Question Period Note: CED’s role in the Defense Industry

CED’s role in the Defense Industry

• Regional Development Agencies are leading the Regional Defense Investment Initiative, which is one of the concrete measures of the Defense Industrial Strategy.
• CED has a budget of approximately $65 million dollars over three years to implement this initiative in Quebec, which was launched on December 8, 2025.
• CED’s investments in this new initiative promote the integration of businesses, particularly SMEs, into defense supply chains, both nationally and internationally.
• As of April 17, 2026, 46 defense-related projects have recently been approved under the RDII and other CED programs, with funding totaling $72 million dollars.
CED supports Quebec SMEs—whether already integrated into supply chains or seeking to join them, including in the defense industry, through investments in productivity or marketing.
CED also funds organizations that assist SMEs and supports events within the defense industry that raise awareness of defense business opportunities, such as the Canadian Defense and Security Market Symposium.
CED plays a facilitating role in maximizing the economic benefits of federal defense investments for Quebec SMEs under the Industrial and Technological Benefits Policy.

Regular interventions
• As part of its mandate, CED supports small and medium-sized enterprises (SMEs) in Quebec that are part of or wish to become part of defense supply chains in three ways:
**Through its regular programs, CED provides financial support to Quebec companies them grow and integrate into the supply chains of major defense contractors. In particular, CED supports international marketing strategies and productivity, expansion, or innovation projects that enable SMEs to meet the needs of major contractors.
**Through its regular programs, CED also supports partners in the defense ecosystem who offer services and activities to Quebec businesses, including outreach and networking. This includes the Defense and Security Symposium (STIQ and Aéro Montréal) and the networking session held in conjunction with CANSEC (STIQ).
**As part of the Industrial and Technological Benefits (ITB) Policy, CED provides support and facilitates networking among companies, prime contractors, and key partners, using the Policy as a lever for integration into defense value chains.
• CED also acts as a facilitator and has a network of collaborators within the federal and provincial governments as well as industry. In particular, CED works closely with the Quebec government to optimize the benefits of investments in the defense industry in Quebec.

Key Measures of the Defense Industrial Strategy - Regional Defense Investment Initiative (RDII)
• As part of the key measures of the Defense Industrial Strategy (DIS) aimed at building a dynamic and entrepreneurial defense sector for SMEs, the RDAs are implementing the RDII, an initiative with a contribution budget of $379 million over three years – CED has a budget of $64.9 million in contributions starting in 2025–2026 for Quebec.
• The RDII is part of the Department of National Defense's (DND) accelerated plan to increase the readiness of the Canadian Armed Forces (CAF) and invest in the capabilities and industries necessary for Canada’s defense, in order to meet Canada’s commitment to defense spending, with a target of 2% of GDP by 2025–2026, rising to 5% of GDP by 2035.
• RDII responds to the fifth priority in the Prime Minister's Mandate Letter, which is to protect Canada's sovereignty and ensure the safety and security of Canadians through measures that will strengthen the Canadian Armed Forces, our border, and our police services.
• Projects eligible under the RDII are designed to meet the military needs of the Government of Canada, NATO, or its Allies, in full alignment with the regular Regional Economic Growth through Innovation (REGI) program, and, in exceptional cases, through the Quebec Economic Development Program (QEDP).
• Specifically, RDII has several objectives:
**Support the development and integration of businesses, particularly SMEs, and regional innovation ecosystems into defense supply chains, both nationally and internationally.
**Support the strengthening of industrial and innovation capacities of companies, dual-use technology suppliers, and technology centers, including strategic regional infrastructure. This includes investments in dual-use companies wishing to shift or expand their activities toward defense.
• The ADRs, under the leadership of CED, are also collaborating with DND and Innovation, Science and Economic Development Canada (ISED) on work related to the DIS itself to ensure alignment between the strategy’s priorities and RDII objectives.

Examples of projects supported by CED under the RDII:
• CED has authorized a repayable contribution of $2,400,000 to Alphacasting Inc., a Montreal-based company specializing in the manufacture of aerostructure parts and subassemblies for the aerospace industry. (Unannounced, disclosed).
• CED has authorized Solutions Novika, a College Centres for Technology Transfer (CCTT) affiliated with Cégep de La Pocatière, to receive a non-repayable contribution of $1,230,000 to acquire technological equipment.
• CED has authorized a repayable contribution of $250,000 to Ferréol Inc., a young Quebec City-based company that develops and markets innovative alpine skis and is already a supplier to National Defense. The financial assistance will be used to implement the marketing strategy.
• CED has authorized a non-repayable grant of $4,495,000 to Aéro Montréal, Propulsion Québec, and Sous-traitance industrielle Québec (STIQ) to implement a continuum of services for Quebec SMEs seeking to integrate into national and international defense supply chains or expand their operations within them. The support is aimed at mobilizing, raising awareness of business opportunities, fostering networking, and building the capacity of companies involved in this market.

Regional Coordination Table in Quebec
• To support the implementation of the DIS initiatives, CED has established a regional coordination table to bring together federal partners, and potentially provincial partners, who support the defense industry in Quebec, particularly in the context of the DIS initiatives.
• This regional coordination table aims to facilitate information sharing among the various partners, harmonize the strategic objectives of the initiatives, and promote consistency in federal and provincial defense interventions in Quebec.

Additional information: The defense industry in Quebec
• Across Canada, the defense industry is divided into three subsectors: aerospace, land, and maritime. In 2022, Quebec accounted for 23.7% of the 36,016 direct jobs, with key activities in munitions, aircraft maintenance and manufacturing, and simulation systems.
**Quebec stands out in the aerospace and space sectors, with companies such as MDA and Reaction Dynamics contributing to exports and the development of sovereign space launch capabilities. The naval sector is also growing, notably with the Davie shipyard and the construction of the Polar Max icebreaker for the Canadian Coast Guard.
**Three major Quebec companies (Pratt & Whitney Canada, CAE, and Bombardier) are among the leading investors in R&D. The industry also benefits from Quebec's leadership in artificial intelligence, cybersecurity, advanced materials, and emerging technologies.

Canada Economic Development for Quebec Regions (CED) supports Quebec SMEs seeking to enter or expand within defense supply chains. It provides funding, facilitates connections with major defense contractors under the Industrial and Technological Benefits Policy, and supports ecosystem partners. This support is part of the Defense Industrial Strategy (DIS) to strengthen the industry across the country.