Good morning. The commander of the Canadian Army wants to flood the military with drones. Ottawa wants those autonomous uncrewed systems to be built at home as part of a sovereign supply chain. Are Canadian companies up for the challenge? That’s in focus today, along with sweeter deals on submarines.
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A technician works on drone repairs at Volatus Aerospace in Vaughan, Ont., last month.Sammy Kogan/The Globe and Mail
In focus
A sector in surge mode
Hi, I’m Pippa Norman. I cover innovation and the business of defence for The Globe. My deep dive for Report on Business about the uncrewed and autonomous systems industry in Canada began with a visit to Volatus Aerospace Corp. in Vaughan, Ont., in December.
The company’s chief executive officer, Glen Lynch, invited me to come for a tour, see what Volatus was building and chat more broadly about the uncrewed aerial vehicles sector emerging in Canada.
Lynch is an advocate for his own business, of course. But he’s also an advocate for the industry and the innovation that’s happening in Canada that the layperson may know little about. “Some of the stuff that’s happening, people have no idea,” he told me upon arrival at their facility.
Volatus Aerospace CEO Glen Lynch stands next to a deployed UAV at the company's test site in Vaughan, Ont., in March.Sammy Kogan/The Globe and Mail
I heard this time and again while reporting this story. From coast to coast there were stories of either the federal government not knowing what’s in its own backyard or Canadian companies themselves not knowing about the existence of each other. At a recent defence industry conference in Calgary, I noticed nearly every conversation happening around me was some form of: We have this technology, you have that technology, here’s how we can put our technologies together to make them twice as effective.
And this collaboration is critical if Canadian companies are going to emerge successful over the next decade, especially in a sector where many businesses still rely on foreign parts. When Ottawa identified uncrewed and autonomous systems in its Defence Industrial Strategy as one of the sovereign capabilities it hopes to build at home, it sent a signal to industry that supply chains matter.
That’s why Philip Reece at InDro Robotics in Sidney, B.C., is upping the share of Canadian content in his products from around 50 to 80 per cent. And why Toronto-based defence company INKAS is opening a new manufacturing facility dedicated to meeting domestic demand.
In anticipation of their products playing a key role in the modernization of the Canadian Armed Forces, as well as Ottawa’s defence spending plans, Canadian companies are firing up their engines, investing in building at home and crossing their fingers it all pays off.
Open Ocean Robotics technician intern Jake Cushway controls an uncrewed service vehicle, while testing in Victoria, B.C., on March 10.Chad Hipolito/The Globe and Mail
I spoke to a dozen of those companies for this story. Each had a unique perspective on where the industry is headed and how they fit into it. Of course, I highly recommend you read the whole piece. But should you find yourself short on time here are a few of the companies that I’ll be keeping my eye on.
Keep in mind, these are only four out of hundreds of interesting companies building autonomous systems in Canada. We have the talent and innovation. Next, the country needs to figure out how to scale and establish a truly sovereign supply chain.
Kraken Robotics Inc.
Kraken’s stock on the TSX Venture Exchange has been reliably climbing over the past year, its customers include U.S. defence darling Anduril Industries and in March, it acquired British underwater tech company Covelya Group Ltd. for $615-million, further expanding its capabilities in maritime defence. It specializes in underwater uncrewed surveying vehicles and subsea batteries.
Sentinel R&D
Sentinel is one of a handful of Canadian drone companies that has a presence in and is actively travelling to the hotbed of innovation for their industry: Ukraine. The company has exclusively developed its own intellectual property and recently formed a partnership with Volatus Aerospace to up the domestic manufacturing of Sentinel’s drone platform, which has a variety of applications from strike to surveillance.
Open Ocean Robotics
Open Ocean’s experience breaking into defence is similar to that of many Canadian companies, in that it wasn’t originally the plan. At first, the company focused on monitoring endangered marine mammals, serving the research and environment markets with its autonomous uncrewed surface vessels. Today, that same technology is being applied to maritime security. If you can monitor an endangered whale, it turns out, you can probably monitor a security threat, too.
Volatus Aerospace
As CEO Glen Lynch described it to me, Volatus is akin to an “800-pound gorilla” in the drone industry. It’s a publicly traded company and one of the bigger players in the aerial sector, with expertise in manufacturing, training, operations and resale. It specializes in larger drones, such as a helicopter-like model it has created, and this summer, it’s gearing up to fly completed aircraft out of its newly established domestic manufacturing hub in Mirabel, Que.
Keep reading: A U.S. defence company is looking to raise as much as $100-million to build a manufacturing facility in Ontario focusing mainly on small arms
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Up next: Finance Minister François-Philippe Champagne will hold a media call after his visit to Washington and attending the G20 ministers’ meetings. Data will also be released for Canadian housing starts.
Morning update
Global markets were mixed with investors dialing back risk ahead of a crucial weekend that could pave the way for a near-term resolution to the Middle East war.
Wall Street futures were in positive territory, while TSX futures followed sentiment higher.
Overseas, the pan-European STOXX 600 was up 0.22 per cent in morning trading. Britain’s FTSE 100 fell 0.2 per cent, Germany’s DAX advanced 0.69 per cent and France’s CAC 40 gained 0.48 per cent.
In Asia, Japan’s Nikkei closed 1.75 per cent lower, while Hong Kong’s Hang Seng slid 0.89 per cent.
The Canadian dollar traded at 73.10 U.S. cents.