Hanwha Defence Canada chief govt Glenn Copeland was swiping via pictures he’d taken inside Common Motors Co. ’s now-vacant CAMI meeting plant in Ingersoll, Ont., earlier this month whereas ready for his panel dialogue to start at a current auto sector convention.
GM halted manufacturing on the plant final 12 months after demand for its BrightDrop electrical van didn’t materialize on the scale essential to rationalize the prices of working it. The closure of Canada’s first full-scale electrical car manufacturing plant was one of many causes Canada’s auto manufacturing fell seven per cent final 12 months, and what to do about CAMI is now considered one of many complications for Prime Minister Mark Carney and his cupboard.
Copeland, the native face of South Korean submarine maker Hanwha Ocean Co. Ltd. because it bids for an estimated $80-billion contract to make Canada’s first new submarines in a era, is eager to be a part of any resolution at CAMI.
That curiosity is only one instance of how Hanwha plans to insert itself into a few of this nation’s main industrial coverage points — from autos to metal to liquefied pure fuel — so long as it wins the submarine contract.
Allure offensive
To that finish, Hanwha has wrapped Canada in promoting over the previous few months, placing up billboards on buses and in airports and working adverts throughout hockey video games voiced over by Peter Mansbridge. Extra importantly, its executives have crisscrossed the nation to strike greater than 70 offers to spend money on or companion with Canadian industrial and know-how corporations, universities and authorities ministries, whereas its competitor, Germany’s ThyssenKrupp Marine Techniques, has made an identical, albeit much less promotional, push.
The ensuing dealmaking blitz has raised hopes that elevated army spending will present a long-lasting boon for the economic system, however it’s also elevating questions in regards to the viability of all these facet offers and whether or not future authorities procurements will see an identical barrage of public promotion from bidders.
The Canadian Patrol Submarine Mission , the official identify of the procurement that Hanwha and TKMS are bidding on, ties into the federal authorities’s plans to greater than double its defence and safety spending to 5 per cent of the nation’s annual gross home product by 2035, up from two per cent at present.
“Even when Hanwha doesn’t win, the Canadian automotive sector continues to be going to push actually onerous into defence,” Flavio Volpe, president of the Automotive Components Producers’ Affiliation (APMA), mentioned.
In April, APMA struck a deal to take a 51 per cent stake in a three way partnership to construct all-terrain army autos, with Hanwha proudly owning the remainder. Earlier this month, they introduced a deal to make use of metal within the autos sourced from Sault Ste. Marie-based Algoma Metal Inc., Canada’s final independently owned mill.
However sources, who spoke on situation of anonymity as a result of they weren’t approved to talk publicly, mentioned GM, Hanwha and the APMA stay removed from placing a deal to provide autos at Ingersoll.
At 2.3 million sq. ft, they mentioned the plant is much too massive for Hanwha and the APMA alone. However GM can also be pursuing contracts for army autos, and if it agreed to share sources such because the workforce with different corporations, sources say it might make sense to repurpose the plant to make these autos.
“CAMI Meeting continues to be assessed for future alternatives, and no ultimate selections or agreements have been made,” GM mentioned in a press release.
There’s additionally one other a lot larger catch: Hanwha must win the submarine contract, after which its three way partnership would want to win a contract to construct army autos. Equally, GM and different potential gamers would want to win contracts to construct army autos, all of which has bolstered considerations that some enterprise executives could also be overestimating the impacts that Canada’s shift in army spending will convey to the commercial base.
Defence and safety spending reached $63 billion final 12 months and the deliberate leap in spending to 5 per cent of GDP would quantity to about $150 billion per 12 months based mostly on 2025 numbers.
The nation’s 4 submarines, acquired secondhand from the UK in 1998 and accepted into service starting in 2000, are anticipated to stay operational till the mid-to-late 2030s. Now, the federal authorities is thinking about buying as much as 12 submarines for the Royal Canadian Navy, and it’s anticipated to price a minimum of $20 billion and take years to ship.
Secretary of State for Defence Procurement Stephen Fuhr has mentioned the submarine contract “might be the most important procurement we ever do.” Upkeep and infrastructure for the submarines might elevate the whole price above $100 billion over the approaching many years.
Rushing up the method
Past the associated fee, Fuhr and army analysts have mentioned the federal authorities is shifting notably shortly in comparison with the previous. The request for data for the procurement was introduced in 2024 and the federal authorities narrowed it right down to Hanwha and TKMS final August.
Prime Minister Mark Carney is anticipated to announce a call on the procurement by the top of June, doubtless this week.
“That is an exceptionally quick course of compared to historical past,” mentioned Darren Hawco, a retired vice-admiral of the Royal Canadian Navy who now serves as an govt adviser at Deloitte Canada.
He attributed the velocity to the fragility of the present Canadian submarine fleet, which is down to at least one submarine, with three others in upkeep or underneath restore.
