Navy commander says he's 'not looking' to have new sub fleet built in Canada

Hanwha Oceans and Germany’s ThyssenKrupp Marine Systems, or TKMS are the two companies competing for the multi-billion-dollar contract to replace Canada’s rapidly aging Victoria Class subs.

Both companies say it’s possible to build the boats in Canada but Topshee told reporters he needs the new submarines “quickly” and the navy is “not looking” for either of the two final bidders to build them in Canada.

He said Canada currently does not have the capacity to build submarines and it would be a complicated business to enter.

“A submarine industry requires a consistent production line, and to be able to build enough submarines in Canada to sustain a production line will be a real challenge,” he said.

Canada plans to buy up to 12 new submarines, part of an effort to bolster the military’s presence in the Arctic. The Victoria subs will be out of commission within a decade, putting the government in a race against time to select a winner.

“To maintain a recurring submarine construction capability, Japan has a fleet of 22 boats that they cycle through, so it’s a lot of submarines to be able to sustain submarine production,” Topshee said.

The navy commander added the contract will create jobs in Canada, since maintenance facilities will need to be built “with Canadian steel” on both coasts and the boats will need a skilled support workforce.

Hanwha representative Steve Jeong said his company could build its subs in Canada, but that might take another 10 to 12 years.

“I’d rather build it here because (then) we can provide submarine(s) more quickly for Canadian navy,” he said.

Carney toured one of Hanwha’s submarines on during the shipyard visit Thursday — the same day that Canada and South Korea agreed to a new defence partnership.

Defence Minister David McGuinty and South Korean Prime Minister Kim Min-Seok joined Carney and Topshee as Hanwha officials showed off their advanced production facility, which features automated welding by robots.

Carney toured TKMS’s submarine facility in Kiel, Germany on Aug. 26.

Topshee said both submarine designs are “excellent” and meet the navy’s requirements, and a decision in the next year “would be fantastic.”

David Perry, president of the Canadian Global Affairs Institute, told The Canadian Press that compared to most defence procurements, the submarine project is “moving at light speed” and the competition is heated.

The winning contractor will also factor into Canada’s industrial and trade strategies, since both bidders and their home countries are competing fiercely behind the scenes to offer spinoff economic benefits to Canada.

McGuinty said he left the shipyard with the impression that Hanwha is a “very serious company.”

While he gave no deadline for a decision, the minister said the factors that will influence the final call include the delivery timeline, whether the bidders plan to use Canadian inputs like steel and aluminum, and how the promised industrial benefits stack up.

Perry said awarding this contract would be “among the most actionable things the prime minister can do to actually achieve some of that trade diversification he’s been talking about.”

“The government of Canada can negotiate trade agreements, support trade access by having the trade commissioner service support businesses’ activities, but the government doesn’t actually trade directly, so Carney’s leverage in that respect is limited,” he said.

“Purchasing a new submarine — that’s a lever he can pull on himself.”

Carney and South Korean President Lee Jae-Myung signed the defence partnership agreement earlier on Thursday. The deal will see more frequent joint exercises and training. It also commits the two nations to improving interoperability and exchanging military personnel, equipment and supplies.

“Ultimately we need to make sure that we are engaged more fulsomely in this region and we’ve chosen Korea for a reason,” McGuinty said.

The South Koreans are pitching the submarine contract as the start of a wider industrial partnership between the two countries.

Representatives from the embassy in Ottawa noted at an event last week that South Korea is now the second-largest supplier of military equipment to NATO countries, behind the United States.

Hanwha has talked about investing in Canadian lithium-ion battery production, liquefied natural gas, aerospace, steel and critical minerals, and is offering to build two submarine sustainment facilities on both coasts.

Hanwha is a vertically integrated conglomerate that bills itself as South Korea’s seventh-largest business group, and is aggressively pursuing a global expansion strategy.

The company maintains if Canada signs a contract next year, it can leverage its massive shipyard capacity to beat any rival’s delivery schedule.

It says it can build four KSS-III submarines by 2035, with the first to be delivered in 2032. It says that after the first four are delivered, it can send Canada a new one every year.

The company claims early delivery could allow Canada to avoid $1 billion in repairs by retiring the Victoria subs early. Hanwha says the 12 subs would cost in the ballpark of $20-24 billion, which does not include the infrastructure to service them.

Hanwha’s KSS-III — a bigger boat than its German rival — uses lithium-ion batteries and comes with vertical launch tubes that allow the subs to fire ballistic missiles straight up into the air. The South Korean navy is currently operating the sub but it has not been exported yet.

South Korea is eager to grow its domestic defence industry and has pushed hard to expand exports and move itself away from overreliance on the U.S. Korea was the eighth-largest arms exporter in the world in 2023 and wants to become the fourth-largest by 2027, according to an internal National Defence document.

Germany and Norway have together ordered a dozen of TKMS’s 212CD submarines — a design so new that no navy has it in the water yet.

TKMS says it can beat Canada’s tight 2035 deadline for its first sub delivery, but its delivery schedule cannot meet the aggressive pace Hanwha is offering.

TKMS company brass and defence ministers from Germany and Norway travelled to Ottawa last week on a charm offensive ahead of Carney’s trip to South Korea. They were trying to sell the Canadian government on joining a club of nations operating the same subs that would allow for pooling of resources and parts.

The German defence firm is also telling Ottawa that it’s a less risky bet. One of the world’s oldest sub builders, TKMS has supplied some 70 per cent of NATO’s conventional sub fleet.

This report by The Canadian Press was first published Oct. 30, 2025.

— With files from Kyle Duggan in Ottawa