In a major development, Prime Minister Mark Carney announced that Canada is in discussions to purchase up to twelve submarines from German shipbuilder ThyssenKrupp Marine Systems (TKMS), concluding a competitive process to replace the aging Victoria-Class fleet. Both bids, one from South Korea in partnership with Hanwha Ocean and the other from Germany and Norway with TKMS, promised substantial investments beyond just submarine procurement, aiming to bolster Canada’s economy.

TKMS proposed delivering four Type 212CD submarines to the Royal Canadian Navy by 2036, with the first one expected by 2034. This offer closely matched the South Korean bid, which also committed to providing four submarines by 2035. The timing is crucial as Canada’s current fleet of Victoria-Class submarines is scheduled for retirement in the mid-2030s, with only one operational at present.

Carney emphasized the significance of the decision, stating that both TKMS and Hanwha platforms met the Royal Canadian Navy’s high standards. By choosing the TKMS bid, Canada is now entering negotiations for the potential acquisition of up to twelve submarines.

The deal includes a condition where the value of the federal government’s investment must be matched by economic benefits to Canada, amounting to “tens of billions of dollars in investment” across defense and industrial sectors such as space, munitions, autonomous technology, critical minerals, and research and development.

Prior to the announcement, information suggested that the combined investments from TKMS and the German government could inject $86 billion into Canada’s GDP. Carney highlighted that the TKMS contract is projected to create over 100,000 well-paying jobs nationwide, with the initial phase focusing on tasks like submarine construction requiring skilled workers like welders, pipefitters, engineers, machinists, and researchers.

Germany’s bid included various proposed investments such as the construction of a maintenance facility on a Canadian coast and the establishment of manufacturing centers for torpedoes and anti-torpedo systems. Additionally, the Germans offered plans to develop Manitoba’s Port of Churchill into a major export hub and collaborate on a carbon capture facility in Alberta.

Furthermore, the TKMS platform’s compatibility with NATO forces was a key factor, as it is already a supplier to the alliance and designed for Arctic waters. Carney highlighted the platform’s NATO interoperability, enabling seamless communication and joint missions.

While the German bid aligns with some of Canada’s economic goals, Carney clarified that selecting TKMS does not indicate a shift away from the Indo-Pacific strategy. Hanwha remains the backup supplier for the submarine contract, should negotiations with TKMS not succeed.

Carney underlined the potential benefits for Canada’s coasts, particularly Halifax and the West Coast, anticipating significant economic activity in shipbuilding and maintenance that would extend throughout the country. The decision marks the beginning of a transformative phase for Canada’s naval capabilities and economic landscape.