German and South Korean Firms Compete Intensely for Submarine Deal Benefits
The competition between German and South Korean firms for Canada’s submarine construction contract is intensifying. ThyssenKrupp Marine Systems (TKMS) and Hanwha Ocean are both vying for the government’s approval to supply new submarines to the Royal Canadian Navy.
Competing Proposals for Canada’s Submarine Fleet
This week, TKMS announced it has partnered with Seaspan Shipyard in Vancouver. This partnership aims to establish a submarine maintenance facility should TKMS’s Type-212CD be selected. The project is part of Canada’s strategy to maximize domestic involvement in the estimated $20 billion to $24 billion submarine program.
- TKMS plans to create two maintenance facilities, one on each coast of Canada.
- Canadian officials have expressed skepticism about building submarines domestically due to current industrial capacity limitations.
Hanwha Ocean’s Strategic Partnerships
On the other hand, Hanwha Ocean has secured several agreements with Canadian businesses, including Algoma Steel in Sault Ste. Marie, Ontario. The South Korean firm pledged to invest $275 million to establish a new structural steel beam mill necessary for submarine production.
- Algoma Steel is expected to provide high-strength alloy steel for Hanwha’s vessels.
- This investment aims to enhance local industry and job creation should Hanwha win the contract.
Government Expectations and Timeline
The Canadian federal government has requested comprehensive proposals from both companies by March. A decision on which company to partner with is expected later this year. Vice-Admiral Angus Topshee, commander of the Royal Canadian Navy, emphasized the urgent need for more operational submarines, highlighting that only HMCS Corner Brook is currently serviceable.
Job Creation and Economic Benefits
Both firms have been told that creating Canadian jobs will be a priority in the selection process. Hanwha has stated that its plans could generate up to 200,000 jobs in Canada by 2040 through various collaborations.
Additional Collaborations and Investments
Recently, a South Korean government delegation signed memorandums aimed at strengthening industrial collaboration in several sectors beyond submarines. These agreements focus on enhancing supply chains for automotive and critical minerals, as well as clean energy initiatives.
Simultaneously, TKMS has been negotiating with Norwegian and German companies to propose a broader investment package that extends beyond submarine construction. This could potentially include commitments in essential industries like artificial intelligence, mining, and battery production.
Speculative Future Job Projections
Despite the ambitious promises from both TKMS and Hanwha, experts remain cautious. The effectiveness of previous defense contracts in generating economic benefits has been questioned, with past audits indicating issues in tracking and fulfilling obligations.
As both companies prepare to finalize their proposals, the outcome of this competitive bid remains uncertain, but the stakes for Canada’s defense capabilities and industrial sector are high.
