With Ottawa expected to announce a winner in Canada’s largest defence procurement in decades before the end of June, South Korea’s Hanwha made its most expansive pitch yet on Monday, bringing three senior government officials — including Seoul’s presidential chief of staff — to an Ontario auto plant to formalize a conditional package that would tie 30,000 jobs and a new defence-manufacturing joint venture to its bid for the Canadian Patrol Submarine Project.

At a signing ceremony at Martinrea International in Vaughan on June 1, Presidential Special Envoy Kang Hoon-sik, Defence Acquisition Program Administration Minister Lee Yong-cheol, and Vice-Minister of Trade Moon Shin-hak joined Automotive Parts Manufacturers’ Association (APMA) president Flavio Volpe and Algoma Steel chief executive Rajat Marwah to announce that Canadian-made Algoma steel will feed both the proposed submarine hulls and the armored vehicles that Hanwha has promised to manufacture in Canada — provided the company wins a contract worth CAD $20–30 billion in acquisition cost alone, and as much as CAD $60 billion or more over the fleet’s full lifecycle.

“The economic activity that comes from that deal for automotive is the equivalent of one new car plant here,” Volpe said at the event, estimating the package would deliver 15,000 direct jobs and 15,000 indirect jobs across the supply chain. He framed it as urgently needed at a moment when Canadian auto manufacturing is running about 30 percent below pre-tariff levels because of U.S. trade policy.

The deal is entirely contingent on Hanwha winning. If Ottawa picks Germany’s ThyssenKrupp Marine Systems instead, none of the conditional promises — the joint venture, the Algoma mill investment, the vehicle production — come into effect.

What Hanwha Is Promising Canada

The vehicle-manufacturing offer, formalized in an April 29 joint venture between Hanwha and the APMA called Project Arrow Defence, would produce five Hanwha weapons platforms in Canada: the K9 Thunder self-propelled howitzer, the K10 ammunition resupply vehicle, the Redback infantry fighting vehicle, the Chunmoo multiple-launch rocket system, and uncrewed ground vehicles. Project Arrow Defence would be majority Canadian-owned with a Canadian chief executive, and is specifically sized to supply the approximately 250 armored vehicles the Canadian Army requires for Arctic and NATO duties.

The Algoma Steel component was structured earlier: in January, Hanwha Ocean and Algoma Steel signed a binding memorandum of understanding valued at up to USD $250 million, or approximately CAD $345 million. Under its terms, Hanwha committed a USD $200 million contribution toward developing a new structural steel beam mill in Sault Ste. Marie, Ontario, and up to USD $50 million in purchases of Algoma products for submarine construction and maintenance infrastructure in Nova Scotia and British Columbia. The June 1 ceremony extended that arrangement to cover the vehicle manufacturing program as well, completing the steel-to-defense pipeline Hanwha has been assembling since January.

Algoma CEO Marwah described the arrangement as aligned with Canada’s national-security priorities and a step toward the company’s broader diversification strategy, which includes a transition to electric arc furnace steelmaking.

What TKMS Is Promising Canada

Germany’s ThyssenKrupp Marine Systems has countered with a scale that numerically exceeds Hanwha’s package. According to information reported by CBC News from the CANSEC defence expo in Ottawa on May 28, the German-Norwegian bid is linked to a potential CAD $86 billion boost to Canada’s gross domestic product and as many as 50,000 jobs annually over five years, with 654,000 job-years projected over the contract’s lifetime. The package includes two coast-based submarine maintenance facilities, a heavy-torpedo and anti-torpedo manufacturing capability, hypersonic missile test facilities, and investment in Manitoba’s Port of Churchill. TKMS has also signed teaming agreements with CAE for simulation-based training, Seaspan for Pacific-coast sustainment, and four Indigenous development organizations.

German Defence Minister Boris Pistorius personally vouched for his country’s delivery timeline at CANSEC, pledging that TKMS could deliver four Type 212CD submarines to the Royal Canadian Navy by 2036. Hanwha has promised four of its KSS-III submarines by 2035 — one year earlier — and a full fleet of 12 by 2043.

Neither set of economic projections has been independently verified. Both figures are drawn from models commissioned by the respective bidders and their home governments. Dave Perry, president of the Canadian Global Affairs Institute, called the Hanwha-APMA venture “pretty attractive” and estimated the full procurement could reach CAD $120 billion over 30 years or more — crediting Ottawa for engineering genuinely intense competition. Perry has not independently verified either side’s job projections.

How Did Canada’s Auto Sector Become Part a Submarine Bid?

Canada’s federal government made the connection explicit. After receiving initial proposals in March, Ottawa asked both Hanwha and TKMS to improve the economic and industrial-benefits portions of their bids, signaling that capability alone would not decide the contest. Prime Minister Mark Carney has said the decision will weigh economic implications and broader strategic partnership alongside military requirements.

