‘This is nuts’: The hard-fought race to build Canada’s next submarine fleet

At no point during the two-year-long procurement competition did the federal government ever really talk about the boats’ capabilities. The navy made it clear very early on that either model would do just fine.

With the July NATO summit right around the corner, the Liberal government is expected to announce its chosen supplier for up to 12 submarines in the coming days.

It’s a massive order, worth tens of billions of dollars — enough to catch the attention of South Korean manufacturer Hanwha as Seoul aspires to make itself the fourth-largest defence exporter in the world.

Hanwha launched a massive ad campaign, plastering airports in Canada with advertisements and hitting broadcast TV and streaming platforms to showcase its KSS-III.

Even its competition — a European market leader responsible for supplying most of NATO’s conventional submarines — took note of the ads that appeared as far away from the coasts as Winnipeg and Calgary.

“This is nuts, honestly,” said Oliver Burkhard, CEO of rival bidder TKMS, in an interview at the CANSEC military trade show in May. “We’re not used to this.”

His typical competitors — French, Spanish, Italian, British and Swedish submarine makers — “do not do this,” he said. Submarines aren’t supposed to be so visible, after all. These competitions usually focus on what the subs can actually do, and the sales pitches are aimed squarely at governments — not everyone.

“This is unusual. Let them try it,” he added. “If they have success, then maybe say this was a big strategy and we have won this because of our advertising. If they do not win it, then they are the more popular one who has lost … the most popular loser.”

But Hanwha is not a typical competitor. While it has never exported subs before, it boasts of its massive shipyard facility and has offered Ottawa a breakneck delivery schedule.

Hanwha says it is making a long-term play with the ads. It’s a household name in Korea but not yet known in countries like Canada as a top defence supplier, said its Canadian CEO Glenn Copeland.

“It’s about brand recognition and it’s about understanding what our capabilities are, and as people have understood, it’s a pretty powerful company,” Copeland said in an interview days after the big defence trade show.

He said the ads also “certainly got the attention” of several levels of government and resulted in a lot of knocks on their door.

Hanwha might be new to exporting subs but its boats are already being used by the Korean navy. One sailed to Esquimalt, B.C. in May.

The TKMS model 212CD sub is the firm’s latest design and has yet to start rolling off assembly lines. It offers cutting-edge engineering from a long-established manufacturer.

While all subs are quiet, the 212CD has a diamond-shaped hull designed to make it less detectable by sonar.

The TKMS campaign for the sub contract has focused on the fact that Germany and Norway, NATO alliance countries, are buying the same model. Interoperability — doing things like training and repairs together — is a stated goal of the alliance.

While the details of the bids remain classified, the public side of the Korean campaign has wowed some observers.

“Korea has gone all-out to win this,” said Paul Mitchell, a professor of defence studies at the Canadian Forces College. “In some ways, I think it’s theirs to lose.”

Early on, Hanwha pitched an aggressive delivery timeline — four boats in the water by 2035, then one boat per year. The Germans then revised their own schedule to speed up deliveries late in the game.

Hanwha’s KSS-III is a bigger, more spacious boat than the 212CD, something that can affect modifications and range.

Designed to keep North Korea in check, it also comes with an added capability to vertically launch ballistic or cruise missiles from the sea to hit land targets — something the German boats don’t have.

“The strengths that the German boat has over the Korean boat are harder to quantify — interoperability, the layout of the boat itself, and I would argue the language factor … You’re dealing with navies that have extremely good English-language capabilities,” Mitchell said. “And language is going to be a real significant issue.”

Most experts say the contest appears to be a dead heat or is marginally leaning to one bidder or the other. No one really knows, since Ottawa is keeping it tightly under wraps.

The federal government’s behaviour during the last two years has also been somewhat unusual. It changed the normal rules and processes to speed up what is likely the biggest military purchase in Canada’s history, advancing it by several years.

Ottawa made a surprise move to extend the bid deadline this spring. Industry Minister Mélanie Joly publicly declared she hoped the bidders would include in their packages an offer to open a new car plant in Canada to help the struggling auto sector.

That led to an additional offer from Hanwha — a possible joint venture to build military vehicles.

Those who watch military purchases closely were not entirely shocked.

“I would say that’s par for the course for Canada, honestly,” Mitchell said.

When Canada was about to order its current Victoria subs from the U.K. in the 1990s, he said, Ottawa asked for an extra $50 million discount at the last minute.

With procurement projects this large, economic benefits often come to the fore.

“This is a quite unusual capability acquisition, in part because it’s very significant in value,” said Darren Hawco, a retired naval officer now working with Deloitte.

“While many procurements of military capabilities are modest in value, relatively speaking … this procurement is different because of its size, because of its (geopolitical) strategic alignment outcomes, and because of the economic potential to Canada overall.”

Retired vice-admiral Mark Norman said he’s been “really impressed” by both bidders.

“The Koreans have been extremely aggressive and they have led the way in the public domain. They’ve been out there communicating, not just making deals but also communicating the nature of those deals,” he said.

“The Germans equally have been working hard but more behind the scenes.”

He said he’s not convinced either company has a clear edge since Ottawa’s decision will come down to how it assesses the value of the economic benefits and strategic partnerships on offer. Publicly comparing capabilities only gets a sub maker so far.

“The difference between a Toyota Camry and a Honda Accord is fundamentally buyer preference,” Norman said.

“They both basically do the same thing. They both are the same configuration, basically the same product. They’re just packaged differently and they deliver their capability in slightly different and nuanced ways.”

This report by The Canadian Press was first published June 21, 2026.