In a significant development for Canada’s naval capabilities, Prime Minister Mark Carney is set to announce the winner of a crucial competition for a contract to build 12 advanced submarines. This decision, expected to be revealed on Monday in Halifax, pits South Korea’s Hanwha against Germany’s ThyssenKrupp Marine Systems (TKMS) in a contest that will shape the future of the Royal Canadian Navy.
A Game-Changing Procurement
The forthcoming announcement comes as part of the Canadian government’s broader strategy to enhance its defence spending, aiming to reach 5% of GDP by 2035, a level not seen since the Cold War. The submarine contract, valued at an estimated $20 to $30 billion, with a potential total economic impact of $40 to $50 billion when factoring in operations and maintenance, promises to transform Canada’s military capabilities.
Canada’s current fleet consists of four second-hand submarines, which typically includes only one operational vessel at any given time. The acquisition of 12 new submarines would dramatically enhance the nation’s underwater warfare capabilities, allowing for three vessels to be deployed simultaneously. This strategic expansion is seen as essential for patrolling Canada’s vast coastal waters, particularly the Arctic, Pacific, and Atlantic regions.
Philippe Lagassé, a defence policy expert at Carleton University, highlights that while the announcement will identify a preferred bidder, it will not immediately finalise a contract. Negotiations with the chosen company could span several years, underscoring the complexity of this procurement process.
The Contenders: Hanwha vs. TKMS
Both contenders have made ambitious promises to secure the contract. Hanwha has committed to generating over $70 billion in trade and investment in Canada, alongside creating 25,000 jobs annually between 2026 and 2044. In a notable move, Hanwha has pledged an investment of $200 million to assist struggling steelmaker Algoma in Ontario, ensuring a local supply of steel for the submarine project.
Conversely, TKMS, in partnership with Norway, has indicated that its proposal could add approximately $86 billion to Canada’s GDP over the life of the contract, with the potential to generate over 650,000 job years of employment. This distinction in job creation is significant, with a job year equating to one job sustained for one year.
While there were initial discussions about a possible split of the contract between the two bidders, government ministers have recently downplayed this scenario, suggesting a singular choice will be made.
The Broader Implications
This submarine procurement is not merely a matter of military enhancement; it also carries substantial economic implications. With both South Korea and Germany vying for this lucrative contract, each has been actively engaging Canadian stakeholders and promoting their respective industrial benefits. The competition has seen a marked increase in public diplomacy efforts, particularly from South Korea, which has dispatched a submarine to Canada and engaged with Canadian officials to showcase its technology.
As the competition intensifies, it reflects South Korea’s ambitions to elevate its defence industry to one of the top four in the world. The stakes are high for Seoul, which has made significant investments in promoting its capabilities on the international stage.
Why it Matters
The decision regarding Canada’s submarine acquisition will have lasting repercussions for both national security and economic development. For the first time, Canada may potentially purchase a major defence platform from a non-Western supplier if Hanwha is awarded the contract. This shift could redefine Canada’s military procurement landscape and signal a new era of defence collaboration beyond traditional allies. As Ottawa navigates this pivotal moment, the implications for domestic industry, job creation, and military readiness will resonate for years to come, making this an announcement that is not to be overlooked.
