Both contenders vying to construct Canada’s upcoming submarine fleet are currently in a competition to secure agreements this week, striving to demonstrate to the federal government and the public their commitment to generating employment opportunities within the country.
ThyssenKrupp Marine Systems (TKMS) from Germany has finalized a deal with Seaspan Shipyard in Vancouver to establish a maintenance facility for the potential new submarines, should the federal government opt for its Type-212CD model to replace the aging Victoria-class vessels of the navy. TKMS emphasized the significance of the facility in supporting Canada’s objective to maximize domestic involvement in the program, which is projected to range from $20 billion to $24 billion, to be conducted by Canadian firms.
TKMS has hinted at the possibility of constructing some of the 12 submarines in Canada, along with running maintenance facilities on both coasts. However, Canadian authorities have expressed skepticism about local submarine construction due to the lack of existing industrial capacity, necessitating time for development.
Meanwhile, Hanwha Ocean, a submarine manufacturer from South Korea, has announced collaborations with several Canadian firms, including Algoma Steel in Sault Ste. Marie, Ontario, which has been impacted by U.S. tariffs. The agreements include Hanwha’s commitment to invest $275 million in establishing a new steel beam mill at Algoma, essential for producing the high-strength alloy steel required for submarine construction.
Both TKMS and Hanwha Ocean have been instructed by the federal government to submit comprehensive proposals by March, with a decision expected later this year. The Royal Canadian Navy’s Vice-Admiral Angus Topshee emphasized the urgency of securing a new submarine fleet, given the current operational limitations.
Furthermore, high-level South Korean officials have signed agreements on industrial collaboration unrelated to the submarine manufacturer, with a focus on enhancing various sectors, including the automotive industry and clean energy initiatives. The economic benefits proposed by both South Korea and Germany for their submarine projects are expected to contribute to strengthening Canada’s automotive sector, aligning with Ottawa’s priorities.
TKMS has disclosed ongoing discussions with Norwegian and German companies to present a substantial investment package to Canada, encompassing various sectors beyond submarine construction. Similarly, the Hanwha Group aims to create significant job opportunities in Canada through cross-sector cooperation, including shipbuilding.
While the potential economic impacts of these agreements remain speculative, past audit reports have raised concerns about the effectiveness of policies in translating defense contracts into tangible economic benefits, highlighting the need for improved tracking and adherence to obligations.
