South Korean shipbuilder withdraws from Hamilton partnership after losing bid for navy submarine contract

A southward Korean ship building accompany is withdrawing from a partnership to establish a grooming hub with Mohawk College and Ontario Shipyards in Hamilton because Canada has chosen to buy navy submarines from a German company instead of Hanwha Ocean.

The remaining partners say Hanwha's support was "significant," but their initiative is not dead in the water.

The news comes the same week Prime Minister Mark Carney's announced that the government picked German company ThyssenKrupp Marine Systems (TKMS) over Hanwha to building the navy's new fleet of submarines. The multibillion-dollar defence program is expected to be the largest ever in Canada.

In February, Hanwha signed a memorandum of understanding to work with Ontario Shipyards — a private ship repair company with operations in Hamilton, St. Catharines and Thunder Bay — to share knowledge and resources. It said it would help support the creation of a naval training and recruitment vessel that Ontario Shipyards plans to build. The two companies also entered into a letter of intent with Mohawk to create the shipbuilding training hub. 

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"All of it stops," Green said when asked if the partnership may yet continue or be renegotiated.

Mohawk spokesperson Sean Coffey confirmed in an email that the college and Ontario Shipyards have a "standalone agreement" that will continue.

Neither of the remaining partners specified exactly how Hanwha pulling out would affect them or what it has cost them.

"Hanwha's commitment was primarily based on knowledge and technology transfer, as well as training, so it's difficult to put a dollar amount on it, but it would have been significant," Ted Kirkpatrick, Ontario Shipyards' vice-president of business development, said in an email. 

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"While we are disappointed that Hanwha was not the winning proponent, we are honoured to have worked with them to support their bid and for the opportunity to build what we hope is a lasting relationship," Kirkpatrick said.

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Carney said the government will enter into several months of negotiations with TKMS to sign a contract. 

If negotiations are unsuccessful, Carney said, "Canada retains the right to designate Hanwha's KSS-III, currently the reserve supplier, as the preferred supplier and enter negotiations with them."

The government announced Hanwha and TKMS as the top picks to build up to 12 submarines about a year ago and Hanwha subsequently announced multiple Canadian agreements. 

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A January news release from the company said it had "further expanded its industrial partnerships in Canada," in support of the submarine procurement, citing "series of strategic MOUs spanning steel, space, artificial intelligence, and advanced technologies."

Part of the company's unsuccessful bid to Ottawa was a memorandum of understanding in January to give Algoma Steel $345 million for the creation of a structural steel beam mill in Sault Ste. Marie and the purchase of Algoma products. Hanwha had also said it would work with the mill on armoured vehicle manufacturing in southern Ontario. 

When Padulo and Hanwha Ocean CEO Charles Kim signed the Hamilton memorandum of understanding at Mohawk College in February, several area politicians including Hamilton Mountain MPP Monica Ciriello attended and praised the partnership.

Reporter

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