Atlantic Canada: Regional Report
The commencement of full-rate production on the first River Class Destroyer at Halifax Shipyard is generating optimism within Atlantic Canada’s defence industry.
BY PETER DIEKMEYER
Atlantic Canada’s aerospace and defence stakeholders continue to navigate an increasingly complex global landscape. U.S. President Donald J. Trump’s repeated warnings to President Vladimir Putin regarding Russian actions in Ukraine go un-headed. Israel continues to blockade millions of Palestinians in Gaza despite an outstanding arrest warrant issued by the International Criminal Court against President Benjamin Netanyahu. The strategic Straights of Hormuz remain under constant threat by Yemeni Houthis.
Local developments have been far more promising. The announcement by Dirk Lesko, CEO of Irving Shipbuilding of the start of “full rate production” of the 15 River Class Destroyers (RCD) the company is slated to build for the Royal Canadian Navy (RCN) is spreading optimism throughout the sector. The move represents great news, not just for the company’s Halifax Shipyard where the vessels will be built, but also for the critical supply chains that will be set up to produce what Lesko describes as the “cornerstone of the Royal Canadian Navy.”
The broader outlook is also optimistic. Atlantic Canada contributed 25 Liberal Members of Parliament to Prime Minister Mark Carney’s near majority government during the recent federal election. A slew of government defence spending commitments, including an additional $9.3 billion in defence accruals during 2025–26, are providing the Liberals the opportunity to return the favour.
DEFSEC Atlantic, a growing industry trade show sponsored by the Atlantic Canada Aerospace & Defence Association (ACADA) which takes place each year at the Halifax Convention Centre, provides a tangible bellwether of industry momentum. This year Executive Director, Colin Stephenson, rented the entire building to accommodate the expected traffic.
“It’s a world class facility worthy of a world class show,” Stephenson told CDR. “The River Class Destroyer Program is expected to be the largest procurement in Canadian history. So it’s naturally attracting considerable interest from foreign specialty defence contractors. DEFSEC Atlantic provides them the perfect venue to demonstrate the value they can add.” Stephenson cites interest in the 30 rooms that will be set aside at the event to hold private B2B meetings as a key demand metric.
Stakeholders are increasingly acknowledging that the impact of defence procurements extends far beyond the sector itself. For example, NATO’s Defence Innovation Accelerator for the North Atlantic (DIANA), which established its North American headquarters at the TD Centre in Halifax in late 2024, has been a key driver of dual-use technologies, such as AI, cybersecurity, and advanced materials, which serve both civilian and defence purposes. The move has been great for DEFSEC Atlantic which is expected to attract 80-person delegation drawn from 32 NATO countries.
“Federal government spending commitments and possible new programs such as submarine procurements have driven considerable interest from offshore naval players,” says Stephenson who cites Hanwha Ocean, Navantia, BAE, Kongsberg, and Naval Group as possible contributors. “We are also bringing in local high school and university students to help generate interest in the industry during a time of shortages in many skilled trades.”
Worth noting: Stephenson is launching DEFSEC West which will serve Western Canada the way that DEFSEC Atlantic has served Atlantic Canada. DEFSEC West will be a vibrant and active trade show with an effective business to business component that focuses on the relationships between primes and SMEs in Western Canada.
Jake Trainor, Chief Executive Officer of PAL Aerospace provides a perfect example of how Atlantic Canadian defence executives are studying dual use technologies that can be applied to defence applications. PAL Aerospace’s 2,500 employees, including 1,600 in Eastern Canada, provide a range of intelligence, surveillance, and reconnaissance, in-service support, aircraft modification and crew resource management training solutions.
Domestically, PAL Aerospace co-owns AirPro SAR Services (with Airbus), which does in-service support work for 16 aircraft which are currently being rolled out at Canadian Air Force Bases 19 Wing Comox and 14 Wing Greenwood as part of Canada’s Fixed Wing Search and Rescue aircraft program. PAL Aerospace’s Cartenav division provides a proven “all Canadian mission” system software that is currently deployed on 600 platforms.
