Medicine Hat aerospace set to benefit from Canada’s defence boost, officials say

While nearby drone companies did not respond to interview requests on Wednesday, one executive told CHAT News in March the industry was poised to take advantage of any increase to federal spending.

Spencer Fraser, CEO of drone company Landing Zones Canada, said then that the industry was set up well if Ottawa decides to invest further in the technology.

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READ: Southeast Alberta’s aerospace industry poised for growth

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His company has a billboard advertising Medicine Hat as the “the drone city” — a play on the formal “Gas City” slogan.

Pudwell, who works as a marketing consultant for Pattison Media, said there also are “spillover effects” that could see investments in the area beyond just the drone manufacturers.

“Defence growth will boost sectors like transportation, manufacturing, construction, technical services,” he added.

“All of these industries are fast growing already, and then in our area, we just help increase that.”

The new NATO spending goal is broken down into two parts: an investment of 3.5 per cent in core defence needs such as weapons and 1.5 per cent in related areas like infrastructure and cybersecurity.

Canada’s defence spending hasn’t reached five per cent of GDP since the 1950s.

It hasn’t even been above two per cent since 1990, despite the fact that the two per cent target has been the NATO standard since 2014.

NATO estimates that Canada spent $41 billion in 2024 on defence, or 1.37 per cent of GDP. In 2014, Canada spent $20.1 billion, or 1.01 per cent of GDP, on defence.

Carney has said that five per cent of GDP would mean a $150 billion defence budget for Canada.

Much of that spending will remain in the country because of a federal policy that requires companies awarded defence procurement contracts to undertake business activity in Canada equal to the value of the contracts they have won.

Selena McLean-Moore, director of Medicine Hat Economic Development, said that domestic defence policy will help companies already poised for growth in the region.

“The trickle down effect to our defence and aerospace companies — and even manufacturers — is going to be huge,” McLean-Moore told CHAT News on Wednesday.

Prime Minister Mark Carney said he wasn’t yet able to list what military equipment Canada will need as the technology used on the battlefront keeps shifting.

However, he pointed to the huge role drones have played in Ukraine’s defence — weapons that have become more sophisticated even as their costs have dropped.

Also near Medicine Hat is Canadian Forces Base Suffield, home to one of the largest military training areas in North America used for live-fire and manoeuvre exercises.

The base is home to a British training unit through a partnership between Canada and the UK that started during World War Two.

It’s also considered a hub for military research and development with a focus on counter-terrorism, explosives testing and protective systems.

However, the UK in 2023 formally withdrew all tanks, artillery and other military vehicles from Suffield, bringing an end to armoured exercizes that have taken place there for decades.

But the base remains crucial for some of the companies that will benefit from increased national defense spending.

“Our proximity to CFB Suffield is a very strategic opportunity for us, based on the fact that is the department that is going to be spending a lot of money,” said McLean-Moore.

The new spending could also provide an opportunity that could match with Medicine Hat’s shifting energy plans.

McLean-Moore said the Canadian Armed Forces will require more sustainable aviation fuel that Medicine Hat could supply if it expands its carbon capture initiative.

“If we’re looking at tax assessment and growth, that would probably be one of the bigger ones, because it would be an industrial manufacturing facility,” McLean-Moore said.

Outside of the city, the Alberta government’s work to “twin” Highway 3 will help to attract potential business, officials say.

Pudwell, the chamber president, also pointed to the education and training initiatives that help boost the sector in Medicine Hat.

The region will be ready when the federal government starts spending, he said.

“We definitely have the foundation in place already,” Pudwell said.

“It’s just taking taking advantage of that.”

— With files from The Canadian Press and Kevin Kyle

by Olivia Thorington

Medicine Hat aerospace set to benefit from Canada’s defence boost, officials say

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