Ontario releases framework for its first-of-its-kind Defence Industrial Strategy

On May 28, 2026, Ontario released a framework for its Ontario Defence Industrial Strategy (the Strategy), a proposed 10-year plan to grow the province’s defence industry and position Ontario as a trusted partner in domestic and allied defence supply chains. Following the release of the federal government’s Defence Industrial Strategy (the Federal Strategy) in February, the provincial framework outlines four strategic pillars that will guide the development of the Strategy and support Ontario’s objective of expanding its defence sector, while also identifying areas for further exploration and consultation. With the full Strategy expected later in 2026, industry stakeholders should review the framework and remain attentive to upcoming announcements and consultation opportunities.

What you need to know

• Goals by 2035. The Strategy aims to create 43,000 jobs, contribute $6 billion to provincial GDP, and generate over $400 million in annual provincial tax revenue by 2035. These goals broadly align with the Federal Strategy, which targets a 50% boost in defence exports, 240% industry revenue growth, 125,000 new jobs, and over half a trillion dollars in defence-related activity over the same period.
• Four strategic pillars: The framework is organized around four pillars that will guide the development of the Strategy:
  • Strengthen the province’s industrial base: Ensuring Ontario firms capture value from increased federal and allied spending, including securing large-scale procurement opportunities.
  • Owning tomorrow’s frontier: Translating Ontario’s research strengths into commercially viable technology and establishing future industries in AI, quantum, and advanced materials where such dual-use technology can be built, brought to market, and compete globally.
  • Expanding export reach: Positioning Ontario firms as reliable suppliers to the federal government and allies for defence and dual-use technology and equipment through increased export readiness and market access.
  • Building an integrated supply chain: Leveraging Ontario’s strengths in critical minerals, energy, and advanced manufacturing to build a resilient defence supply chain.
• Next steps. Ontario will undertake consultations on both the framework and the proposed Strategy with key defence stakeholders, municipalities, industry, and academia over the coming weeks and months. Ontario plans to launch the full Strategy by the end of 2026.

Why the Strategy matters

A more complex global security environment is driving significant increases in defence spending by Canada and its allies. Canada’s 2025 federal budget, Canada Strong, commits $81 billion over five years and to reach NATO’s 5% of GDP spending target by 2035—by conservative estimates, this will amount to $150 billion in annual spending on defence, per year, by the Government of Canada within nine years. The Federal Strategy aims to build, equip, and sustain Canada’s defence capabilities and generate over half a trillion dollars in overall defence-related activity. Ontario views this surge in spending as a “generational opportunity” to grow its defence industry and broader economy.

In response, Ontario is developing a first-of-its-kind provincial strategy focused on the defence sector. This 10-year economic Strategy aims to help Ontario firms scale in domestic and allied supply chains and capture a greater share of defence investments provided by Canada and its allies. While its geographic location does not position Ontario as central to the active defence of Canada’s north and establishing Arctic sovereignty, the provincial Strategy seeks instead to leverage Ontario’s well-developed economic levers. These include talent development, innovation, investment attraction, supplier readiness, export support, and enabling infrastructure.

Four strategic pillars

The framework is organized around four strategic pillars that will guide the development of the Strategy, supported by a foundational focus on workforce development.

“Foundation for Success”: a specialized, industry-ready workforce

The framework emphasizes the need to build a pipeline of skilled talent to enable firms to scale and attract investment. Current measures include skills training funding and significant investments in post-secondary capacity, particularly in STEM and skilled trades. Looking ahead, Ontario is considering opportunities to better assess defence-specific skills needs, expand defence-related learning opportunities, and convene with government, industry, and post-secondary institutions to identify defence workforce training gaps. The Strategy’s foundation aligns with one of the objectives under the Federal Strategy: to build up a workforce capable of both producing and maintaining defence materials in Canada¹.

