The Canadian government has made a pivotal decision, selecting Thyssenkrupp Marine Systems (TKMS) from Germany to construct a fleet of submarines, as confirmed by two anonymous sources familiar with the matter. Prime Minister Mark Carney is set to unveil this significant announcement in Halifax on Monday, concluding a high-stakes battle between TKMS and South Korea’s Hanwha for a lucrative contract to build 12 submarines for the Royal Canadian Navy. This decision marks a transformative moment for Canada’s naval capabilities, enabling unprecedented stealth operations along its coastlines.
A Strategic Choice for Canada’s Naval Future
The selection of TKMS represents more than just a procurement decision; it signifies a strategic enhancement of Canada’s military prowess. With an investment estimated between $20 billion and $30 billion for the submarines themselves, and potentially up to $50 billion for maintenance and operational costs, this initiative is poised to reshape the Royal Canadian Navy for generations.
Prime Minister Carney had previously indicated the government would announce its choice by the end of June, though specifics remained elusive. This announcement comes just before Carney heads to the NATO leaders’ summit in Turkey, underscoring the significance of the procurement not only for Canada but also for its allies.
While the announcement is expected to identify a preferred bidder, it is essential to note that this does not guarantee an immediate contract. Negotiations will continue with TKMS, and experts suggest that finalisation could take several years. Philippe Lagassé, a defence policy professor at Carleton University, emphasised that the process is typical for such substantial military procurements.
The Heavyweight Competition
The competition between TKMS and Hanwha has been intense, with both companies vying for the substantial economic and strategic benefits that come with such a contract. Ottawa has made it clear that the economic advantages offered by the bidders would play a decisive role in the selection process. Hanwha has pledged over $70 billion in trade and investment in Canada, promising to generate more than 25,000 jobs annually from 2026 to 2044.
Conversely, the TKMS proposal, in collaboration with Norway, has projected an impressive $86 billion boost to Canada’s GDP throughout the contract’s lifetime, along with the creation of over 650,000 job years—a metric reflecting one job for one year. The stakes are high, and the implications of these commitments extend far beyond the immediate military capabilities.
In earlier discussions, there was speculation that Ottawa might consider splitting the contract between the two contenders. However, government ministers have since downplayed this scenario, indicating a clear preference for a single supplier.
The Transformative Impact on Canada’s Navy
This procurement is set to revolutionise Canada’s naval operations, allowing the Royal Canadian Navy to establish a more formidable underwater presence. Currently, Canada operates four submarines, all acquired second-hand, with only one typically available for deployment. The acquisition of 12 new submarines would enable Canada to maintain three operational vessels at any given time, significantly enhancing its ability to monitor and protect its Arctic, Pacific, and Atlantic coastlines.
David Perry, president of the Canadian Global Affairs Institute, remarked on the strategic advantages this fleet would provide, stating, “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters.” This capability is crucial in a geopolitical climate where threats from rival nations are increasingly pronounced.
Since the procurement process began in August 2025, both bidders have engaged in a vigorous public relations campaign to win over Canadian officials and the public. The Carney administration has also leveraged this competitive environment to secure commitments from bidders that align with its Canada-first industrial policy, aimed at boosting domestic industrial capacity in the face of U.S. protectionism.
International Relations and Industrial Benefits
The drive for industrial benefits is a core component of Canada’s approach to defence contracts. Both TKMS and Hanwha have collaborated with Canadian firms to maximise local economic impacts. For instance, Hanwha has pledged a significant investment in Ontario’s Algoma Steel, while TKMS has highlighted its longstanding ties with Canada and the potential for collaborative ventures with Canadian partners.
The German ambassador to Canada, Tjorven Bellmann, emphasised this partnership, stating, “Together, Canada, Germany and Norway can build the biggest, most modern and low-risk conventional submarine fleet.” This sentiment reflects the shared strategic interests of NATO allies in bolstering military capacities.
In contrast to past bidding wars for military contracts, such as the fighter jet competition that saw Canada select the F-35, the submarine procurement lacks a U.S. defence contractor. Canada’s decision to exclude nuclear submarines further narrows the playing field, allowing for a more focused competition between traditional allies.
South Korea’s ambition to expand its military industry is underscored by its aggressive pursuit of this contract. With aspirations to become a top-tier global defence player, South Korea views this opportunity as a vital step in establishing a foothold in the Canadian market.
Why it Matters
The decision to award the submarine contract to TKMS is not merely a procurement milestone; it represents a crucial turning point in Canada’s military strategy. This procurement could redefine Canada’s naval capabilities, significantly enhancing its ability to operate independently on the world stage. As Canada commits to bolstering its defence spending to meet NATO targets, the implications of this submarine fleet extend beyond military readiness to encompass economic revitalisation and international partnerships. The stakes are high, and the outcome of this decision will resonate for decades to come.
