Canada selects German ThyssenKrupp as preferred bidder for submarines

Canada selects German ThyssenKrupp as preferred bidder for submarines

Prime Minister Mark Carney announced Monday in Halifax that German shipbuilder ThyssenKrupp Marine Systems (TKMS) is the preferred choice to build the Royal Canadian Navy's new fleet of submarines. The multibillion-dollar procurement program is expected to be the largest in the history of the country.

The decision ends a period of high-stakes competition between a joint German-Norwegian bid and a proposal from South Korea’s Hanwha Ocean Co. And HD Hyundai Heavy Industries Co. Carney stated that the federal government will now enter negotiations with TKMS to sign a contract, a process anticipated to take several months. A senior federal official indicated hopes to conclude a contract by next year.

The navy seeks 12 conventionally powered submarines to replace the aging Victoria-Class fleet, some of which are due to be retired in the 2030s. Carney confirmed he is committed to purchasing all 12 vessels and has allocated funds within the federal government's long-term fiscal framework.

Financial Stakes and Industrial Goals

While the prime minister did not reveal a final price tag during the announcement, a senior federal official stated that the purchase cost could reach $24 billion. When lifetime sustainment and maintenance costs are included, the total program is likely to hit $100 billion or more. This follows an earlier estimate from one executive involved in the process that the contract could be worth more than $70.4 billion.

The procurement is a central part of Carney's strategy to leverage defense spending for economic gains. After winning power last year, Carney persuaded voters he could protect Canada from the tariff assaults of U.S. President Donald Trump by strengthening global relationships. His cabinet pushed bidders for "sweeteners," such as automotive investment, to offset the damage of the U.S. Trade war.

Beyond the vessels, the project aims to build Canadian industrial capacity. TKMS previously expressed willingness to transfer intellectual property and technology, with CEO Oliver Burkhard stating he would not rule out establishing a manufacturing facility in Canada. The TKMS pitch also included plans for a submarine maintenance facility to create domestic jobs.

Strategic and Military Implications

The selected German-designed Type 212CD is based on the 212A design and was developed jointly by Germany and Norway for operations in all oceans, specifically the Arctic. According to Norway's program director of submarines, Oystein Storebo, the boat's air-independent propulsion system allows it to stay submerged for more than three weeks. The Type 212CD measures 73 metres in length, weighs 2,800 tonnes when submerged, and features four torpedo tubes.

Regarding delivery, TKMS originally committed to providing four submarines by 2036, but a federal official noted Monday that this timeline could be advanced to 2034. If all 12 boats are acquired, submarines would comprise one-third to one-half of the Canadian navy's fleet.

The choice carries significant geostrategic weight. It pulls Canada closer to Europe and NATO allies at a time when the United States is perceived as pulling away from the alliance. However, some observers suggest the move may hinder Canadian investment and ambitions in the Indo-Pacific. Former diplomat and soldier Marius Grinius argued that Canada's long-term security and economic interests lie in the Indo-Pacific and that a strategic opportunity in that region has been squandered.

Carney defended the decision, describing Germany, Norway, and the Republic of Korea as dynamic, reliable, like-minded democracies and critical strategic partners. He noted that the choice was based on the absolute best platform and partnership for Canada's security and economic interests.

Next Steps and Alternatives

The government has maintained a fallback position. Carney stated that if negotiations with TKMS fail, Canada retains the right to designate the South Korean KSS-III, currently the reserve supplier, as the preferred supplier.

The announcement comes as the prime minister prepares to travel to Ankara, Turkey, for the NATO summit. Carney is expected to present the submarine deal and a plan to create a defense investment bank designed to give NATO countries easier access to capital for the arm-making industry.