In a strategic move to bolster its bid for Canada’s next submarine fleet, the South Korean conglomerate Hanwha has announced plans for a joint venture with the Automotive Parts Manufacturers’ Association (APMA). This initiative promises to manufacture industrial and military vehicles in Canada using local parts and labour, a commitment aimed at enhancing its appeal in the competitive procurement process.
A Sweetened Proposal
Sources familiar with the development have revealed that Hanwha’s partnership with APMA will lead to the establishment of a new entity dedicated to producing vehicles that meet the needs of both the Canadian military and the automotive sector. This announcement coincides with the Canadian government’s recent extension of the bidding timeline for the submarine contract, allowing both Hanwha and its German rival, TKMS, the opportunity to refine their proposals.
The revised bids, now due for submission, come in response to Ottawa’s request for bidders to incorporate commitments to local manufacturing in their offers. By pledging to produce military vehicles in Canada, Hanwha seeks to demonstrate its dedication to supporting the local economy during a period of uncertainty for the Canadian automotive industry, especially in light of recent U.S. trade policies.
Implications for the Canadian Automotive Sector
Canada’s auto industry has faced challenges, particularly since the imposition of a 25% tariff on foreign-assembled vehicles by former U.S. President Donald Trump, which has made the market increasingly difficult. Hanwha’s proposal aims to mitigate these challenges by ensuring that vehicles are assembled in Canada, thereby sustaining tens of thousands of jobs within the sector.
The new manufacturing commitment includes the use of Canadian-sourced materials, such as steel and aluminium, effectively creating a “sovereign Canadian automotive business unit” focused on designing and producing non-commercial vehicles. These vehicles may include advanced military technology, such as the K9 Thunder self-propelled howitzer and the Redback infantry fighting vehicle, among others.
The Submarine Contract Stakes
The stakes for this submarine contract are monumental, with estimates suggesting that the total investment for the acquisition and lifecycle costs could range between $60 billion and $120 billion. The Canadian government is keen to ensure that any contract awarded delivers substantial industrial benefits, which is why the extended bidding period was granted.
Both Hanwha and TKMS are vying to provide Canada with up to 12 new diesel-electric submarines, with Hanwha presenting its KSS-III Batch-II model and TKMS proposing the 212CD as part of a collaborative German-Norwegian initiative. The competition has intensified, with Ottawa clearly signalling its desire for bids that not only meet military needs but also significantly contribute to the Canadian economy.
Why it Matters
The outcome of this bidding process will have far-reaching implications for Canada’s defence strategy and its domestic manufacturing landscape. As the government seeks to bolster national sovereignty and enhance military capabilities, commitments like Hanwha’s to local production could reshape the future of the Canadian automotive sector while ensuring that defence procurement supports economic resilience. The decisions made in the coming weeks will not only determine the next generation of Canada’s submarine fleet but could also redefine the relationship between the Canadian military and its industrial partners.
