In a significant move for its naval capabilities, Prime Minister Mark Carney is set to announce on Monday in Halifax the winner of a fiercely contested bid to supply Canada with 12 advanced submarines. The competition has boiled down to two contenders: Germany’s ThyssenKrupp Marine Systems (TKMS) and South Korea’s Hanwha Defence. This announcement is poised to reshape the Royal Canadian Navy, enhancing its ability to patrol the nation’s vast waters undetected.
A Historic Announcement Ahead
The outcome of this monumental procurement process, expected to be worth between $20 billion to $30 billion for the submarines alone and potentially reaching as high as $50 billion for operations and maintenance, will mark a turning point in Canada’s naval history. The Prime Minister had indicated that a decision would be reached by the end of June, but as the date approached, the exact timing remained undisclosed. The announcement will occur just prior to Mr. Carney’s departure for the NATO leaders’ summit in Turkey, underscoring the strategic importance of this procurement.
While the announcement may identify a preferred bidder, experts caution that this does not equate to a finalised contract. Ongoing negotiations can extend over several years, as noted by Philippe Lagassé, a defence policy scholar at Carleton University.
The Stakes Involved
The submarine contract represents a watershed moment for Canada’s military capabilities. Historically, Canada has relied on second-hand submarines purchased during the Cold War, with only four aging vessels currently in operation—one of which is frequently in service. The planned procurement aims to establish a fleet that can ensure Canada has three submarines ready for deployment at any one time. This capacity will significantly enhance the country’s deterrence capabilities along its Arctic, Pacific, and Atlantic coastlines.
David Perry, president of the Canadian Global Affairs Institute, emphasised the strategic implications of this procurement: “It will give us much more of an ability to independently know what’s happening around our own Canadian coastal waters.”
Competing Offers and Economic Promises
Both bidders have made significant economic promises tied to their proposals. Hanwha has pledged over $70 billion in trade and investment, projecting the creation of more than 25,000 jobs annually between 2026 and 2044. Meanwhile, Germany’s TKMS has stated that its bid, in collaboration with Norway, could contribute up to $86 billion to Canada’s GDP and generate over 650,000 job years throughout the agreement’s duration. A job year is defined as one job for one year.
The Canadian government has indicated that it will prioritise the economic benefits offered by bidders in its decision-making process. Reports had previously suggested that splitting the contract between the two contenders was a possibility; however, recent statements from government ministers have downplayed this scenario.
A Changing Landscape in Defence Procurement
The current competition is unique, primarily because it lacks participation from U.S. defence contractors. Canada has opted out of nuclear submarines, and the United States no longer manufactures conventional diesel-electric submarines. This absence of American influence allows Canada a degree of independence in its decision-making process.
While South Korea, as an emerging player in the global defence market, has invested heavily in its bid, TKMS benefits from a long-standing reputation, having supplied submarines to 20 navies worldwide. The South Korean bid corresponds to a broader ambition to become a leading force in the global defence industry, aiming to secure a position among the top four defence suppliers globally.
Why it Matters
This decision carries profound implications for Canada’s national security strategy and its industrial policy. Awarding the submarine contract to Hanwha would not only signify a historic shift, as it would be the first time Canada procures a major weapon system from a non-Western entity, but it also reflects a broader intention to bolster domestic defence capabilities against a backdrop of rising global tensions. The outcome will be closely watched, shaping not only Canada’s maritime defence posture but also its industrial landscape for years to come.
