N.L. tech companies optimistic they'll see benefit from Ottawa's increased defence dollars

CBC

a day ago

As Ottawa commits to ramping up defence spending by billions of dollars in the next decade, Newfoundland and Labrador tech companies anticipate more business coming their way.
In June the federal government, along with other NATO members, promised to spend five per cent of its gross domestic product on defence spending by 2035. Prime Minister Mark Carney had said the new benchmark would have Canada spending $150 billion a year on defence.
TechNL CEO Florian Villaumé, who leads the province's tech industry association, said the announcement has local companies excited, including companies that don't currently work in the defence sector.
"Now we're talking about how can we take advantage of that opportunity to grow the tech sector, but also to create jobs and keep people here as well," he told CBC News.
When there are large investments, Villaumé added, there are opportunities for tech companies to reach new markets.
'Rising tide'
Ocean technology company Kraken Robotics CEO and president Greg Reid said about three-quarters of Kraken's business comes from the defence sector. The company already counts the Royal Canadian Navy, the Royal Danish Navy, the Polish Navy, the Royal Australian Navy and some U.S. companies as clients.
He said Carney's commitments to spend more on defence is positive news and he anticipates more work for Kraken, and not just from the Canadian government but other NATO members.
"I'll call it 'a rising tide lifts all boats' in the defence sector," said Reid.
He added Kraken has already seen an increase in business from clients in other parts of the world and he'd like to see it on the "home front."
"We've got capability. We've got people. We're a local manufacturer. And we'd love to be able to, you know, have people down the road point and say 'There's the Canadian champion in subsea technology,'" said Reid.
He said Kraken's technology — which includes its Katfish mine-hunting systems, subsea batteries and sonar — can play a vital role in border control and Arctic security, which is increasingly challenging as ice melts and new waterways open.
"It's a complicated world out there. There's a lot of ... 'geopolitical hotspots,' and now we're really starting to see it in the Arctic and at home as well," said Reid.
Randy Billard, president and CEO of marine simulation company Virtual Marine, said his company began in the oil and gas sector but there are plenty of defence capabilities here too.
"We're part of a very specialized group of [experts] here in Newfoundland and Labrador," said Billard.
"There's a lot of experts working on ice. There's a lot of experts working on harsh environments. There's a lot of operational experience of people who are operating vessels," he said, which includes military vessels.
Billard is also hoping to see some of the defence spending go to Virtual Marine.
"I think it should because … you're really feeding an ecosystem here. The ecosystem has a lot of great creative people, a lot of great creative companies, like Virtual Marine."
Avalon Holographic co-founder Russ Baker said its holographic displays technology has many defence applications, including mission planning, battle management and after-action reviews. He too welcomed the news from Ottawa and what it could mean for his St. John's-based company.
"The increase in defence spending ... not just in Canada but across NATO, is expected to drive a lot of activity and innovation," he said.
Baker expects the spending increase to mean the military will be "freed up" to work with smaller companies and is "cautiously optimistic" it will lead to Avalon Holographic seeing more purchases.
"We're eagerly waiting to see how that plays out in practice when ... the rubber hits the road of the procurement process."
'Contracting is so complicated'
There is some work that can be done to make sure Newfoundland and Labrador companies see a boost, and Villaumé said he'd like to see funding to help companies expand into the defence sector through funding for prototypes and testing.
"The idea would be to help them grow that product," he said.
Reid would like to see the Canadian government change how procurement contracts are awarded so it happens quicker.
"Traditionally, the process of purchasing new equipment has taken so long and the contracting is so complicated that eventually when the technology gets in the hands of the [Canadian] Armed Forces, a lot of time has gone by," said Reid.
He cautioned that it can lead to instances where technology isn't as relevant as people thought it was when the procurement process kicked off.
Technology is changing rapidly and the government needs to be able to purchase necessary items faster, Reid added.