2022 Annual report

ITB Annual Report 2022

The Report Context

  • The Industrial and Technological Benefits (ITB) Policy contractually requires companies awarded defence procurement contracts to undertake market-driven business activity in Canada equal to the value of the contracts they have won
  • The ITB Policy:
    • Supports employment and economic growth across the country
    • Drives innovation and exports
    • Scales up small and medium-sized businesses (SMBsFootnote1)
    • Advances 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 ReportFootnote2
Highlights the economic and innovation impact of the ITB Policy
2) Report on Contractor Progress
Demonstrates contractors’ progress in meeting their ITB obligations

1. Economic Impact

The ITB Policy is estimated to contribute more than 41,000 jobs and over $4.6B to GDP annually in Canada

Figure 1: GDP Economic Impact

 (5-Year Annual AverageFootnote 3 Currently ActiveFootnote 4 ITB ProjectsFootnote 5)
GDP Economic Impact. Long description below.

Source: ISED economic modelling based on the ITB administrative database (2016-2020 ITB Credits of active ITB projects in 2021), 2022; Statistics Canada’s Input-Output multiplier (2018), 2022.

Text version of Figure 1
GDP Economic Impact
(5-Year Annual AverageFootnote 3 Currently ActiveFootnote 4 ITB ProjectsFootnote 5)
ITB Recipients $2.2B
Canadian Suppliers to ITB Recipients $1.3B
Consumer Spending by Assoicated Employees $1.1B

Figure 2: Employment Economic Impact

(5-Year Annual AverageFootnote 3 Currently ActiveFootnote 4 ITB ProjectsFootnote 5)
Employment Economic Impact. Long description below

Source: ISED economic modelling based on the ITB administrative database (2016-2020 ITB Credits of active ITB projects in 2021), 2022; Statistics Canada’s Input-Output multiplier (2018), 2022.

Text version of Figure 2
Employment Economic Impact
(5-Year Annual AverageFootnote 3 Currently ActiveFootnote 4 ITB ProjectsFootnote 5)
ITB Recipients 19,000
Canadian Suppliers to ITB Recipients 11,900
Consumer Spending by Assoicated Employees 10,000

2. Regional Industrial Strengths

ITB business activity aligns closely with regional industrial strengths

Figure 3: Breakdown of ITB Business ActivityFootnote6 by IndustryFootnote7

(Currently ActiveFootnote4 ITB Projects)
Breakdown of ITB Business Activity  by Industry. Long description below

Source: ITB administrative database (2016-2020 ITB Credits and 2021-2032 ITB Commitments of active ITB projects in 2021), 2022.

Text version of Figure 3
Breakdown of ITB Business ActivityFootnote6 by IndustryFootnote7
(Currently ActiveFootnote4 ITB Projects)
  Canada Western Canada Ontario Quebec Atlantic Canada
Aerospace 52% 35% 54% 68% 27%
Space 1% 2% 1% 2% 0.1%
Marine 25% 51% 13% 7% 68%
Information Technology/ Land 19% 9% 28% 21% 4%
Other Industries 3% 3% 4% 2% 1%
Total 100% 100% 100% 100% 100%
 

3. Obligation Progress Report

Currently active ITB projects result in more than $44B of ITB economic obligations

Figure 4: Economic ObligationsFootnote8 $44B

(89 Currently ActiveFootnote4 ITB Projects)
Economic Obligations. Long description below

Source: ITB administrative database (2016-2020 ITB Credits and 2021-2032 ITB Commitments of active ITB projects in 2021), 2022.

Text version of Figure 4
Economic ObligationsFootnote8 $44B
(89 Currently ActiveFootnote4 ITB Projects)
Completed $28.9B
In Progress $6.5B
To be Identified $8.6B

ActiveFootnote4 ITB Projects Between 2020 and 2021:

  • 9 new projects added
    • $0.7B in new ITB obligations
  • 26 projects amendedFootnote 9
    • $2.4B in new ITB obligations
  • 7 projects closed
    • $1.7B in ITB obligations fulfilled
 
  • Over $8.6B of economic obligations to be identified in the next decade

4. Business Activity Across Strategic Areas

The introduction of the Key Industrial Capabilities (KICs) Policy resulted in 85 Commitments from 34 ITB Projects

Figure 5: Number of KICs Commitments by Strategic Area Footnote 10
Currently ActiveFootnote4 ITB Projects

Number of KICs Commitments by Strategic Area: . Long description below
  • KICs commitments drive business activity across strategic areas

Source: ITB administrative database (2022).

