Canada Seeks More Jobs from Lockheed Martin in F-35 Deal

Canada’s Minister of Industry, Melanie Joly, is set to engage with executives from Lockheed Martin Corp. as the country prepares for a significant decision regarding its acquisition of fighter jets. In an interview, Joly expressed her aim to secure greater economic benefits from Canada’s upcoming defense spending, which is poised to increase substantially.

The Canadian government has committed to purchasing 88 Lockheed F-35 jets to modernize its aging military fleet. However, as of now, only 16 jets have been acquired. This multibillion-dollar project has ballooned in cost to approximately C$28 billion (around $20.4 billion), as noted in a report by Canada’s auditor general last June. Prime Minister Mark Carney aims to utilize this procurement process not only to enhance national defense but also to bolster job creation in the manufacturing and technology sectors.

Joly emphasized the need for Canada to extract more jobs from this defense initiative, particularly in light of potential job losses in other manufacturing areas. “We cannot control the White House, nobody can,” she stated, referring to external political influences. “But we can control the levers of our economy, and that’s why the defense industrial strategy is so important.”

Competing Offers and Job Creation Promises

While Canada moves forward with its plans for the F-35s, Saab AB is also vying for a piece of the action. The Swedish company is proposing its Gripen jet as a possible alternative to the F-35s, promising the establishment of a production line in Quebec. This proposal includes the creation of up to 12,600 direct jobs in Canada, along with spinoff benefits in research and development.

Joly is keen to assess Saab’s offer seriously, especially if the government decides to adopt Saab’s GlobalEye as a surveillance aircraft. “We have a very interesting offer from Saab, and it is our duty to look at it very seriously,” she remarked. Saab’s commitment to utilizing a Canadian facility for building jets for Ukraine and other export markets further strengthens its business case.

The stakes are high for Carney’s administration, as abandoning the F-35 deal carries potential political ramifications. Peter Hoekstra, the US ambassador to Canada, has publicly urged the government to maintain its commitment to the F-35 project, highlighting the importance of Canadian companies in supplying components for the aircraft.

Experts have weighed in on the decision, with Richard Shimooka, a senior fellow at the Macdonald-Laurier Institute, cautioning against abandoning the F-35s. He described such a move as a “disastrous decision,” arguing that Saab’s job promises might be overstated and that the Gripen jet does not match the F-35’s capabilities, as reflected in a 2021 defense department review.

Future Defense Spending and Industrial Strategy

In June, Carney announced an increase in defense spending by C$9 billion for the current fiscal year to align with commitments made to the North Atlantic Treaty Organization (NATO). This adjustment raised Canada’s total defense budget to C$62.7 billion, with the expectation of future increases to meet NATO’s 2035 target of spending 5% of gross domestic product on military and related infrastructure. This target could require an estimated C$150 billion annually.

As Canada embarks on a comprehensive rebuilding plan for its military assets, the fighter jet decision stands out as one of the most significant upcoming choices. Joly indicated that the final decision regarding the F-35s will rest with Carney and is expected to be made in 2026.

In addition to the fighter jets, the Canadian government is also looking into acquiring up to 12 submarines for its navy, with Hanwha Ocean Co. from South Korea and Thyssenkrupp Marine Systems from Germany as the final contenders.

Canada’s defense strategy extends beyond aircraft and submarines. Joly plans to unveil a strategy document early in the new year that aims to develop a robust industrial base for various defense sectors. Canada already possesses expertise in manufacturing armored vehicles, satellites, and marine sensors, all of which could benefit from government support.

Joly also noted the importance of secure artificial intelligence technologies, highlighting her commitment to fostering Canadian companies like Cohere Inc., a Toronto-based startup that is contemplating an initial public offering. “We will build Cohere; we will make it the national champion,” she affirmed, expressing confidence in its potential to compete globally.

As discussions with Lockheed Martin approach, the Canadian government remains focused on maximizing domestic job creation while ensuring its defense capabilities are aligned with international standards. Joly’s proactive stance underscores her commitment to leveraging defense spending for the broader economic benefit of the country.