In a strategic move to bolster its chances in the competition for Canada’s next submarine fleet, South Korean firm Hanwha Ocean has unveiled a joint venture with the Automotive Parts Manufacturers’ Association (APMA). This collaboration pledges to produce military and industrial vehicles using Canadian auto parts and local workforce, a commitment designed to enhance their bid amid a recently extended bidding process.
A Strategic Alliance
On Wednesday, Hanwha Ocean announced the formation of a new entity in partnership with APMA, a step aimed at meeting the Canadian government’s conditions for bidders seeking to construct up to 12 submarines. This initiative comes in the wake of the government’s call for suppliers to include significant domestic manufacturing commitments in their proposals. With only two contenders remaining—Hanwha and Germany’s TKMS—the stakes for securing this lucrative contract are particularly high.
APMA President Flavio Volpe expressed optimism regarding the joint venture, stating it would fulfil Prime Minister Mark Carney’s challenge to the automotive sector to significantly contribute to Canada’s national defence efforts. Volpe remarked, “Today’s agreement is a historic commitment to shaping the future of Canada’s defence industry together. This is more than a submarine contract—it is Hanwha’s promise to strengthen Canada’s industrial capacity and economic sovereignty.”
Meeting Canada’s Defence Needs
Hanwha Ocean’s proposal highlights its intention to manufacture vehicles in Canada, utilising Canadian materials such as steel and aluminium, which could include advanced military equipment like the K9 Thunder self-propelled howitzer and Redback Infantry Fighting Vehicle. The venture aims to not only produce military vehicles for domestic use but also establish a robust capability for international supply.
Steve Jeong, head of Hanwha Ocean’s Naval Ship Global Business, reiterated the alignment of their proposal with the Canadian government’s “build-in-Canada” principle and Defence Industrial Strategy (DIS). He stated, “This is Hanwha’s promise to strengthen Canada’s industrial capacity and economic sovereignty,” emphasising the potential for thousands of jobs within the Canadian automotive sector as a result of this partnership.
The Competitive Landscape
While Hanwha is making bold promises, TKMS is also in the running, benefiting from a strong government-to-government partnership between Germany and Canada. Nils Beyer, a spokesperson for TKMS, indicated that their proposal includes long-term industrial collaborations designed to ensure sustainable economic and security outcomes for Canada. He noted that their bid encompasses co-operation with Canadian firms like Bombardier and a commitment to investing in local resources.
As the bidding deadline looms, the Canadian government has extended the submission period, allowing both companies additional time to enhance their proposals. This extension highlights Ottawa’s concern regarding the level of economic and industrial benefits initially presented by both bidders.
The Financial Implications
The potential value of the submarine contract is staggering, with estimates ranging from $60 billion to $120 billion over the vessels’ life cycle, which includes an acquisition cost of $24 billion to $30 billion. Industrial benefits are integral to defence procurement in Canada, and the government expects a significant portion of contract spending to occur domestically, reinforcing local economies and capabilities.
The stakes are monumental, not just for the two companies competing for the contract but also for the future of Canada’s defence manufacturing landscape.
Why it Matters
Hanwha Ocean’s commitment to Canadian manufacturing could reshape the nation’s defence industry, fostering economic growth and job creation in a sector that faces uncertainty due to external pressures, particularly from U.S. tariffs on foreign-assembled vehicles. This bid not only reflects a significant opportunity for increased industrial capacity in Canada but also serves as a barometer for future defence procurements, signalling to other international bidders the importance of local investment and collaboration in securing contracts. As Canada navigates its defence priorities amidst a shifting geopolitical landscape, the outcome of this submarine fleet bid will likely have lasting implications for the country’s industrial sovereignty and economic resilience.
