillar of the strategy. MDA Space, a Canadian leader in satellite imagery and communication, is already at the forefront of space-based security, leveraging its expertise to support real-time battlefield intelligence through satellite constellations. The strategy aims to expand this capability, creating opportunities in data science, signal processing, and satellite engineering.

Additional sectors targeted by the strategy include digital and cloud-based defense services, space-based surveillance platforms, training and simulation systems, and specialized vehicle manufacturing. General Dynamics Land Systems-Canada, based in London, Ontario, is one of the country's established leaders in armored combat vehicles and stands to benefit significantly from increased domestic procurement. Irving Shipbuilding, based in Halifax, Nova Scotia, is already building combat ships for the Royal Canadian Navy and would see expanded contracts under the new framework.

How Will the Defence Investment Agency Change Procurement?

One of the most significant institutional changes accompanying the strategy is the expansion of the Defence Investment Agency (DIA). First announced by Carney in October 2025, the DIA was created to overhaul and streamline Canada's notoriously slow and fragmented defense procurement process. Under the new strategy, the agency will be established as a standalone entity with the authority to consolidate procurement decisions that were previously scattered across multiple government departments.

Canada's defense procurement has long been criticized for its glacial pace. Major acquisitions have historically taken an average of 7.5 years from concept to delivery. The new strategy aims to slash that timeline to under 3 years through streamlined approval processes, reduced bureaucratic duplication, and clearer communication with industry partners. For job seekers, this faster procurement cycle means that new defense projects, and the jobs they create, will materialize much more quickly than in the past.

The DIA will also play a matchmaker role, connecting small and medium-sized Canadian businesses with defense contracts that were previously dominated by large foreign firms. The government has committed to boosting federal investment in defense research and development by 85 percent, which will flow through the agency to fund Canadian companies developing cutting-edge military technology.

What Does the "Canadian Champions" Program Mean for Workers?

A distinctive feature of the strategy is the "Canadian Champions" initiative. The Carney government has announced plans to enter into formal strategic partnerships with select Canadian defense companies that demonstrate the ability to deliver projects on time and within budget. In exchange for meeting performance benchmarks, these companies will receive preferential treatment including research funding, export promotion support, financing assistance, and access to government testing infrastructure.

The goal is to build "world-leading champions that can meet Canada's needs" while securing domestic ownership and control over critical intellectual property and capabilities. This means Canadian defense companies will not just be manufacturing to foreign specifications but developing their own proprietary technologies that can be exported globally.

For workers, the Canadian Champions program signals a long-term commitment to domestic defense employment. Companies that receive champion status will have the financial stability and contract certainty needed to hire and train large workforces, invest in apprenticeship programs, and build career ladders within the defense sector. The average salary exceeding $75,000 for defense industry positions makes these some of the most attractive manufacturing and technology jobs in the country.

How Does This Fit Into Canada's Broader Economic Picture?

The defense industrial strategy does not exist in a vacuum. It is part of a broader "Buy Canadian" economic agenda that the Carney government has been pushing in response to Trump-era tariffs and the growing unpredictability of the Canada-US trade relationship. Canadian manufacturing sectors have been hit hard by American tariffs, and the government sees defense spending as a powerful tool for industrial policy, one that can simultaneously strengthen national security and create high-quality domestic jobs.

According to TD Economics, when defense spending becomes industrial policy, the economic multiplier effects can be substantial. Every dollar invested in domestic defense manufacturing creates additional economic activity through supply chains, local spending by workers, and technology spillovers into civilian industries. The strategy's projection of a 240 percent increase in defense industry revenues suggests the government is counting on exactly this kind of multiplier effect.

The strategy also includes an international component. Canada will deploy more trade commissioners to promote Canadian defense exports and increase participation in military-industrial trade fairs around the world. When Canada purchases major equipment from abroad, the government will now expect partner nations to buy Canadian products in return, a policy of reciprocity aimed at strengthening Canada's export base while maintaining important allied relationships. The strategy envisions partnerships with European allies in particular for joint weapons development, creating a more diversified set of defense partnerships beyond the traditional US-centric model.

What Military Readiness Targets Are Driving the Job Creation?

Beyond job creation and economic growth, the strategy sets concrete military readiness targets that will require a massive expansion of the defense workforce. The government has committed to raising equipment serviceability rates across all branches of the Canadian Armed Forces: 75 percent of the navy's ships must be operational, 80 percent of the army's vehicles, and 85 percent of the air force's aircraft. Meeting these targets requires not just new equipment but an army of technicians, mechanics, engineers, and logistics professionals to maintain and repair it.

Canada has also committed to reaching the NATO 5 percent GDP defense spending target by 2035. With current defense spending at approximately $62.7 billion, reaching 5 percent would mean a dramatic increase in the defense budget over the next decade. That growing pool of money, combined with the mandate to spend it domestically, creates an unprecedented runway for defense industry job growth. The Atlantic Council has noted that meeting these NATO commitments will require Canada to fundamentally transform its defense industrial base, exactly the kind of transformation the new strategy is designed to achieve.

What Types of Jobs Will Be Created?

