OTTAWA — In their 2022 budget, the federal Liberals promised to create a new national innovation agency. They did not specify at the time that it would be built around the National Research Council’s signature program for small- and medium-sized enterprises, the Industrial Research Assistance Program, which marked its 75th anniversary last year.

In 2021–22, IRAP accounted for about a third of the NRC’s nearly $1.3 billion in spending. The new Canada Innovation Corp. (CIC) is to take IRAP over within two years, under a plan put forward by Finance Minister Chrystia Freeland and Innovation Minister François-Philippe Champagne.

On a mild day in March, The Logic spoke to Iain Stewart, the president of the National Research Council, in Building M-50 on the NRC’s headquarters campus east of downtown Ottawa.

Stewart’s predecessor John McDougall started in 2010 and announced plans to reorient the NRC toward research with direct industrial applications. He left abruptly in 2016; Stewart arrived at the NRC later that year after multiple postings in the federal bureaucracy and a brief stint as assistant vice-president of research at Dalhousie University.

In September 2020, Stewart became president of the Public Health Agency of Canada, a post he held for about 13 months before returning to the NRC.

The grounds of the NRC complex are open and quiet, like a university or college campus with only widely spaced technical and science buildings, and no students coursing from class to class. M-50 houses a photonics fabrication centre, where the NRC can manufacture prototypes and work with clients on designs and production processes. Stewart would explain why he chose it as the venue.

The interview, about the impending change and what it means for the NRC’s place in Canada’s innovation ecosystem, has been edited here for length and clarity.

To begin with, could you tell me when the notion that IRAP was going to be carved out of the NRC first came to you?

At a very early stage, the question was raised, ‘Should IRAP be part of this new entity?’ There’s pros and cons. It is the national, foundational innovation-support program for small- and medium-sized enterprises’ innovation and technology projects. It touches about 11,000 companies a year and it’s up to almost $440 million a year now. The team to deliver it is almost 500 people. It’s funding about 3,500 projects a year. It’s got national scale. It’s foundational, and it’s well used. So, if you didn’t include it, what would the new agency be in relation to it, and would the new agency have to go and replicate and create something in the same space?

The value of IRAP is not the money. If you said to companies, ‘Why are you knocking on our door?’, well, they want money. But once they knock, they’re dealing with an industrial technology advisor who is taking them through fundamental things they need to internalize. The ITA, to use the acronym, is saying to them, ‘Well, do you have a technology plan? If we do this project that you’re asking us to fund, what does it lead to? Are you ready for what it leads to? Do you know your market you’re trying to address? Are you aware of the intellectual property you need to do the project? Who’s on your management team? Who’s advising you? Where are you getting the technical support?’ and so on.

Once the ITA and the company kind of understand each other, IRAP provides money very quickly and the ITA works with the applicant. So it’s easy to use. It’s not a bureaucratic process, [not like] you’re dealing with some website, you have a question, nobody’s answering the phone. 

Anyway, if the new agency did not include IRAP, then is the new agency not working with early-stage companies? Is that flow of business something outside of its scope? Or does it replicate? Would it come up with its own programs in the exact same space? Well, that sounds suboptimal.

Our view inside this organization was, of course, mixed. We love IRAP. If you go back to the very first years of the NRC, it started providing technical support to companies from the get-go. The program is 75 years old but the role of working with small companies is existential to the NRC. So for us, it was obviously, ‘Ouch. OK, ouch. How would this work?’ But, standing back and looking at the ecosystem, maybe this was the moment when IRAP was ready to take this step.

If you look at our history, many parts of the federal innovation and research system began as pieces of the NRC. We’ve been spinning off things once they achieved scale. It’s been 100 years of us doing this.

In the case of IRAP, being part of CIC adds additional resources, additional mandates and in fact, IRAP will evolve in that new context. It made sense, I guess, is what I’m trying to say.

What do you think would be the ideal relationship between the NRC and the CIC?

One of the synergies and virtues of IRAP and the [NRC] labs is that the labs are service providers. Sometimes an NRC lab has the unique facility or capability or team, and then IRAP brokers a relationship with our business development people in the labs, and off they go. My hope would be that for CIC, we remain a service provider. Once CIC is established, then CIC inherently will take companies to the best solution provider, but we’re hoping we remain part of that network.

We do a lot of joint programming as well. Through the labs, we fund collaborative research activity with universities and companies domestically and internationally. We run challenge programs, which are large-scale, network-style projects around a given topic. Quantum software would be an example. Cell and gene therapy would be another. IRAP is an invaluable connector into the SME community—what are the companies that are interested? What are the companies that are currently trying to make money from quantum software? Who are they? IRAP is an immense, immense source of market and technology intelligence.

Once that function is carved away, how does the NRC stay connected to those practical applications of the science?

They’re kind of two games running at the same time. The funding agency deal flow is startup companies looking for financial assistance and advice. And the ITAs provide good connectivity. They often know their network and so they’ll say, ‘You should go talk to these people or those people,’ and so on. Success in that game is the growth of the company. 

The labs’ role is different. There are actually three things they do. First, the labs do basic exploratory research: developing new knowledge, inventing and discovering, publishing in peer-reviewed journals, just advancing knowledge in Canada and with our partners.

Second, they support government mandates. During the pandemic, we built a vaccine manufacturing centre in Montreal. In 11 months, we constructed a lab that’s capable of producing 22 million vaccines a year and it has an industrial client, Novavax, and it’s in the process of working with Novavax on manufacturing their vaccine.

Writer’s note: The NRC’s biologics manufacturing centre was funded with $126 million in August 2020, before any COVID-19 vaccines were approved in Canada. Although Novavax’s vaccine has since been authorized here, it came later and with results in clinical trials slightly inferior to the mRNA-based vaccines from Moderna and Pfizer-BioNTech. Novavax’s future is uncertain, though Stewart said later in the interview that nothing has changed in the NRC’s contract to manufacture Novavax’s vaccine.

