Canada’s industry minister is planning to meet with executives at

Lockheed Martin Corp.

soon to try to leverage more jobs out of a multibillion-dollar deal to acquire fighter jets.

Melanie Joly

said in an interview that one of her main goals for 2026 is to extract greater economic benefits from the government’s move to sharply increase defence spending.

Prime Minister Mark Carney

’s administration has tens of billions of dollars worth of projects on the docket, including the planned purchase of fighter jets and submarines, along with a goal to expand Canadian production of armored vehicles, satellites and other equipment.

Carney’s goal is to create more manufacturing and tech jobs out of the government’s defense industrial strategy, which would help to offset job losses in other manufacturing sectors and buttress Canadian efforts to reduce economic reliance on the U.S.

Joly, 46, who was previously Canada’s foreign minister, has been trying to play Lockheed and Sweden’s Saab AB against each other over a contract for dozens of new jets.

“We cannot control the White House, nobody can,” Joly said. “But we can control the levers of our economy, and that’s why the defence industrial strategy is so important.”

Canada pledged in 2023 to buy 88 Lockheed F-35 jets to modernize its aging fleet, but it has purchased only 16 so far. Carney ordered a review of the rest shortly after taking office, which was days after

U.S. President Donald Trump

levied his first tariffs on Canadian goods. The overall cost of the project has jumped to around $28 billion, Canada’s auditor general said in a report last June.

Saab is pitching its Gripen jet as a replacement or addition to the F-35s, with the promise of a production line based in Quebec, where many of Canada’s aviation businesses are headquartered. If the government also chooses Saab’s GlobalEye as a surveillance plane, the company has said a total of 12,600 direct jobs would be created in Canada, with spinoff benefits in research and development.

“We have a very interesting offer from Saab, and it is our duty to look at it very seriously,” Joly said in an interview. Saab would also use the Canadian factory to build new jets for Ukraine and other export markets, further shoring up the business case, she said.

Joly said she plans to see Lockheed in January and she’s been pushing the company to compete with Saab’s pitch.

Supply chain

Walking away from the F-35s would bring political risk for Carney’s government. Peter Hoekstra, the U.S. ambassador to Canada, has been publicly pressing the government on the decision. He has pointed out that Canadian companies get contracts to help supply components to the jet, and that Canada’s use of compatible equipment helps with military alliances like North American Aerospace Defense Command, or Norad, the long-standing joint U.S.–Canada air defence system.

Richard Shimooka, a senior fellow at Canada’s Macdonald–Laurier Institute who specializes in defense policy, wrote recently that it would be a “disastrous decision” to not follow through with the F-35s. Saab’s job promises to Canada are highly questionable and the Swedish firm offers an inferior jet, he said. Canada’s defense department rated the F-35 higher than the Gripen in a 2021 review that was

obtained by the Canadian Broadcasting Corp.  

Asked what more she wants from Lockheed, Joly said Canada could have a bigger role in the supply chain: “I think also they can definitely do more research and development in the country, and we should be able to have access to much more IP control.”

Carney announced in June that the government would hike defence spending by $9 billion in this fiscal year to meet the target set by the

North Atlantic Treaty Organization. 

That brought Canada’s defense outlay to $62.7 billion — but it’s going to have to do much more than that in the future. The prime minister also promised to meet the new 2035 NATO target of spending five per cent of gross domestic product on the military and related infrastructure, which would require about $150 billion annually.

A rebuilding plan for Canada’s old stock of military equipment is a part of that, and the fighter jet deal is the highest-profile decision looming. The final decision rests with the prime minister and will be made sometime in 2026, Joly added.

“We are one of the four big aerospace producers in the world. We have the capability and we will defend our sector. Period,” she said.

Carney will also be making a major procurement decision on buying as many as 12 submarines for the Canadian navy, with the two final bidders being South Korea’s Hanwha Ocean Co. and Germany’s Thyssenkrupp Marine Systems.

In the meantime, there are other defense industries for which Canada can build up an industrial base, Joly said. She plans to release a strategy document on this early in the new year.

Canada already has expertise in building armored vehicles, satellites and other space technology, as well as a range of underwater marine sensors, Joly said. All of those are candidates for a government-backed push.

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She said secure artificial intelligence will also be a focus, pointing specifically to Cohere Inc., a Toronto-based AI startup that’s mulling an initial public offering.

“We will build Cohere, we will make it the national champion,” Joly said. The government believes the company will be a strong global competitor in the sector, she said, adding that “we will be bold about it.”

Bloomberg.com