Vanguard Magazine

C anada's recently released De- fence Industrial Strategy (DIS) focused on the need for more sovereign capabilities in sup- port of the Canadian Armed Forces (CAF). Foreign companies involved in supplying Canada with fighter jets and submarines have been particularly engaged in deter- mining how to maximize sovereign sup- ply chains to support long term in-service support. And the Minister of Industry Sci- ence and Economic Development Canada (ISEDC) Mélanie Joly regularly speaks of the importance of creating sustained jobs when discussing military acquisition proj- ects, even hinting that Lockheed Martin should provide more jobs in Canada to support the US weapons sensors and com- bat management systems in the River Class Destroyers. These are logical developments in terms of the context in this moment. But when one looks under the hood, there are major challenges to overcome to make sovereign supply chains viable for the long term. Canada has too often seen foreign prime contractors that established factories in Canada, only to close them within years when the business case is no longer prof- itable or the political pressure to move elsewhere is unbearable. Notwithstanding contractual commitments, unprofitable business will always drive companies to take appropriate action to survive. Prime contractors endeavour to de- liver weapons systems on time, whether for construction or subsequent support, and they often fail to meet the contrac- tual delivery dates. The reasons are many: climate extreme events, disease epidemics, workforce issues, material shortages, fires, mergers and more that logistics experts know well. In essence, all of these unpre- dictable surprises cause incremental delays that add up. To overstate the obvious, the supply chains for warships, combat vehicles and military aircraft are made up of thousands of components. Even if the thousands of lowest component suppliers escape the challenges mentioned in the previous paragraph, the challenges faced are signifi- cant in peacetime and so much larger dur- ing transitions in logistics philosophy or in the level of wartime footing required. Should both occur at the same time, mira- cles are called for with the level of sophis- tication of most modern weapons systems. This note explores just one aspect of these challenges. Tier Two+ Suppliers I recently read an article written by Men- ny Shalom entitled "The Primes Aren't the Real Bottleneck in U.S. Weapons Pro- duction," published in War on the Rocks in January 2026. While focused on US supply chain challenges, it resonated with my own experience in this area. The article explores one of the major issues that can play havoc, the challenges often faced by lower tier component sup- pliers as caused by significantly variable demands for their products. When purchasers dramatically reduce their annual purchases or suddenly call for surges, lower tier suppliers are hamstrung in their ability to address them. The lower the tier supplier, the less flexibility suppli- ers can accommodate with smaller work- forces adjusting to layoffs, less access to finances to survive the peaks and valleys and challenges accessing necessary materi- als and lower tier parts. A decision to sub- stitute with material from new suppliers requires recertification of products, usu- ally a lengthy and expensive process. In a similar vein, many lower tier de- fence suppliers are sole sourced by the Primes. Failure to keep them busy during major disruptions as occurred during the Covid-19 pandemic can jeopardize their very survival. Funding, skills develop- ment, tooling and certifying new lower tier replacement suppliers can create de- lays in the order of years. Therefore, customers need to be pre- pared to subsidize lower tier suppliers in the demand troughs with targeted fund- ing and warehousing, and with advanced notice to ramp up to address peaks in de- T H E LA S T W O R D B Y I A N M A C K THE CHALLENGES OF A SOVEREIGN SUPPLY CHAIN 50 APRIL/MAY 2026 www.vanguardcanada.com A supply chain is only as strong as its weakest link —Tony Hsieh

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