Escalating strife and international conflict have sparked a military build-up that means governments contending with personnel shortfalls depend increasingly on private sector firms for everything from catering and construction to hired guns.
“Nobody’s happy about the rise of geopolitical tensions around the world. But what is happening for sure is that defence budgets are on the rise,” Parent said in an interview.
“Militaries literally don’t have enough uniformed personnel to be able to conduct their operations themselves … In
Last month, a joint venture between
The 25-year deal represents a vast expansion of the simulator maker's previous role in RCAF training, as the partnership, dubbed SkyAlyne, takes on more responsibilities such as training support crews and procuring trainer aircraft.
“We’ll essentially be running the bases here,” Parent said, referring to air bases in
“This is the Canadian government essentially transforming the way they do pilot crew training,” he said, adding that “pretty much everything” in that realm will be outsourced.
In a world of technologically complex warfare, companies can fill critical niches for armed forces already short of recruits.
Defence Minister
“The private sector unquestionably can be more efficient, more nimble, faster decision making,” Perry said.
He cited a "big push" toward privatization of publicly owned entities and services that dates back to the Mulroney government's sale of more than 20 Crown corporations, including
More recently, outsourcing practices have come under fire, sparked by the ArriveCan controversy, which revealed that a company at the centre of the development of the pandemic-era travel app received more than
Brown University’s Costs of War project argues that militaries in particular are spending more and more of their budgets on contractors with little accountability for how the funds are doled out.
In a 2020 report, the
"The companies cited in the report have often found themselves in hot water, here and around the world, on issues such as human rights, health and safety and workers' rights," it wrote.
Canadian defence spending rose by more than two-thirds between 2014 and 2021, according to the Parliamentary BudgetOffice, with further increases since. Last year, the government announced
For CAE's chief executive, however, the selection of Canadian companies for a critical training role shows how the state and the private sector can work hand in glove to bolster security at home and abroad.
"It's training for Canadians, by Canadians," Parent said of the recent deal.
The
Two days earlier, CAE had reported a half-billion-dollar net loss in its fourth quarter after massive one-time charges linked to its defence business, including a
"It represented more than we thought," Parent said.
Nonetheless, the segment represents a rising source of revenue at the company.
Defence contracts amounted to three per cent of CAE's revenue last year, but will comprise 15 per cent this year, he said.
Industry watchers also have an upbeat take.
In a recent research note on CAE,
This report by The Canadian Press was first published
Companies in this story: (TSX:CAE)
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