Text version of Figure 5
Number of KICs Commitments by Strategic Area Footnote 10
Currently ActiveFootnote4 ITB Projects
Direct Work 30
VP R&D 17
VP Supplier Development 14
VP Skills 12
VP DefenceFootnote11 7
VP Exports 5
 

5. Scales up small and medium-sized businesses (SMBsFootnote1)

Over 715 Canadian organisations are benefiting from the ITB Policy, of which close to 65% are SMBsFootnote1

Figure 6: ITB Recipients Breakdown: Number of Recipients by Type (2021) and SMB Activity Volume Breakdown by Type (2021)

 ITB Recipients Breakdown Number of Recipients by Type, 2021 and SMB Activity Volume Breakdown by Type, 2021. Long description below
  • The vast majority of ITB SMB activity is focused on scaling up through supplier development via direct work and global supply chain participation

Source: ITB administrative database (2016-2020 ITB Credits and 2021-2032 ITB Commitments of active ITB projects in 2021), 2022.

Text version of Figure 6
ITB Recipients Breakdown
Number of Recipients by Type, 2021
SMBs 450 63%
Academic Organisations 33 4%
Large and Other Organisations 234 33%
SMB Activity Volume Breakdown by Type, 2021
Direct Work on Procurement 49%
Global Supply Chain Participation 40%
Investment 10%
Collaborative InnovationFootnote 12 1%
 

6. Academic & Research Organisations R&D and Skills

Over 70 Canadian academic and research organisationFootnote 13 projectsFootnote4 are focused on areas of skills development, emerging technologies and leading competencies

Academic & Research Organisations R&D and Skills. Long description below.

Source: ITB administrative database (2016-2020 ITB Credits and 2021-2032 ITB Commitments of active ITB projects in 2021), 2022.

Text version of Figure 7
Academic & Research Organisations R&D and Skills
Skills Development Emerging Technologies Leading Competencies
Cultural Training Adaptation Models Additive Manufacturing Aircraft Engine Testing
Indigenous Students Skills Development Bio-aviation Fuel Flight Simulation Systems
Mechanic Apprenticeship Program Flight Model Dynamics Ice Breaking Technology 
Shipbuilding Skills Excellence Hydrogen Embrittlement Industrial Maritime Applied Research
  Marine Cyber Security Sensing, Engineering and Analytics
  Propulsion Clean Technology Underwater Acoustics
  Quantum Computing Video Processing Algorithmic Development
  Ultra High Frequency Satellite Communications Visual Analytics

7. Gender and Diversity Plans

As a result of the ITB Policy, there are 8 currently active projectsFootnote4 with Gender and Diversity plans

Through the Gender and Diversity Plan, bidders are required to describe 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

Source ITB administrative database (2022).

8. Key Findings

In conclusion, the ITB Policy drives innovation and fosters economic growth in Canada

  • Contributes to close to 41,000 jobs and over $4.6B GDP 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, Supplier Development, Skills, Defence and Exports
  • Supports more than 715 Canadian organizations, including 450 SMBs
  • Benefits over 70 Canadian academic and research organization projects focused on areas of skills development, emerging technologies and leading competencies
  • Promotes gender equality, diversity, and inclusion

9. Annex: Economic Impact Methodology Principles

  • Methodology concepts are informed by subject matter experts from the Organisation for Economic Co-Operation and Development and Statistics Canada.
  • Foundation data is based on ITB credits and commitments of active ITB projects in 2021 over the period of 2016-2032 as specified on each slide.
    • Annual average economic impact analysis is based on the ITB credits over the period of 2016-2020, with adjustments reflecting the intangible business activity and ITB Policy credit multipliers to evaluate the job and GDP impacts.
  • Economic model is based on Statistics Canada Input-Output (I/O) multipliers.
    • Each ITB activity has been linked to the latest (2018) and most relevant economic impact multiplier.
      • All values have been adjusted for inflation based on the Consumer Price Index (CPI) as well as the Bank of Canada's target CPI of 2% and are expressed in 2018 dollars.
    • I/O multipliers have been adjusted to reflect the ITB 100% Canadian content requirement wherever applicable.
    • Job and GDP impact is reported on an annual average basis.
    • Job impacts are measured in terms of full-time equivalent (FTE) employment.
      • Jobs cannot be additive as they are maintained for an extended period after creation.
    • Total economic impact includes the activity that occurs within ITB recipients, Canadian value chain, as well as consumer spending by associated employees across the Canadian economy.
    • All project analysis are based on 2016-2020 ITB credits and 2021-2032 ITB commitments of active ITB projects in 2021 to date.
    • Economic impact estimates are reported at the national level and cannot be broken down at the regional level.
    • All totals are in Canadian dollars. Foreign currency amounts were converted to Canadian dollars using the Bank of Canada’s annual average exchange rate for 2021.