However, during recent months Trainor has been working closer with Exchange Income Corporation, PAL Aerospace’s Winnipeg-based parent, which fosters a range of manufacturing and infrastructure capabilities. “We are excited by the Canadian government’s vision,” says Trainor. “EIC provides considerable synergies that could enable us to contribute in several new areas going forward.”
PAL Aerospace’s “Force Multiplier” ISR fleet got a big boost this summer when the company announced the integration of next-generation low Earth orbit (LEO) satellite connectivity into its flagship C-GFMX (DHC-8 315).
The capability, which enables real-time, high-throughput transmission of full-motion video, radar tracks, imagery, and open-source intelligence directly from the aircraft to ground-based mission command centers provides a new option to clients seeking turnkey ISR capabilities. On the export front PAL Aerospace just sent a second Dash-8 ISR aircraft to the U.K. and deployed two of its Dutch-based ISR aircraft alongside a NATO meeting Amsterdam.
One of the biggest challenges facing Canada’s defence industry is that the country’s closest ally is an exceptionally tough negotiator. The Trump Administration recently forced Europe to agree to unprecedented trade concessions, as well as significant purchases of U.S. energy, and investments in the U.S. economy. It is expected to be equally tough on Canada. While few Canadian officials admit this on the record, Trump Administration pressures were already a key driver of the Liberal government’s decision to finally abide by its long-standing NATO defence spending commitments after years of foot dragging. Trump’s hope is that much of that money will be spent on U.S. weaponry.
Not so fast says Clark Bain, IMP Aerospace & Defence’s Vice President Strategic Development. “We need to think of Canada first,” says Bain who does double duty on the board of the Atlantic Canada Aerospace and Defence Association (ACADA). “If Canada invests directly in its own defence industry, then benefits such as capabilities, intellectual property, jobs, and taxes stay here and any future export work we get from those newly developed capabilities goes to Canadians.”
Bain is not shy about talking his own book. IMP Aerospace & Defence has two existing Nova Scotia facilities that could benefit from new defence investments. The company operates an aerostructure facility and an assembly plant that specializes in space technologies such as the Canadarm, James Webb telescope programs, and Lunar Gateway.
This fall IMP Aerospace & Defence will begin subcontract update work at its Halifax International Airport hangers for Leonardo on 16 Cormorant SAR helicopters which will be equipped with new avionics, engines, EIOR sensors, mobile phone detector systems, and fuselages.
Greg Reid, CEO of Kraken Robotics – a marine technology company based in St. John’s, NL, that specializes in advanced sensors, software, and underwater robotic systems – agrees on the importance of a ‘Canada first’ defence policy. “We want to be a national champion,” Reid told CDR. “We have a very sophisticated technical team including many based in Atlantic Canada, that has a lot to offer.”
Kraken Robotics is a publicly traded company which generates $100 million in annual sales, including half in Canada through its main facilities in NL and NS. Last year Kraken acquired 3D at Depth, a 60-person Houston based company that specializes in high resolution LiDAR imaging and measurements.
Kraken’s team has shot up by approximately 27% to 370 people due to the success of its Synthetic Aperture Sonar (SAS) solutions, provision of high-resolution seabed imaging for military and commercial applications, including mine-hunting and underwater surveillance, and a range of export contracts from the U.S., Danish, Polish and other navies.
Kraken also leverages a savvy two track strategy that fosters synergies between its defence and commercial divisions. These include the creation of a 60,000 sq ft. manufacturing plant dedicated to the production of sub-sea autonomous underwater vehicle batteries which is expected to formally open at the end of the year in Dartmouth.
“These technologies can be used in defence applications such as critical underwater infrastructure inspection and mine counter measures,” says Reid. “However, they also have broad application in ocean science.” Kraken’s Katfish sonar has dual use characteristics, it can be used both for mine counter measures and for data collection in the offshore wind and oil & gas industries. “We are a world class team that provides world class technology,” says Reid. “Most of our business is defence and has come from exports. However, we compete with giants such as Northrup Grumman and Thales. So, any increased government focus in Canada is good news both for us and the country as a whole.”
The Canadian government’s national approach to aerospace and defence create challenges for those trying to determine which contractors can be identified with which region. Global Spatial Technology Solutions (GSTS), which markets maritime risk management, shipping and port operation solutions, is a case in point.