The CUSMA review — the scheduled reassessment of the Canada-United States-Mexico Agreement — begins July 1, giving Ottawa a political motivation to announce the submarine winner before that process opens and Canada’s trade leverage shifts to a different set of pressures.

Canada’s auto sector, heavily reliant on U.S. exports and battered by the Trump administration’s 25 percent tariff on foreign-assembled vehicles, has lost roughly 30 percent of its production volume. For an industry trade association president like Volpe, the opportunity to redirect defence spending toward automotive conversion is not a minor procedural matter — it is an argument for industrial survival.

Volpe’s role in the Hanwha announcement does carry a wrinkle, however. Just over a week before the April 29 Project Arrow Defence announcement, Volpe was named to Prime Minister Carney’s Advisory Committee on Canada-U.S. Economic Relations, giving him direct access to senior government officials outside normal lobbying channels at precisely the moment he was finalizing the joint-venture terms with Hanwha.

What Analysts Say the Decision Is Really About

Royal Canadian Navy commander Vice-Admiral Angus Topshee has said publicly that either submarine would be a viable choice for Canada — the two platforms meet its requirements, and the differentiator lies elsewhere.

Philippe Lagassé, a defence scholar at Carleton University who has tracked the CPSP closely, wrote in April that Ottawa is selecting a strategic partner for 40 to 50 years, and that the choice will signal whether Canada deepens its Atlantic and NATO alignment or makes a genuine Indo-Pacific pivot. Jeffrey Collins, a political scientist at the University of Prince Edward Island and author of Canada’s Defence Procurement Woes, has noted that Canada’s future submarines will need to share secure sensor and communications data with U.S. counterparts under existing North American Aerospace Defense Command obligations — a complication for any platform not already integrated into Western alliance frameworks.

Both the KSS-III and the Type 212CD are diesel-electric submarines that would require integration with U.S.-made combat-management systems to fulfill those NORAD commitments. Hanwha demonstrated communications interoperability with the Royal Canadian Navy during the trans-Pacific voyage of the ROKS Dosan Ahn Chang-ho — the same KSS-III class vessel it is proposing for Canada — which arrived at CFB Esquimalt in Victoria on May 23 after sailing more than 14,000 kilometers from Jinhae Naval Base in South Korea. Two Royal Canadian Navy submariners sailed aboard the vessel from Hawaii to Victoria, successfully communicating with Canada’s Pacific Maritime Forces using the Combined C4I command-and-control system.

Secretary of State for Defence Procurement Stephen Fuhr, who is not involved in evaluating the bids, said he learned of the June 1 Vaughan announcement from a news article. Both Hanwha and TKMS, he said, “know what’s at stake” and are “putting their best foot forward.”

Lagassé has also noted that once Ottawa names a preferred supplier, it will likely describe the choice as tentative — pending final contract negotiations — giving the government leverage to extract binding commitments on delivery, industrial investment, and technology transfer from whichever bidder wins.

Canada’s Defence Investment Agency has confirmed that both proposals are under review. A preferred-supplier announcement is expected as early as this summer, with a binding contract anticipated around 2028. The Royal Canadian Navy requires its first new submarine delivered no later than 2035, when the aging Victoria-class fleet is scheduled for retirement.

Frequently Asked Questions

What is the Canadian Patrol Submarine Project?

The Canadian Patrol Submarine Project is a procurement initiative launched in 2021 to replace Canada’s four aging Victoria-class submarines with a fleet of up to 12 new diesel-electric vessels capable of operating under ice. The program will allow the Royal Canadian Navy to maintain simultaneous patrol capability in the Atlantic, Pacific, and Arctic, and Canada’s Defence Investment Agency has said a preferred supplier could be announced as early as summer 2026.

What is Project Arrow Defence?

Project Arrow Defence is a joint venture between South Korea’s Hanwha and Canada’s Automotive Parts Manufacturers’ Association (APMA), announced on April 29, 2026. It would produce five Hanwha military platforms — including the K9 howitzer and Redback infantry fighting vehicle — in Canada using Canadian workers and materials, with 51 percent Canadian ownership and a Canadian chief executive. The entire venture is contingent on Hanwha winning the Canadian Patrol Submarine Project contract.

How many jobs does Hanwha’s submarine bid promise Canada?

APMA president Flavio Volpe estimated the combined automotive and defence manufacturing package would create 30,000 jobs — 15,000 direct and 15,000 indirect across the supply chain. The figure has not been independently verified and comes from Hanwha’s own KPMG-commissioned analysis. Germany’s competing TKMS bid projects up to 50,000 jobs annually over five years, also based on bidder-commissioned modelling. Neither set of figures has been confirmed by an independent third party.

When will Canada announce the submarine contract winner?

Prime Minister Mark Carney has committed to naming a preferred supplier before the end of June 2026, ahead of the Canada-United States-Mexico Agreement review that begins July 1. A preferred-supplier announcement is a separate step from a binding contract, which is not expected to be signed until approximately 2028.