In a new series called Fortress Canada, the Financial Post explores the economic challenges and opportunities ahead as the federal government attempts to build out a high-tech, homegrown defence sector.
Look for more features and guest columns in the days and weeks to come.
Eliot Pence was five-foot-eight, a smidge on the pudgy side and convinced he was going to play professional basketball.
Steve Nash went to the same high school in Victoria, and if he could make it in the NBA, why not Pence? His parents, being the sort of parents who never wanted to say no to their kids, encouraged him to pursue his dream.
“I know it sounds insane, but I believed it was possible,” he said.
The chase led to an exclusive camp in Los Angeles and daily sessions competing against top American prospects.
To say things did not go well for the Canadian would be an understatement.
“I got absolutely destroyed,” he said.
No matter how humbling the experience, it did not extinguish a now 44-year-old’s capacity to see the impossible as doable and to undertake ambitious things.
For example, he uprooted his American wife and two American-born young children and relocated to Ottawa from Washington, D.C., after 20 years stateside to launch a defence technology company from scratch in a country where defence technology startups are rare and tech startups generally have a habit of moving in the opposite direction.
If the move is unquestionably a gamble for Pence, the timing is no coincidence.
The federal government’s pledge to reach the North Atlantic Treaty Organization‘s spending target of five per cent of gross domestic product (GDP) means core defence spending is expected to soar to $164 billion a year by 2035, according to Parliamentary Budget Office estimates, up from $65 billion in 2025 — a figure that is already double what it was five years ago.
Add it all up, and there is about $1 trillion up for grabs, according to a Canadian Chamber of Commerce report in September, and a good chunk of that money is supposed to be spent at home.
Ottawa also wants to grow the share of defence procurement contracts awarded to Canadian companies to 70 per cent, increase defence exports by 50 per cent and create 125,000 new jobs, turning defence from a fiscal drag into an engine of economic growth.
For a country accustomed to government nickel-and-diming its military, buying its gear from some other place and allowing our formerly best buddies in the U.S.
to do much of the heavy lifting to recast itself as a nation of warriors equipped by a homegrown defence industry would be a massive transformation.
One thing is for certain: Pence came home to give Canada his best shot.
“I don’t really care about the company; I care about changing the country,” he said.
“If we can change the country, then 50 other businesses like mine are going to exist and they are all going to be successful, but it is that country piece that I care most about.” How to win like an American Pence spent a decade in Africa working as a venture capitalist before being among the early hires at Anduril Industries Inc., a U.S.
defence tech startup founded in 2017 out of an old lost airline luggage garage in Orange County, Calif., and backed by mega-billionaire tech investor Peter Thiel.
Anduril appeared on the scene as an industry disruptor and today holds multibillion-dollar contracts with the Pentagon, has a valuation somewhere north of US$60 billion and about 7,000 employees worldwide.
In Ottawa, Pence’s Dominion Dynamics has expanded from having one employee in June 2025 to 98.
He has raised $200 million from mostly Canadian investors, including pension funds and a Big Six bank, and opened the Radisson in suburban Kanata, Ont.
The Radisson is not a hotel, but a 25,000-square-foot manufacturing facility named in honour of a famous French-Canadian explorer who did some daring things and it is built to develop software and manufacture the gizmos — for example, advanced communications networks to safeguard the Arctic frontier and giant drones that can pair up with fighter jets — of an autonomous war-fighting future at a moment when federal dollars are pouring into the defence sector.
Ottawa is full of patriotic folks with first-hand knowledge of what it is like to serve in an underfunded military that average Canadians habitually ignored until Donald Trump came along, initiated a trade war and mused about Canada as a 51st state.
Mark Norman is one of those people.
He turned a passion for sailing into a 39-year career in the Royal Canadian Navy, eventually climbing the ranks to become a vice-chief of defence of the Canadian Armed Forces before retiring six years ago.
These days, he works as an industry consultant and he recently grumbled about a meeting he had in Ottawa that he politely declined to disclose the juicy details of, but said it encapsulated an aircraft carrier-scale sense of frustration, something he has felt after many such meetings lately.
Sure, Norman said, there has been a palpable mood shift in Ottawa.
Money is set to rain down on defence from Parliament Hill, the military is now front and centre instead of an afterthought and government messaging around the urgency to get things done is being pushed from the very top.
But institutional inertia is a tough hurdle to overcome.
Canada’s military has been “genetically programmed” to contract, shrink, cut budgets and the like, so to now flip the switch to growth mode for an organization not set up for growth is difficult in the extreme, he said.
“My optimism is tempered on an almost daily basis by ridiculous examples of — and you can’t make this crap up, to put it bluntly — how we can’t seem to get out of our own way,” he said.
Another hurdle is Canadian defence companies are typically not accustomed to being in charge of making our own stuff.
For decades, the industry has been dominated by what Norman refers to as “apex predators.” That is massive, mostly U.S.-headquartered multinationals, such as Lockheed Martin Corp., RTX Corp., General Dynamics Corp., Boeing Co., L3 Harris Technologies Inc.
and others, that would vacuum up government contracts, retain the intellectual property and only dole out business to smaller Canadian enterprises employed along the supply chain.
For startups, the status quo was an innovation killer since no matter how much imagination they could bring to the table, unless they were part of an apex predator’s supply chain, “nobody in government ever gave them the time of day,” Norman said.
On top of being ignored, any enterprising smaller player had to deal with lengthy security clearances, limited access to capital and byzantine procurement processes, all without a clear idea of what exactly the government was in the market for.
Ottawa has signalled a willingness to change and in February released its Defence Industrial Strategy, which commits to building “world-leading Canadian firms” and nurturing “small and mid-sized” companies.
Great intentions, but words can have a way of proving empty, depending upon whom the speaker is.
What seems different, however, according to David Perry, chief executive of the Canadian Global Affairs Institute and a longtime defence industry watcher, is that Prime Minister Mark Carney’s government is “developing a reputation for doing what they said they would.” Pledging to and hitting the NATO spending target of two per cent of GDP this year and selecting a supplier for Canada’s new submarines within a prescribed timeframe are two examples of the government keeping its word.
Two years ago, a defence company lacking an established presence in Canada and a decades-long track record of selling and delivering would not have stood a chance, Perry said.
But conditions today are “radically” different for a company such as Dominion Dynamics....