GSTS has nearly 40% of staff in Halifax. However, the advanced AI analytics, prediction, and optimization platform provider recently opened a Montreal headquarters. This was primarily done to support it’s work with Canada’s Ocean Supercluster, the Port of Montreal and Canada-U.S. Seaways.
“We recruit staff from across the country” says CEO and co-founder Richard Kolacz who built this impressive Canadian success story, which provided tools that helped NATO monitor Russian international deliveries of grain, fuel, and other commodities during start of the Ukraine conflict. “However, the Montreal region with its port, the St. Lawrence Seaway, shipping companies such as Canada Steamship Lines (CSL) and Fednav, and its strong local AI capabilities, provide an excellent cluster with which we can integrate.”
GSTS recently opened an office in the U.K. and in Greece to complement its efforts in Europe, the Middle East and Asia Pacific Regions. Kolacz’s key focus during coming months will be the continued development and expansion of GSTS’s proprietary OCIANA technology which has both military and commercial applications. OCIANA ingests, integrates, and cleans a wide range of real-time satellite, operational, oceanographic and sensor data sets. The process will necessitate the onboarding of new talent, which will be another key priority.
The Canadian government has been making considerable noise about improving integration of small and medium sized businesses into its military supply chains.
MetOcean Telematics, which showcased its autonomous submarine detection product “NiKA” at IDEX and aims to adapt commercial satellite technologies for defence, is a prime example.
“We employ 150 people in our offices in Dartmouth, the U.K., and Washington,” says Tony Chedrawy, CEO of the Dartmouth Nova Scotia based firm. “To those who are trying to build businesses from the ground up, that sounds like lot. However, we are extremely lean. Our divisional managers and research teams are able to turn on a dime when there are new opportunities. That is a crucial capability in the fast changing world of modern defence.”
MetOcean has delivered prototypes of the NiKA to a range of countries for use in maritime surveillance and anti-submarine warfare both of which can be done without sonobuoys or towed arrays. These include a partnership with maritime defence solutions provider FLANQ that was announced this summer to advance submarine surveillance along German coastlines.
Autonomous NiKA buoys are deployed from ships and dive to pre-programmed depths where they conduct real-time passive detection and classification of acoustic signatures of interest. NiKA’s proprietary buoyancy engines leverage the displacement of oil to dive, surface and remain in place in specific water columns. Production will be done at MetOcean’s Dartmouth facility. “There are hundreds of thousands of sonobuoys deployed each year and demand is increasing,” says Chedrawy. “It’s a big potential market and we can help to address it.”
Canada has the longest coastline in the world with more than 40,000 kilometers of it located in Atlantic Canada. Much of this coastline needs to be monitored for environmental reasons. So, it shouldn’t come as a surprise that companies offering underwater acoustic components and systems to support maritime surveillance might be called upon for defence applications as the global security environment continues to worsen.
“We are expanding at a rapid pace,” says Sean Kelly, a retired RCN officer who now works as Vice President Business Development at GeoSpectrum Technologies, a provider of military grade sonar systems. “There are submarines being built everywhere and demand for products that track them is increasing.”
GeoSpectrum is working hard to address a range of recent new contracts from players in Asia, Europe, and South America for its Towed Reelable Active Passive Sonar (TRAPS), as well as for its hull mounted, and passive sonar lines. The company, which currently employs 250 people, almost all of them in Eastern Canada, has increased its staffing and physical footprints by nearly a third and is planning for another 20% increase next year.
Kelly is also continuing to assess demand for GeoSpectrum’s recently launched Lilypad product, an offshore surveillance system that can be anchored to the seabed. Due to the Canadian government’s interest in monitoring the Arctic, another product line gaining attention is the Rapidly Deployable Fixed Array Sensors (RDFAS), which can be placed at key chokepoints into Canada’s Arctic territory for surveillance. “Our Hydrus arrays would be a good fit,” he notes. “They provide a low-cost passive array sonar system that is thin, light, and can be towed behind all vessels but can also be laid on the bottom of the ocean.”
