Market Update: Canada’s defense procurement chief tours Korean shipyard, says submarine bid hinges on broader economic ties – Full Analysis

 
Canada is factoring possible automotive investment and manufacturing cooperation as it weighs competing bids from Korea and Germany for a multibillion-dollar next-generation submarine program, according to its top defense procurement official on Monday.
 
Speaking during a visit to Hanwha Ocean’s shipyard in Geoje, South Gyeongsang, Stephen Fuhr, Canada’s secretary of state for defense procurement, said the Canadian Patrol Submarine Project (CPSP) partner selection would hinge on which bidder can deliver the greatest overall economic benefit to Canada.
 
He said in a statement released by Hanwha Ocean that Canada views both Korea and Germany as major automobile manufacturing countries, and that cooperation in that sector could allow economic ties to expand beyond defense into much larger areas of business.
 
He added that Canada has made clear from the outset that both bids meet the Royal Canadian Navy’s mandatory operational requirements and that the decision now hinges on cost, delivery schedule and the economic benefits to Canada. 
 
The CPSP could be worth as much as 60 trillion won ($41.2 billion), including maintenance, repair and operations over 30 years, with construction costs estimated at about 20 trillion won. Korea’s Hanwha Ocean and HD Hyundai Heavy Industries are bidding as a consortium against Germany’s Thyssenkrupp Marine Systems.
 
Canada has required bidders to provide industrial offsets, including local investment and technology transfers, as part of the deal.
 

The Royal Canadian Navy submarine HMCS Victoria sails in the vicinity of Esquimalt Harbour while wearing a poppy on its sail in Esquimalt, British Columbia, Canada, on Nov. 5, 2021, in this photo provided by the Canadian Armed Forces. [REUTERS/YONHAP]

 
Fuhr oversees Canada’s defense procurement policy and supervises the Defense Investment Agency, which the Canadian government established last year to overhaul its military acquisition system. His role gives him significant influence over the final decision.
 
He said the submarine competition has evolved into a strategic contest between nations and that the winning bidder would enter into a relationship with Canada lasting for decades, according to Hanwha Ocean’s news release.
 
He repeatedly emphasized that the bid’s economic value would be decisive, saying jobs and foreign direct investment are central to Canada’s efforts to reshape its economic structure.
 
Canadian officials have reportedly sought production investments from Hyundai Motor and Germany’s Volkswagen as part of the CPSP negotiations. Fuhr’s renewed focus on automotive cooperation underscored that demand, industry insiders said.
 
Yet Hyundai Motor has indicated it would be difficult to build a new finished-vehicle plant in Canada and has instead proposed cooperation in hydrogen-related projects, the insiders said. Volkswagen is pursuing plans to build an electric vehicle battery plant in the country.
 

Stephen Fuhr, Canada’s secretary of state for defense procurement, second from left, listens to a briefing on a model of the ROKS Jang Yeong-sil during a visit to Hanwha Ocean’s Geoje shipyard on Feb. 2. [HANWHA OCEAN]

 
During Monday’s visit, Fuhr toured Hanwha Ocean’s assembly facilities with about 30 Canadian government and industry officials, including representatives from major Canadian shipbuilders such as Ontario Shipyards, Irving Shipbuilding, Davie and Seaspan. The delegation inspected automated production systems, including robotic welding equipment.
 
Fuhr also boarded the Jang Yeong-sil, a 3,600-ton Jangbogo-III Batch-II submarine that Hanwha Ocean has proposed to Canada. 
 
He described the visit as an impressive experience after boarding the submarine, praising its internal technology, according to the company.
 
The visit was guided by Hanwha Ocean Chief Executive Kim Hee-cheul and Vice Defense Minister Lee Doo-hee, along with other government and industry officials. 
 
Kim said the visit served as an on-site review of the company’s proposal.
 
“We see this as a verification and inspection of our CPSP offer,” the CEO said. “We emphasized that Hanwha Ocean can provide an optimal solution for the Canadian Navy while growing together with Canadian industry as a trusted partner.”
 
Canada is expected to receive final bids for the submarine project in March, with a decision due in June.
 
Korea stepped up government-level support for the bid by dispatching a special envoy delegation to Canada led by presidential chief of staff Kang Hoon-sik. Hyundai Motor Group Executive Chair Euisun Chung also joined the delegation.
 
Hanwha Ocean has signed memorandums of understanding with Canadian companies related to shipbuilding cooperation, while HD Hyundai has proposed multitrillion-won partnerships in shipbuilding and energy.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NA SANG-HYEON [[email protected]]