Pillar I: strengthen the industrial base

Pillar I focuses on positioning Ontario to capture increased federal and allied defence spending by supporting prime contractors and SMEs, and expanding industrial capacity to enable firms to secure large-scale procurement opportunities. Ontario notes its current efforts in this regard, including its $215 million investment in the shipbuilding sector, the use of Invest Ontario to attract and scale dual-use projects, and the development of regulatory and permitting tools (such as Special Economic Zones) to accelerate major projects.

Under the framework, Ontario is considering opportunities to attract manufacturing investment projects, strengthen the supplier base, and better integrate Ontario firms into domestic and international supply chains. The framework also contemplates greater alignment with federal initiatives, including opportunities to fast-track procurement and increase participation in programs such as the Industrial and Technology Benefits policy.

Pillar II: own tomorrow's frontier

Pillar II focuses on targeting growth in the defence market for AI, quantum, cyber, drones, advanced materials, and space technologies, utilizing Ontario’s “world-class research ecosystem” of its post-secondary institutions and labs to develop commercialized technologies that can compete globally. The framework highlights current initiatives including the Ontario Innovation Tax Credit and Ontario Research and Development Tax Credits, support for SMEs through the Critical Technologies Initiative, and funding from Venture Ontario and the Ontario Research Fund. For the Strategy, Ontario is considering opportunities to enable the commercialization of defence-related research, strengthen defence research capabilities for firms through its universities and colleges, and explore linkages to the province’s “Buy Ontario” initiatives.

Pillar III: expand export reach

Pillar III emphasizes that long-term growth in Ontario’s defence sector will depend on expanding beyond domestic demand and increasing participation in international supply chains, including NATO. The province aims to position Ontario firms as reliable partners and “suppliers of choice” for both the federal government and allied markets. Current measures include the appointment of Ontario’s Military Defence Representative (OMDR), Bernard Derible, in March, export training and compliance support for companies, and the use of Trade and Investment Offices (TIOs) to promote Ontario firms in priority markets. Indeed, Ontario has been at the forefront of defence supply in the recent past, with firms like General Dynamics Land Systems-Canada (located in London, Ontario) supplying Light Armored Vehicles for export.

Ontario is also considering opportunities to strengthen Ontario’s brand as a global hub for critical defence inputs and components, develop a "sales playbook" to be used by the OMDR and TIOs to engage domestic and international customers, and work with municipalities and local economic development agencies to identify firms for trade missions and TIO support.

Pillar IV: build an integrated supply chain

Pillar IV aims to leverage Ontario’s strengths in critical minerals, nuclear energy, and advanced manufacturing to support defence objectives and drive economic growth. Additionally, a resilient supply chain makes Ontario a more stable, secure, and reputable jurisdiction for investment and partnership. Ontario possesses critical minerals that have a significant defence application, including nickel, copper, and platinum. The province’s current measures include its $500 million Critical Minerals Processing Fund, submitting a bid for the Defence, Security and Resilience Bank headquarters, and the province’s continued leadership in small modular reactor development. Ontario has achieved considerable success through collaborative agreements with First Nations communities (e.g., Webequie and Marten Falls First Nations) in expediting the development of supply and access roads to the Ring of Fire. It is anticipated that construction will begin on these roads as early as June 2026, several years ahead of schedule.

Looking ahead, Ontario is considering opportunities to explore linkages to “Buy Ontario” initiatives to support Ontario-developed dual-use technologies, expand critical mineral extraction and processing to support allied supply chains, and take a coordinated, “whole-of-government approach” to aligning procurement and investment across the defence supply chain.

Next steps

The launch of Ontario’s Strategy shows, once again, significant alignment and co-ordination with the federal government. Both Canada and Ontario are moving in the same direction to shore up the defence of Canada’s sovereignty while simultaneously using defence investment to bolster domestic economic growth. Following the release of the framework, Ontario plans to consult with key defence stakeholders, municipalities, academic institutions, and industry stakeholders “over the coming weeks and months” to inform the development of the Strategy. The final Strategy is expected by the end of 2026.

As Ontario moves to capture this “generational opportunity”, sector participants should consider the framework and remain attentive to upcoming announcements and opportunities to formally consult with the provincial government on the finalization of the Strategy.