Virtual Marine, a dual use simulations player based in St. John’s, NL, has more than doubled in size during the past two years, due to its expertise in training professionals on how to operate in harsh environments.
“We built our business in part by specializing in waterways that are subject to ice accumulation,” says Virtual Marine’s CEO, Dr. Randy Billard. “This is a particularly useful capability during a time when the RCN is increasingly asserting its presence in [contested] Arctic waters. Simulation technology is a perfect fit for what can be difficult and potentially very dangerous environments.”
Virtual Marine, which has more than 200 simulators in the field that service all types of vessels, counts B.C. Ferries as an anchor client. However, the Canadian government’s announcement in June of plans to expand the “reach, security mandate, and abilities” of the Canadian Coast Guard by integrating it into a Canadian Armed Forces “defence team” should provide a range of new defence opportunities.
“Canada has the capability to become a global leader in the Arctic,” says Billard. “Eastern Canada’s strong naval ecosystem, which includes two DIANA facilities, has the potential to pave the way.” Virtual Marine, which has considerable experience with the Canadian Coast Guard is thus well placed to contribute to a slew of planned new additions to the fleet.
Billard is also investing considerable time and energy in research and development to position Virtual Marine for these and other new opportunities. This includes participation in a Digital Twin Development Facility, a National Research Council led consortium, that partners the company with Memorial University which is currently refining a twin of the RCN’s Arctic and Offshore Patrol Ship (AOPS) that operates in Canada’s northern waters.
Atlantic Canadian defence contractors are at the forefront of a range of productivity enhancing technologies. Avalon Holographics, which continues to refine its NOVAC three dimensional holographic displays, a new capability with a broad range of possible defence and non-defence applications, is a case in point.
“Boosting cognitive efficiency in mission planning provides one of the best opportunities to optimize resource allocation while ensuring achievement of key goals,” says Russ Baker, the company’s Vice President and Co-Founder. “That’s particularly important in defence applications where holographic displays can facilitate domain awareness in broad space to subsea levels.”
Baker’s key challenge in marketing the NOVAC lies in the fact that 3D displays – like other innovative technologies such as AI and blockchain – have so much potential it’s hard to decide in which industries to apply them first. Another hurdle: holographic displays cannot be easily filmed or photographed.
“Until you have seen the technology live, it is hard to define its uniqueness,” Baker told CDR. “Our key focus right now is to partner with regional players to set up on-site testing and development facilities in order to refine key capabilities in local markets.”
During the past year Avalon Holographics has been able to test its NOVAK display at various locations, including the Oak Ridge Enhanced Technology and Training Center (ORETTC) in Tennessee, U.S. Army base Fort Bragg in North Carolina, and at a demo site in San Francisco. The company continues to refine existing facilities in St. John’s, NL, and the University of Central Florida.
“Holographic displays are a perfect example of a dual use technology that extends well beyond defence,” says Baker. “We have seen interest in possible applications in areas ranging from healthcare to immersive education and even entertainment.” Another focus during coming months will be working with NATO’s DIANA facility to study whether holographic displays can be effectively leveraged in Data Assisted Decision Making. “We are also seeing considerable traction in Canada’s defence sector,” Baker noted. “That includes active engagement with all branches of the Canadian Armed Forces including an initiative for an IDEaS challenge which could lead to another site in Canada.”
According to federal government data Atlantic Canada’s aerospace and defence sector, which includes 200 small and medium sized enterprises and contributes a disproportionate share of the country’s output, accounts for more than 10,000 jobs and generates nearly $1 billion in revenues. Despite these massive capabilities and innovation, industry surveys (like this one) inevitably start and end with Irving Shipbuilding where all paths seem to intersect at some point.
Upcoming milestones include the August delivery of the sixth and final AOPS to the RCN, a keel laying for the eighth AOPS and second Canadian Coast Guard variant and continued modernization work on Canada’s Halifax Class Frigates which will carry a key load pending delivery of the River Class Destroyers.
DEFSEC Atlantic will take place at the Halifax Convention Center between September 30th to October 2, 2025.
Peter Diekmeyer is CDR’s Quebec Bureau Chief
