Ottawa will prioritize the proposal that generates the most Canadian employment opportunities when determining whether to grant a contract for twelve new submarines to either a German or South Korean consortium, according to the government’s official in charge of military procurement. Liberal MP Stephen Fuhr emphasized the government’s focus on enhancing the Canadian industrial sector while increasing defense spending to unprecedented levels.
The Canadian government aims to safeguard domestic jobs, particularly in industries like steel and aluminum affected by American tariffs, and create new employment opportunities. Fuhr stated that both submarine bids have received approval from the Royal Canadian Navy, and the decision will be based on factors such as cost, delivery timeline, and the potential economic benefits to Canada by the foreign companies.
“It is crucial that we ensure we stimulate our economy significantly with this substantial defense expenditure,” mentioned Fuhr, who serves as the secretary of state for defense procurement. Prime Minister Mark Carney previously announced the selection between Germany’s ThyssenKrupp Marine Systems and South Korea’s Hanwha Ocean Ltd. for the submarine contract, estimated to exceed $20 billion.
The new submarines are projected to arrive in Canada by the mid-2030s, with the chosen contractor expected to influence Canada’s military and industrial partnerships in Europe or Asia for years to come.
Carney has committed to meeting NATO’s defense spending target by allocating a $9 billion boost to the Canadian Armed Forces (CAF). By 2035, the NATO benchmark will rise to five percent of GDP, with Fuhr indicating that the focus on economic benefits will extend to other significant military procurements, including munitions, surveillance aircraft, drones, artillery, and naval and coast guard vessels.
The government seeks economic advantages in the form of job opportunities in manufacturing or assembly within Canada, or investments by the winning bidders in domestic production. Fuhr reiterated the government’s aim to reduce reliance on the United States amid a shift in alliances and emphasized the importance of supporting both the CAF’s operational needs and the Canadian economy.
The substantial military spending commitments over the upcoming years involve a centralized procurement process managed jointly by various departments, which has faced criticism for causing delays due to competing demands and risk aversion. Fuhr acknowledged the system’s limitations in responding to the government’s pace and scale, announcing forthcoming details on a new defense procurement agency and a new defense industrial policy by year-end.
Fuhr has been actively engaged in lobbying efforts, meeting with representatives from over 40 companies and interest groups and touring facilities across the country to prepare for upcoming contract awards. The submarine proposals from Korea and Germany include plans for submarine maintenance facilities in Canada, contingent on government direction and additional investments.
The South Korean KSS-III and the German-Norwegian Type 212CD submarines differ significantly in size and capabilities, with both being diesel-electric attack submarines equipped for various missions. Both proposals boast lithium batteries for enhanced performance, meeting critical operational requirements for extended submerged durations, particularly in Canada’s Arctic region.
The South Korean proposal’s estimated cost ranges from $20 billion to $24 billion for 12 submarines, with a commitment to deliver four by 2035, coinciding with the retirement of the current Victoria-class submarines. In comparison, the cost of the German-Norwegian proposal remains undisclosed, with the potential for one submarine to be ready for Canada within the specified timeframe.