The Government of Canada is expected to announce the preferred bidder for the Canadian Patrol Submarine Project (CPSP) by early July. This decision represents one of Canada’s most consequential defence procurements and will help define its defence industrial trajectory for the coming decades. The two short-listed bidders are South Korea’s Hanwha Ocean and Germany’s Thyssenkrupp Marine Systems (TKMS).
The CPSP is intended to replace the Royal Canadian Navy’s (RCN) four aging Victoria-class fleet with up to 12 conventionally powered submarines, of which only one is currently operational; half are to be deployed in the Atlantic and half in the Pacific. The competition has increasingly become about much more than military capability and is being closely watched in the lead-up to the NATO Summit, which starts on July 7. Recent comments by Canada’s Defence Procurement Secretary of State Stephen Fuhr suggest that both proposals have satisfied all the RCN’s operational requirements, following the technical assessment. If that is the case, the deciding factor may ultimately come down to which proposal delivers greater economic benefits to Canada throughout the submarines’ lifecycle and beyond.
This head-to-head competition has already moved well beyond the submarines themselves. Both Hanwha Ocean and TKMS have unveiled economic packages that exceed the CPSP’s estimated value of up to C$60 billion, reflecting Canada’s Industrial and Technological Benefits (ITB) Policy. While Hanwha has centred its proposal on prompt delivery timeline and localization, TKMS has emphasized NATO interoperability and deeper integration into European defence-industrial networks.
The intensity of the competition was on display last week, when a debate between the two companies moved into the public sphere. A LinkedIn post by Philipp Schön, Head of Sales at TKMS, argued that the proposed Type 212CD program – co-developed by Germany and Norway – offered advantages through a common “working language” and shared “cultural ecosystem.” While Schön later clarified that his comments were intended to highlight interoperability rather than criticize South Korea, the post prompted responses from Hanwha Defence Canada CEO Glenn Copeland, who described the narrative as “unfortunate,” and Asia Pacific Foundation Vice-President Research & Strategy Vina Nadjibulla, who argued that framing the submarine competition around language and culture was “unnecessary.” The exchange demonstrated that the CPSP has evolved beyond a conventional defence procurement into a broader competition over Canada’s future defence-industrial and strategic partnerships.
In light of the impending decision on this high-stakes competition, it is worth examining how the Hanwha Ocean and TKMS proposals reflect two different visions of partnership – each offering distinct advantages for Canada’s future maritime capabilities, defence industry, and long-term strategic interests.
Hanwha Ocean’s proposal combines three key strengths: a proven platform, an accelerated delivery timeline, and an ambitious industrial package. Operationally, the KSS-III Batch-II is already under construction, with the first vessel launched on October 22, 2025, and toured by Prime Minister Mark Carney during his visit to South Korea the following week. The recent docking of the KSS-III submarine on Canada’s Pacific coast further demonstrated the platform’s long-range operational capabilities and interoperability between the Canadian and South Korean navies. Hanwha has proposed delivering the first submarine by 2032, four by 2035, and the full fleet of 12 by 2043. Given the expected retirement of the Victoria-class submarines between 2036 and 2042, this timeline would significantly minimize the risk of a submarine capability gap.
Beyond operational capability, Hanwha has positioned its bid as a catalyst for Canada’s broader defence-industrial development. Backed by an aggressive promotional campaign throughout the CPSP competition, the company has assembled a network of more than 80 Canadian industry, academic, and research partners. Hanwha estimates that between 2026 and 2044, its proposal could generate approximately 500,000 jobs and contribute more than C$120 billion to Canada’s GDP. Its proposed investment extends well beyond the defence industry to energy co-operation through increased Canadian crude oil and LNG imports, localized defence manufacturing through agreements with partners such as the Automotive Parts Manufacturers’ Association and Algoma Steel, and “Project Beaver,” under which Hyundai Motor has committed to producing hydrogen-powered freight trucks and supporting infrastructure in Canada.
Perhaps the most distinctive feature of Hanwha’s proposal is its emphasis on localization and supply chain remodelling. Building on South Korea’s close government-industry coordination, Hanwha has presented the CPSP as a government-backed initiative rather than a simple defence procurement project, as demonstrated by the visits to Canada of Secretary of State Kang Hoon-sik as the Presidential Special Envoy for Strategic Economic Cooperation for the announcements of several Hanwha industrial initiatives linked to the CPSP bid. The proposal builds on localization models adopted by Hanwha in Australia through the AS9 Huntsman self-propelled howitzer partnership program and in Poland through the HOMAR-K multiple rocket launcher partnership program, where production has progressively shifted to local suppliers and manufacturers. If successfully implemented in Canada, the KSS-III program could similarly extend beyond procurement to include localized production and long-term sustainment, and contribute to the revitalization of Canada’s shipbuilding and manufacturing industries.
