The Canadian government announced that it has selected Germany's ThyssenKrupp Marine Systems (TKMS) as the preferred bidder for the Canadian Patrol Submarine Project (CPSP). South Korea's Hanwha Ocean (042660) suffered defeat, falling behind in the final round of competition despite an aggressive advertising campaign, fast delivery timelines, and large-scale economic cooperation proposals.
Canadian Prime Minister Mark Carney announced Friday that he had finally selected TKMS as the preferred bidder for the CPSP. Carney officially announced the outcome in Halifax, Nova Scotia, an eastern port city that hosts a major Canadian naval base.
"Both TKMS and Hanwha Ocean met the very high performance standards required by the Canadian navy, and choosing between the two companies was a difficult decision," Carney said, explaining the reason for the selection. "TKMS is optimized for Arctic waters and has full interoperability with NATO." He added that Canada retains the right to designate Hanwha Ocean, the runner-up, as the preferred bidder should negotiations with TKMS not be concluded.
Carney mentioned that he had spoken by phone with President Lee Jae-myung over the weekend, explaining that Canada and South Korea are pursuing several initiatives to strengthen economic and security cooperation. "Since I will be standing alongside President Lee in Ankara, Türkiye (where the NATO summit is being held) 24 hours from now, we agreed to continue discussing other strategic issues shared by the two countries, including in the technology sector, at that venue," he said. He stressed, "South Korea is a key strategic partner with capabilities complementary to Canada's in many areas," adding, "Regardless of this decision, we will continue to develop the relationship between the two countries."
The CPSP is a project to replace four Victoria-class submarines nearing retirement with up to 12 new diesel submarines. It is a mega-project with total project costs approaching 60 trillion won, including construction and decades of maintenance, repair and operations (MRO).
The Canadian government said it selected TKMS's proposal after a comprehensive evaluation based on four criteria: submarine performance (20%), maintenance and logistics support (50%), price (15%), and economic and strategic cooperation (15%). With maintenance systems such as logistics support carrying the highest weight, analysts say TKMS's interoperability with NATO allies Germany and Norway, as well as its access to existing maintenance infrastructure in Europe, India, and Singapore, worked to its advantage.
The decision is also read as a political signal that Canada has chosen to strengthen its traditional ties with European allies. The German side has defined this project as part of strategic coordination against the Russian threat. In fact, when news emerged that Carney would officially announce the CPSP preferred bidder before departing for Türkiye to attend the NATO summit, observers had suggested that TKMS would be selected. The interpretation was that there would be no particular reason to announce a decision knocking out Germany, a NATO ally, right before the summit.
In this bidding competition, TKMS also emphasized that Norway would share the design of its own submarine facilities with Canada, supporting the establishment of maintenance facilities on both coasts.
TKMS proposed to deliver four submarines by 2036 and promised effects of 160 billion dollars (Canadian dollars hereinafter) in economic activity, 86 billion dollars in GDP contribution, and the creation of more than 650,000 jobs over the entire project period.
In response, Hanwha presented an aggressive schedule to deliver its first submarine in 2032, four by 2035, and 12 by 2043. Adding automotive industry support measures such as establishing a joint venture with Canada's Automotive Parts Manufacturers' Association (APMA) for local production of armored vehicles including the K9 self-propelled howitzer, and "Project Beaver" to build hydrogen truck infrastructure, Hanwha waged an all-out battle to the end with an economic cooperation proposal expected to create more than 25,000 jobs annually and contribute more than 120 billion dollars to GDP. However, it failed to overturn the Canadian government's final judgment, which prioritized maintenance systems and NATO interoperability.
As a result, Hanwha will have to defer to a future opportunity the symbolic achievement of entering the NATO market. However, some in the industry say the aggressive marketing and rapid delivery strategy that Hanwha demonstrated during this bidding process could be evaluated as valid competitiveness in future submarine acquisition projects in other countries such as Saudi Arabia and Greece.