The 125,000 jobs projected by the strategy span a wide range of skill levels and disciplines. Based on the sectors targeted by the strategy, job seekers can expect opportunities in several key areas:

Manufacturing and skilled trades will form the backbone of the new jobs. Welders, machinists, electricians, and assembly workers will be needed at shipyards, vehicle manufacturing plants, ammunition factories, and aerospace facilities across the country. These are well-paying, hands-on careers that often come with strong benefits and union representation.

Engineering roles will be in high demand across multiple specialties. Aerospace engineers, mechanical engineers, electrical engineers, systems engineers, and software engineers will all be needed to design, develop, and integrate the complex systems that make up modern military equipment. With the government's commitment to an 85 percent increase in defense R&D investment, research-oriented engineering positions will be particularly plentiful.

Technology and cybersecurity professionals will see growing demand as Canada builds out digital and cloud-based defense services, space-based surveillance platforms, and advanced sensor networks. Data scientists, cybersecurity analysts, satellite engineers, and AI specialists will all find opportunities in the expanding defense-tech ecosystem. Bloomberg has reported that Canada's race to rebuild its military has already triggered a "defense-tech gold rush," with startups and established tech firms alike positioning themselves to capture defense contracts.

Project management, logistics, and supply chain roles will also grow substantially. Managing large-scale defense procurement programs requires extensive teams of project managers, procurement specialists, quality assurance professionals, and logistics coordinators. As the Defence Investment Agency ramps up its operations, government positions in procurement policy and contract management will also increase.

What Are the Risks and Challenges?

While the strategy is ambitious, it faces significant challenges. Canada's defense procurement system has a long track record of cost overruns, delays, and political interference. The country's track record with major military projects, from the Canadian Surface Combatant program to fighter jet acquisitions, has been marked by years of delays and ballooning budgets. Skeptics will rightly ask whether a government that has struggled to manage existing procurement can successfully execute a strategy of this scale.

There is also the workforce challenge. Canada is already experiencing skilled labor shortages in manufacturing and technology, and the defense sector will be competing with other industries for the same talent. Building 125,000 new defense jobs will require significant investment in training and education programs, apprenticeships, and immigration pathways for specialized workers. The strategy acknowledges this need but details on workforce development programs remain limited.

Finally, the political timeline introduces uncertainty. The strategy is a Liberal government initiative, and a change in government could alter priorities. However, defense spending has become a rare area of bipartisan consensus in Canada, with both major parties supporting increased military investment. The 125,000 job projection also spans a full decade, meaning the strategy would need to survive multiple election cycles to fully deliver on its promises.

What Does This Mean for Job Seekers?

For Canadian workers and job seekers, the defense industrial strategy represents one of the largest government-backed job creation programs in recent memory. With average salaries exceeding $75,000 and positions spanning everything from factory floor work to cutting-edge R&D, the defense sector is positioning itself as a compelling career destination.

The geographic distribution of defense jobs is also worth noting. Major defense employers like Irving Shipbuilding in Halifax, General Dynamics in London, Ontario, and CAE in Montreal mean that opportunities will be spread across the country rather than concentrated in a single city. As the strategy encourages more small and medium-sized businesses to enter the defense market, new opportunities could emerge in communities that have not traditionally been associated with defense work.

If you are currently working in manufacturing, engineering, technology, or project management, the defense sector should be on your radar. The combination of growing budgets, a government mandate to buy Canadian, and a streamlined procurement process creates conditions for sustained, long-term employment growth that few other industries can match. With Canada's defense spending set to rise dramatically over the next decade as the country works toward the NATO 5 percent target, the 125,000 jobs announced this week may be just the beginning.

People Also Asked

Q: What is Canada's new defense industrial strategy?

A: Canada's defense industrial strategy is a $6.6 billion plan announced by Prime Minister Mark Carney on February 15, 2026, designed to shift military procurement away from foreign contractors, primarily the United States, and toward Canadian firms. The strategy introduces a "Build-Partner-Buy" framework that prioritizes domestic manufacturing and aims to award 70 percent of defense contracts to Canadian companies within a decade. The government projects the strategy will create 125,000 jobs with average salaries exceeding $75,000 annually, while increasing defense industry revenues by more than 240 percent and boosting defense exports by 50 percent.

Q: What types of jobs will Canada's defense strategy create?

A: The strategy targets job creation across multiple sectors including aerospace manufacturing, drone and unmanned systems development, ammunition production, sensors and surveillance technology, digital and cloud-based defense services, space-based surveillance platforms, shipbuilding, and specialized vehicle manufacturing. Positions will range from skilled trades like welding and machining to engineering roles in aerospace, software, and systems design, as well as technology jobs in cybersecurity, data science, and satellite engineering. Project management, logistics, supply chain, and government procurement roles will also see significant growth.

Q: How much does Canada spend on defense in 2026?

A: Canada's defense expenditures are projected to reach approximately CAD $62.7 billion for the 2025-2026 fiscal year, which brings the country to NATO's 2 percent of GDP spending guideline for the first time. This represents a significant increase from previous years when Canada spent roughly 1.4 percent of GDP on defense. Looking ahead, Canada has committed to reaching 5 percent of GDP on defense by 2035 as part of a broader NATO agreement, meaning defense budgets will continue to grow substantially over the coming decade, creating even more opportunities for domestic defense industry workers and job seekers.

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