OTTAWA — Canada is giving two weapons manufacturers millions of dollars to come up with a plan to make more 155 mm ammunition as the war in Ukraine drags on.

Defence Minister Bill Blair made the announcement in a speech to the Conference of Defence Associations Institute in Ottawa on Thursday.

He said $4.4 million will go to IMT Defence and General Dynamics to develop detailed proposals to increase production.

"We've donated tens of thousands of rounds of NATO-standard, 155 mm artillery ammunition to Ukraine. But Ukraine needs much more ammunition — and quite frankly, so does Canada and the (Canadian Armed Forces)," Blair said.

Several of Canada's allies have already signed deals to increase their own production.

NATO signed a US$1.2-billion deal in late January through its Support and Procurement Agency to produce around 220,000 rounds, bringing its total spend on 155 mm ammunition to more than US$4 billion.

Countries contributing to the agreements will either shore up their own supplies or provide the ammunition to Ukraine.

Canada is not one of those contributing nations.

In a statement on Jan. 25, Defence Department spokesman Alex Tétreault said, "We continue to sustain the stocks of ammunition necessary to meet the long-term training and operational commitments of the CAF."

Canadian manufacturers produce a variant of the 155 mm shell known as the M107, which is shorter-range and considered less desirable than the M795.

Blair said Canada's production capacity is now up to 5,000 shells per month from 3,000, thanks to a $4.8-million dollar spend last year — the first increase in production capacity since Russia's full-scale invasion of Ukraine in February 2022.

But cost estimates for building domestic production capacity of the M795 rounds are nearly 100 times that.

A senior Defence Department official told a House of Commons committee in November that General Dynamics and IMT Defence provided initial cost estimates of $200 million in late 2022, and later revised them to $400 million.

That price tag doesn't include any actual ammunition.

Troy Crosby, the assistant deputy minister of materiel, also told MPs on the defence committee that industry estimates suggest it could take three years to get a production line up and running.

The deal announced Thursday is aimed at developing production of M795 rounds.

General Dynamics will "demonstrate the capability to manufacture a combustible cartridge case," the Defence Department said, work that will take two years to complete.

It's also agreed to look into automating some areas of production by the fall of 2025.

IMT Defence is tasked with developing a production line concept within the next couple of months.

Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said she is encouraged that talks continue about ramping up production.

"We continue to call for urgency," she said in an email.

During his address to the conference, Blair was also asked about the military's recruitment efforts and he noted that more members have left the Armed Forces in the last three years than have entered.

"Frankly, it's a death spiral for the Canadian Armed Forces, we cannot afford to continue on that pace."

In December 2022, the Defence Department announced it would allow permanent residents to apply to join the military for the first time. CBC News reported recently that 21,000 people applied but only 77 actually joined the ranks in the first year.

Recruitment processes are too slow, Blair said, and potential recruits are finding other jobs while waiting on the military to call them back.

"One of the things that I was told by the military is, 'If we hire them, we're stuck with them forever, like we own them forever.' And that's why they're so cautious," Blair said.

He suggested creating a probationary period that could help get people in the door more quickly. The department said planning on that began in the fall.

Late last year, officials said the military was short around 16,500 regular and reserve force members. Its authorized strength is 101,500 troops.

This report by The Canadian Press was first published March 7, 2024.

Note to readers: This is a corrected story. An earlier version stated that the deputy defence minister spoke to the House of Commons committee about cost estimates for 155 mm production.

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