Hanwha’s bid faces a major challenge in that the CPSP would represent the first time that the KSS-III platform has been exported. For Hanwha, winning the CPSP would therefore represent not only a commercial success, but also an opportunity to establish itself as a long-term defence partner within NATO’s maritime ecosystem through Canada, much as its land-based defence systems gained a foothold in the European market through Poland.
By contrast, TKMS has emphasized Arctic optimization, NATO interoperability, and integration into European defence-industrial networks as the core strengths of its proposal. Operationally, the Type 212CD has been jointly designed by Germany and Norway specifically for operations in northern waters. Its diamond-shaped outer hull is intended to enhance manoeuvrability and under-ice navigation, while the use of non-magnetic Amanox steel provides greater resistance to extreme cold temperatures and seawater corrosion. TKMS also benefits from decades of operational integration across allied navies, including the ORCCA Combat Management System. As the supplier of approximately 70 per cent of NATO’s submarine fleet, Germany benefits from decades of integration in allied training, logistics, and operational concepts. If TKMS were to win this bid, the combined fleets in Germany, Norway and Canada would comprise 24 submarines; there are also prospective benefits of potential intelligence-sharing among these three NATO allies.
The economic package proposed by TKMS is projected to contribute up to C$86 billion to Canada’s GDP and generate more than 650,000 jobs over the lifecycle of the submarine program. The German government – typically reticent about promoting defence exports – has voiced explicit support for the TKMS bid. Recognizing that Canada will be hard-pressed to build the required marine infrastructure by the early 2030s when the Victoria-class submarines are retired, Norway has offered the design of its submarine maintenance facility for Canada to replicate. With an eye to the type of submarine infrastructure that Canada will need to develop, Prime Minister Mark Carney toured the TKMS submarine building facility in Kiel during his visit to Germany in August 2025.
While the TKMS bid involves fewer proposed partnerships in Canada than Hanwha’s bid, TKMS has emphasized the calibre of these partnerships. From an industrial perspective, the German proposal offers Canada greater access to established European defence-industrial networks and procurement frameworks. Through its proposed Canadian Defence & Dual-Use Innovation Ecosystem (CDDE), TKMS has pledged extensive technology transfer by partnering with Canadian universities, research institutions, Indigenous organizations, and industry to strengthen sovereign defence capabilities, retain intellectual property, and diversify Canada’s defence talent base.
The German proposal also capitalizes on the fact that Canada has recently joined the European Union’s Security Action for Europe (SAFE) program, making Canada the only non-EU participant in the €150-billion (C$243-billion) defence financing initiative supporting joint procurement and industrial co-operation. This presents Canada with an opportunity to deepen long-term defence-industrial co-operation with Europe at a time when Ottawa is seeking to diversify its security partnerships beyond the United States.
The German bid faces an operational challenge in that the Type 212CD has not yet entered operational service and remains in the early stages of production. To address concerns over delivery timelines, Germany has pledged to accelerate Canadian deliveries by reallocating submarines from existing German and Norwegian naval orders, committing to deliver four submarines by 2036. In addition, TKMS has recently experienced near-term cash flow pressures, raising questions about its ability to manage multiple large-scale naval programs simultaneously. While its orders are robust, the company is also juggling heavy advance payments for ongoing projects.
The CPSP has become as much a geopolitical choice as a defence procurement decision. The decision will signal how Canada intends to pursue its broader objective of building sovereign capabilities and the priority it attaches to deepening its transatlantic security ties versus strengthening its security engagement in the Indo-Pacific. The growing political attention surrounding the competition – including the United Kingdom’s public endorsement of Hanwha Ocean – reflects the broader significance attached to the project.
Regardless of which proposal is selected, the long-term success of the CPSP will ultimately depend on Canada’s ability to maximize the strategic and industrial opportunities arising from this procurement. Whether through Hanwha’s localized model or TKMS’s integration into European defence-industrial networks, Ottawa needs to translate procurement into lasting sovereign capability. Doing so will require sustained investment in Canadian suppliers, training and workforce development, research partnerships, and industrial infrastructure to ensure that technology transfer and domestic production extend well beyond the initial procurement phase.
Ultimately, the success of the CPSP will be measured not only by the submarines acquired, but by Canada’s ability to translate the project into skilled jobs, stronger domestic supply chains, and lasting industrial capabilities that can grow its export potential across both the Indo-Pacific and European markets.
• Edited by Erin Williams, Director, Programs, APF Canada