The army has mentioned each of the provided submarines meet the technical functionality threshold, so the choice will come right down to different elements, comparable to how shortly the submarines might be delivered.
“From a authorities perspective, it’s larger than selecting the correct submarine and buying submarines,” Hawco mentioned. “It’s about selecting a long-term financial and geopolitical companion.”
Every bidder is providing one thing totally different. TKMS is pitching the Sort 212CD, a submarine collectively developed with the governments of Norway and Germany for each nations’ navies. Utilized by North American Treaty Group (NATO) companions, it could strengthen Canada’s transatlantic ties to European allies.
In contrast, if Hanwha wins the contract, Canada can be the primary NATO nation to make use of its KSS III-Batch II submarines, placing South Korea on the map as a army defence exporter to the West.
However neither firm plans to construct the submarines in Canada, a minimum of not initially. Underneath the Industrial Technological and Advantages Coverage, international and home defence corporations are required to speculate 100 per cent of the contract worth again into the Canadian economic system.
In conditions the place the first work will likely be carried out abroad, the profitable bidder should discover methods to offset these expenditures with investments in Canada.
Hanwha has generated a gradual drumbeat of headlines about its potential investments, however TKMS has additionally introduced a number of key initiatives that it mentioned already complete tens of billions of {dollars} in worth.
“Our strategy relies on the precept that Canada shouldn’t merely purchase submarines; Canada ought to assist construct, maintain and finally personal the commercial functionality that helps them,” TKMS mentioned in a press release.
In January, TKMS signed a “teaming settlement” with North Vancouver-based Seaspan ULC to collaborate on sustaining and repairing the submarines. In February, it struck an settlement with Mississauga, Ont.-based EllisDon Corp. to design and construct upkeep and coaching amenities on each coasts. And it signed an settlement with Calgary-based E3 Lithium Ltd. in April to include lithium into submarine batteries.
It additionally provided to assemble a home manufacturing unit to fabricate heavy torpedoes and anti-torpedo defence methods.
In non-defence-related offsets, it has proposed funding carbon seize and storage amenities in Alberta utilizing TKMS know-how and it has steered investments in infrastructure within the Port of Churchill in Manitoba so it could export extra, together with Arctic liquefied pure fuel. Plus, there are different offers that TKMS says will generate $86 billion in worth for the Canadian economic system. In fact, it’s all tied to TKMS profitable the submarine bid.
Hanwha has additionally reached quite a few offers that strike at Canada’s industrial heartland. Along with its memorandum of understanding (MOU) to kind a three way partnership with the APMA to construct army autos, in January, it introduced a $275-million funding in Algoma in direction of Canada’s first structural metal beam mill. In change, Hanwha is entitled to 3 per cent of the steelmaker’s web gross sales from the beam mill for 10 years.
It additionally agreed to buy round $70 million of Algoma’s merchandise to be used in establishing the submarines and the infrastructure required to help the fleet. Algoma mentioned the deal is structured as an MOU, contingent on Hanwha profitable the bid and in a approach that satisfies its commitments to reinvest each greenback of the contract again in Canada.
In January, Hanwha struck an MOU with Fermeuse Vitality Ltd. to collectively advance a Newfoundland and Labrador LNG improvement challenge and in June, South Korea’s presidential envoy Kang Hoon-Sik mentioned his nation might make investments a further $1.6 billion within the LNG Canada challenge in Kitimat, B.C., by which it’s already considered one of 5 main traders.
Hanwha additionally mentioned South Korea expects to extend its oil purchases from Canada to roughly 16 million barrels this 12 months and as much as 20 million barrels subsequent 12 months after the nation just lately eradicated a 3 per cent tariff on Canadian crude oil.
Hanwha mentioned its offers might present greater than $96 billion in affect to Canada’s GDP.
Lots of the offers hinge on who wins the submarine contract, however Korea’s removing of tariffs on Canadian oil reveals that the bidding course of by itself has allowed Canada to develop its commerce alternatives.
By the identical token, many within the enterprise neighborhood view the submarine procurement as half of a bigger shift that can open up new avenues of international funding.
Auto executives are hoping that the velocity at which the federal government is shifting on the submarine bid will unfold to different procurements, thereby unleashing a bathe of funding alternatives.
For instance, producing army autos in Ingersoll would assist GM shoulder the prices of sustaining such a big plant.
However some army procurement analysts are skeptical that even Canada’s elevated defence price range will ever create sufficient quantity to maintain a complete auto plant except it might produce autos for export.
Traditionally, Canada exported almost all its autos to the U.S., which has comparable labour and environmental requirements, however the sector has struggled to interrupt into different markets.
“I’m unconvinced proper now that ample thought has been given to how all of that is going to work, actually,” mentioned Philippe Lagassé, a professor at Carleton College’s Norman Paterson College of Worldwide Affairs, who research defence procurement.
