In a significant move for national security, Prime Minister Mark Carney is set to announce the selection of Germany’s Thyssenkrupp Marine Systems (TKMS) to construct a fleet of submarines for Canada. This decision, which will be revealed in Halifax on Monday, concludes a fierce competition with South Korea’s Hanwha for a lucrative contract to deliver twelve submarines. This procurement is projected to enhance Canada’s capabilities to patrol its waters undetected and reshape the Royal Canadian Navy’s future.
High-Stakes Competition
The announcement, anticipated shortly before Carney’s departure for the NATO leaders’ summit in Turkey, culminates a lengthy and intense bidding war between TKMS and Hanwha. While the government is expected to name a preferred bidder, final contracts will take time to negotiate, potentially extending over several years, according to defence policy expert Philippe Lagassé from Carleton University. The total value of the procurement could reach between $20 billion and $30 billion for the submarines alone, with operational costs potentially escalating to $50 billion.
Despite the excitement surrounding the announcement, the Prime Minister’s Office remained tight-lipped when approached for comments ahead of the reveal. Likewise, both German and South Korean embassies in Ottawa declined to provide insights into the ongoing discussions.
Transformative Defence Strategy
This submarine acquisition represents a transformative step for Canada’s military capabilities, marking the first substantial investment in underwater warfare since the Cold War. Historically, Canadian submarines have been limited in number and operational capacity, with only four second-hand submarines currently in service—often leaving just one operational at any given time.
The Canadian Armed Forces have indicated a need for twelve submarines to ensure a robust defence posture, with estimations suggesting that only one in four vessels would be available for deployment at any time due to maintenance and training requirements. The new fleet would enable Canada to deploy three submarines simultaneously, significantly enhancing its ability to deter foreign threats along its Arctic, Pacific, and Atlantic coastlines.
David Perry, president of the Canadian Global Affairs Institute, emphasised the strategic importance of this acquisition: “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters.”
Economic Considerations and Industrial Benefits
The submarine procurement process has not only been about military capability but also economic impact. The Canadian government has prioritised the economic benefits that the selected contractor can deliver. Hanwha has pledged over $70 billion in trade and investment, promising the creation of more than 25,000 jobs annually from 2026 to 2044. Conversely, TKMS claims its joint proposal with Norway could inject $86 billion into Canada’s GDP and generate over 650,000 job years throughout the contract’s lifespan.
Although there were initial discussions about potentially splitting the contract between the two bidders, government ministers have recently downplayed this idea. The ongoing rivalry between the two firms has led to significant promises of industrial benefits, with Hanwha, for example, pledging $200 million to bolster Algoma Steel’s operations in Ontario if awarded the contract.
The Campaign Trail: A Battle of Influence
Since August 2025, both TKMS and Hanwha have engaged in a vigorous public relations campaign to win the hearts of Canadian officials and the public. Hanwha’s efforts have been particularly visible, featuring high-profile visits from South Korean politicians and the demonstration of their submarine technology in Canada. Meanwhile, TKMS has made strides to match this enthusiasm, highlighting its long-standing relationship with Canada and its history of successful submarine exports.
German Ambassador Tjorven Bellmann noted the potential for collaboration among Canada, Germany, and Norway in creating a formidable submarine fleet, drawing attention to the shared values and commitments that bind these NATO allies.
Why it Matters
The choice of TKMS to build Canada’s new submarine fleet not only enhances national security but also represents a pivotal moment in the country’s defence strategy. By investing in a modern, capable underwater fleet, Canada is taking significant steps to secure its maritime sovereignty while simultaneously stimulating its economy through industrial commitments. This procurement could redefine the landscape of defence spending in Canada, ensuring that military capabilities are not only robust but also economically beneficial to the nation. As global tensions rise and the need for effective naval power becomes increasingly evident, this decision could have lasting implications for Canada’s role on the world stage.
