Deadline day: $20B submarine showdown puts Korean and German bids in spotlight

Canada's seemingly breakneck travail to put back its ageing sub swift hits an important milestone on Monday with the deadline for both the South Korean and German shipyards to submit their formal proposals in the more than $20-billion program.

The federal plan to buy as many as 12 submarines for the Royal Canadian Navy has evolved rapidly over the last year into one of the most consequential procurement battles in a generation.

It is a contest that will shape the navy's undersea reach, Canada's Arctic posture and the country's industrial alliances for decades.

The two bidders are Hanwha Ocean of South Korea and TKMS (ThyssenKrupp Marine Systems) of Germany.

Between now and April 6, the federal government has reserved the right to ask both bidders clarifying questions about their submissions, the confidential sources added. After that the plans will be analyzed mostly through the lens of what economic benefits — both direct and indirect investment — can be brought to Canada.

The navy has already said both the South Korean KS-III and the German Type 212CD designs will deliver the capability it needs.

The South Koreans are promising to deliver four submarines by 2035, the year the navy plans to begin retiring its current fleet. The Germans have said publicly they can deliver a boat by 2032 with a steady ramping up of production afterwards.

An additional 15,000 short-term jobs could be created through the construction phase of submarine maintenance facilities, which are to be built in Halifax and Esquimalt, B.C.

"In this particular case, it's not just Hanwha, it is the Republic of Korea and the Republic Korean Navy putting a commitment behind this," said Copeland, who did not outline what went into the calculation.

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In January, the Hanwha Group, the parent company of the shipyard, told the Reuters news agency that it could create 200,000 jobs in Canada by 2040 — but similarly did not offer a breakdown.

Copeland said they've heard the economic argument "loud and clear."

In addition, Hyundai Heavy Industries is a partner with Hanwha Ocean on the submarine project. Hyundai is a big proponent of hydrogen fuel technology, and it is considering massive investments in Canada as part of the deal, including a hydrogen fuel innovation hub.

Since Canada doesn't have the industrial capacity to build submarines, the federal government is compelled to buy offshore. But in doing so, it has also demanded sizable economic offsets from the shipyards involved, in terms of investment with Canadian partner industries but also with both allied governments who've helped refine the pitches with potential economic initiatives and partnerships.

Hanwha Ocean submitted its bid late last week, ahead of the deadline. The South Korean government and the conglomerate of Hyundai companies have been pitching to help Canada establish hydrogen fuel-cell facilities and corridors that could support railways or heavy-duty trucks, and potential automotive plant investment by Hyundai.

Copeland said he's not privy to the details of those discussions, but is confident the Koreans are treating the submarine bid as "a whole-of-nation approach."

For its part, among other things Hanwha signed a memorandum of understanding with Algoma Steel to provide up to $275 million to develop a new structural steel beam mill at its Sault Ste. Marie, Ont., facility. It promises to use Canadian-made steel and labour for submarine construction and maintenance.

The company also signed a partnership agreement with Mohawk College to train students in shipbuilding for potential work in marine industries at the Ontario Shipyards in Hamilton.

Copeland said there are other important initiatives underway, including talks between Canada and South Korea over the development of a sovereign rocket launch facility, possibly in Nova Scotia. The intention would be to break Canada's dependency on the United States and the European Union for the launch of satellites. 

TKMS and German government officials are expected to outline their bid in more detail in the coming days.

There is perhaps no understating the urgency of the program for the navy. At the centre of the concern is the future of the four Victoria-class submarines, acquired second-hand from the United Kingdom in the late 1990s. 

The boats — HMCS Victoria, Windsor, Chicoutimi and Corner Brook — have provided Canada with a limited but important conventional submarine capability on both coasts.

But they are aging, maintenance-intensive and increasingly difficult to sustain. Their projected end of life is the early 2030s.

"We're down to a single operational submarine," Vice-Admiral Angus Topshee said in an interview late last year. "Submarines are really the thing that makes sure that no one comes into our waters without our permission. And maybe all we'll do is watch what you're doing, but if we want to be able to own our waters and control our space, then we need a submarine to be that ultimate guarantor of Canadian security."

The procurement of the submarines will be the first major test of the Liberal government's newly created Defence Investment Agency, but a defence expert said it's too soon to know whether it is a model for the overall rearmament of the Canadian military.

"This project's moving lightning fast," said Dave Perry, president of the Canadian Global Affairs Institute and one the country's leading experts in defence procurement.

"It's been really impressive to see the pace at which the government of Canada can move to this point in time when it wants to."

The speed of the decision-making deserves examination, he said.

"I hope the government can capture some of this magic, put it in a bottle and distribute it around the rest of the government of Canada because we need to see some more urgency" on other programs, Perry added.

Germany – Type 212CD

Germany's TKMS (ThyssenKrupp Marine Systems), in partnership with Norway, is promoting the Type 212CD (Common Design). It is an evolution of the proven Type 212A class already in service with the German and Italian navies. The design uses air-independent propulsion (AIP), allowing extended submerged endurance without nuclear power. TKMS has emphasized the 212CD's Arctic suitability — including under-ice considerations. Proponents argue its advanced sensors and low acoustic signature make it attractive for North Atlantic operations.

South Korea – KSS-III (Dosan Ahn Changho class)

South Korea's Hanwha Ocean has mounted an assertive campaign around the KSS-III, known domestically as the Dosan Ahn Changho class. Larger than most European conventional boats, the KSS-III offers significant range and payload capacity, including vertical launch systems. South Korea has emphasized rapid delivery timelines and deep industrial partnerships. The pitch emphasizes Arctic endurance and cost predictability — key political considerations for Ottawa.

Senior reporter, defence and security

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