Thirdly, the labs support economic objectives. We do client goods and services for Canadian companies. We work with about 1,000 a year. The labs actually have their own networks of clients. We just walked around the equipment suite for the Canadian Photonics Fabrication Centre. This lab, since it was set up around 2004, has had about 50 industrial client partners where we’ve done research and development and manufacturing for them. Companies like Ciena here in the west end in Kanata. Lumentum, Ranovus. TeraXion—we’ve worked with them on their product, and then got them to their initial production.

I was at a meeting with the Aerospace Industries Association of Canada a couple of weeks ago. I said to the room, which is all CEOs and executives from the aerospace industry: ‘Put up your hand if you’ve ever worked with the NRC.’ And everyone put up their hands.

Probably better news for the NRC in 2022 was $962 million for lab upgrades. What are the most pressing needs on that front?

This [photonics] facility behind you, if we were to build it new, would certainly be more than $300 million. We’re in the middle of upgrading machines in this—it’s a $90-million project. So sustaining facilities is expensive. But in order to be relevant and support our clients, we have to have state-of-the-art capabilities.

At our fuel-cell lab in Vancouver, we’re doing what we’re doing here, bringing in next generation devices, replacing machines and software and connectivity and so on. 

We’re doing the same thing here for batteries—for our critical minerals through to automotive batteries and everything in between—as well as in Boucherville, Que. Our batteries capabilities are being renovated because we’re pivoting into and increasing our support for the fabrication of batteries—the materials, the batteries themselves, the uses and applications. We have a large program in that space.

We’re replacing an airplane. We have nine aircraft, and our largest is six years away from needing to be retired, and we won’t be able to certify it. So that airplane alone is a substantial project, to buy a next-generation platform.

We’re adding capacity to our wave tanks. We have an ocean engineering group in St. John’s and an ice tank where we simulate ice conditions at scale, for ship design and offshore oil and gas platforms.

We’re upgrading our trisonic wind tunnel. That’s the only more-than-Mach 3 wind tunnel in Canada. It’s a platform that Bombardier and others have used in the past. It was actually started for the Avro Arrow project. The trisonic wind tunnel is like a workhorse, for decades. It just needs to be upgraded, to have a nozzle replaced, the compressors replaced and so on. 

The big emphasis is on low-carbon economy and [electric] mobility, and the power sources and materials required to make that happen. So it’s very timely.

Do you think the NRC is currently striking the right balance between pure science and industrial support?

I think [under John McDougall] there was a desire to maximize the applied research activity of the national National Research Council, and I think that’s a valid ambition. The problem is, for a research technology organization, you need to feed the plant. You need to grow the team’s capabilities, you need to explore, you need to learn, you need to experiment. If you overly emphasize the industrial and applied side of things, you begin to run down the plant.

If you talk to the CTOs of very large, integrated companies, ‘How do you find solutions for your problem set?’ Quite often they’ll say, ‘Well, we look at the literature, we use bibliometrics, we look for who’s the best in the world on that topic area. Then we engage them and see if they’ve got anything of relevance.’ And that’s happened to us.

You need to do exploratory research, you need to publish, you do need to patent. But I just want to caution—this is a frequent topic within the Canadian innovation community. From the perspective of a research and technology organization, patents and copyrights play an important and vital role, and we do protect our intellectual property and manage it as a portfolio. We have about 1,800 patents at any given time. Right now we have about 500, 550—around there—patents under licence and we’re always applying for new ones or retiring old ones that are not productive.

But! But, but, but, but, but, if you’re trying to add value to an industrial client, a lot of the time they don’t want a patent. They want know-how, they want to come and work with you on their problem. There’s a transfer of technology that does not get patented that occurs there.

I was in Quebec, in Saguenay, and I was visiting a company that manufactures ultra-pure aluminum for F-35 [fighter jets]. They’re trying to take it to the next level, to be usable for semiconductors et cetera. When I toured their facility—which is fascinating, like, automated equipment with three people on the floor, making 3,000 tonnes a year of ultra-pure aluminum—they wanted to tell me the company was made possible due to the expertise of an NRC researcher at our NRC Saguenay lab. One of the experts there knows absolutely the purification and temperature requirements for creating ultra-pure aluminum. Through an ongoing series of conversations and dialogue, they figured out how they were going to do their business plan.

There’s no patent. There’s no contract. There’s a relationship. How do you document that?

I want to go back to something that you said along the way there about publishing leading to contact with companies leading potentially to contracts or other projects. Is there an example that comes to mind?

Yes. I’m not going to name the company, but an automotive company is very interested in how we do cold spray additive manufacturing for the formation of magnets. This company came across that work through their technology scouts. And that led to a significant industrial relationship.

Is this the sort of automotive company the average person would have heard of?

[Stewart nodded toward a parking lot beyond a wall of windows.] Yes. Oh, yeah. They’d be parked over there.

How has your outlook on protecting Canadian intellectual property changed, let’s say over the last three to five years?

The National Research Council has been a target for intellectual property theft for a long time. It’s an area where we spend a lot of effort, to be frank, working with our federal partners to protect our cyber environment, as well as the movement and goods of people in and out of our labs and so on.

In a lot of instances we’re actually in a collaborative mode, not in a proprietary mode. We do a lot of work openly with others. I believe in the movement of minds. I believe that research is an international discourse. It’s a community, and moving ideas and people around is essential for an organization like ours to thrive.

We have a departmental security team. We have a cybersecurity team. They’re a big investment for us. And frankly, it’s an investment that gets bigger over time.