2023 Annual report

From: Innovation, Science and Economic Development Canada

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Economic Impact

The ITB Policy is estimated to contribute nearly $5.0B to GDP and more than 44,700 jobs annually in Canada^{Footnote 2}

Figure 1: GDP Economic Impact

Figure 2: Employment Economic Impact

Regional Industrial Strengths

ITB business activity^Footnote3 aligns closely with regional industrial strengths

Figure 3: Breakdown^Footnote4 of ITB Business Activity by Industry^Footnote5

Obligation Progress Report

Over $48.1B in economic activity^Footnote6 result from ITB obligations active in 2022

Figure 4: Economic Activity from ITB Obligations

• 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 Area^{Footnote 7}

ITB Obligations Active in 2022

• 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 Activity^{Footnote 8} Volume by Type^{Footnote 9}

• 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

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

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

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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.

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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)