The Ingersoll plant produced 317,000 autos at its peak in 2014, in line with AutoForecast Options, a U.S.-based consultancy, however army autos price greater than a traditional car and are produced at a smaller scale. For instance, Canada procured 90 mild tactical autos from GM for round $36 million in 2024.
“It’s unclear to me what number of totally different corporations will be capable to actually thrive even despite how far more we’re spending, except we have now a really aggressive export technique, and that has but to completely come collectively,” Lagassé mentioned. “That’s being underestimated.”
Provided that the submarines won’t be in-built Canada regardless of who wins, some analysts say the actual worth will reside in whether or not the investments create mental property of worth for the nation.
Bentley Allan, a political science professor at Johns Hopkins College who research the Canadian economic system, mentioned the submarine procurement ought to be evaluated based mostly on the way it impacts the nation’s “industrial ecosystem.”
Up to now few years, federal and provincial governments in Canada have injected billions of {dollars} into creating an electrical car provide chain . However slightly than merely interested by advantages when it comes to the direct jobs created, he mentioned the dialog additionally ought to have targeted on spillover advantages that might have been created by combining analysis and improvement with manufacturing or integrating present provide chains.
“The issue that Canada has traditionally is that we have now these international companies that function belongings in Canada, however the R&D for these belongings is again within the metropole of the international firm,” he mentioned, “which signifies that we don’t have any of the analysis advantages of getting a selected manufacturing asset.”
Primary industrial coverage dictates that when analysis and manufacturing are co-located, they’ll work together in a dynamic approach that creates spillover advantages, he mentioned.
However inspecting the advantages of the deal additionally opens up a wider dialogue about whether or not Canada can be higher off if it designed and constructed the ships in Canada. Copeland, who now works for Hanwha, not surprisingly mentioned it’s not possible on a number of totally different ranges.
“The form of cash you’d have to speculate, after which after you construct it, then what? Construct them right here, create the roles after which we’ll export them,” he mentioned. “Nicely, I can present you two or three different nations the place the identical narrative was performed out and so they’re not exporting them, and now they’re shutting down manufacturing traces.”
Copeland mentioned Canada wouldn’t be capable to ship submarines by 2032, which is when Hanwha has mentioned it might ship its first submarine. TKMS has mentioned it might ship 4 by 2036.
He additionally factors to the River-Class Destroyer challenge being in-built Halifax. The design contract was awarded in 2019, however building solely began final 12 months even because the design continues to be finalized. The primary ships should not anticipated till the 2030s.
Dan Kerry, a director at Deloitte Canada, mentioned submarines are amongst essentially the most complicated issues that may be constructed and may take 9 million man-hours to assemble, referencing a extensively cited U.S. Navy and Division of Protection analysis paper a couple of nuclear assault submarine.
“This is sort of a house rocket underwater,” he mentioned. “It has the identical complexity as one thing that goes into house, nevertheless it has to outlive undetected underwater. What you’re coping with is one thing tremendous complicated, nevertheless it comes with a major quantity of employment alternatives.”
To that finish, Jim Stanford, director of the Centre for Future Work in Vancouver, mentioned Canada’s economic system could profit extra if the submarines are constructed utilizing supplies and elements from home provide chains than if the submarines had been in-built Canada utilizing international provide chains.
The true downside, he mentioned, is when governments spend cash on main tasks by which all the advantages stream abroad.
In 2025, British Columbia Ferries Companies Inc.’s resolution to award a $1-billion contract to China Retailers Trade Weihai Shipyards to construct 4 passenger vessels ignited a backlash from staff and home shipbuilders as a result of it amounted to an enormous switch of wealth abroad.
The firestorm grew after it turned public that the Canada Infrastructure Financial institution, a federal Crown company launched in 2017 to spend money on main infrastructure tasks, helped finance the contract.
Stanford, who has been crucial of the contract, described it for example of how to not do industrial coverage. However he additionally mentioned not all the funding commitments which have been introduced by the 2 submarine corporations could come to go.
“One downside that we’ve had with some industrial coverage initiatives is the businesses say they’re going to do one thing, however they don’t essentially,” he mentioned. “Authorities has to have robust conditionalities to guarantee that corporations stay as much as these commitments.”
That Hanwha and TKMS have proposed investments in Canadian business could really feel new, however Stanford mentioned a lot of Canada’s largest industries prior to now grew out of deliberate industrial methods.
Since taking workplace, Carney has spoken publicly in regards to the shift within the world buying and selling order. In January, at a speech in Davos, Switzerland, he described it as a “rupture, not a transition.”
As Canada and the U.S. scale back commerce, he mentioned center powers have to strengthen ties with one another. Included in that group can be each NATO allies in Europe and Indo-Pacific nations comparable to South Korea. Who wins the submarine contract would possibly simply reveal extra about how he sees the brand new world order taking form.
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