South Korean bidder to build military vehicles with Canadian parts and workers if it wins submarine contract: sources
Open this photo in gallery:
National Defence Minister David McGuinty, back left to right, South Korea Prime Minister Kim Min-seok, Prime Minister Mark Carney and Hahnwa Group Vice-Chariman Kim Dong Kwan at the Hanwha Ocean Shipyard in Geoje Island, South Korea, October, 2025.Adrian Wyld/The Canadian Press
The South Korean company vying to win the contract to build Canada’s next submarine fleet is promising, if selected, to build industrial and military vehicles in this country with Canadian auto parts and workers, sources say.
Hanhwa is announcing a joint venture Wednesday with Canada’s Automotive Parts Manufacturers’ Association (APMA) to build a new entity that would produce the promised vehicles, according to two sources familiar with the matter.
The Globe and Mail is not identifying the sources because they were not authorized to discuss the joint venture publicly.
The pledge by Hanwha is an effort to sweeten its bid for the submarine contract. Revised bids are due Wednesday after the Canadian government recently extended the bidding process to prompt bidders to enrich their offers.
The only two companies left in the competition to build up to 12 submarines for Canada are South Korea’s Hanwha and Germany’s TKMS.
Canada’s auto sector, heavily reliant on exports to the United States, faces an uncertain future after U.S. President Donald Trump imposed a 25-per-cent-tariff on foreign-assembled vehicles last year with carve-out for parts made in the U.S. Mr. Trump has said the United States does not need Canadian-made cars.
Ottawa gives South Korean, German submarine builders opportunity to revise bids
Prime Minister Mark Carney’s government asked submarine bidders to pledge vehicle manufacturing as part of their bids and so Hanwha, in partnership with APMA, is “delivering on that request in order to support Canada’s automotive sector and workers in these challenging and uncertain times.”
The Prime Minister’s response to increasing U.S. protectionism under Mr. Trump has been to try to diversify trade with other countries but also to spend more defence dollars at home.
Under the promise by Hanwha, the vehicles would be produced in Canada by Canadian workers with domestically sourced parts and materials, including Canadian steel and aluminum.
The company is expected to promise this venture would sustain tens of thousands of automotive sector jobs for Canadians while establishing a domestic production capability to supply non-commercial industrial vehicles, including military vehicles, in Canada and globally.
Open this photo in gallery:
South Korea Prime Minister Kim Min-seok, centre, Prime Minister Mark Carney, second right, and National Defence Minister David McGuinty, right, at the Hanwha Ocean Shipyard in Geoje Island, South Korea, in October, 2025.Adrian Wyld/The Canadian Press
The vehicles could include Hanwha equipment including its K9 Thunder self-propelled Howitzer and K10 Ammunition Resupply Vehicle, its Redback Infantry Fighting Vehicle, its Chunmoo Multiple Launch Rocket System and uncrewed ground vehicles.
Hanwha is expected to pledge the goal for it and APMA and would be a “sovereign Canadian automotive business unit” that would be focused exclusively on the design and production in Canada of non-commercial industrial vehicles, including heavy-axle and special purpose vehicles, for use by the Canadian Armed Forces, federal, provincial and municipal government departments and agencies, emergency services, and Arctic and Crown resource-sector operations.
Hanwha’s offer to Canada is the KSS-III Batch-II submarine, while TKMS, as part of a joint German-Norwegian project, is offering the 212CD. Both are diesel-electric submarines.
The stakes are high. Canada could end up spending tens of billions of dollars for the 12 submarines it intends to buy over their life cycle.
Industrial benefits are a key component of many defence contract bids. Canada expects suppliers to spend significant dollars in this country while fulfilling a contract.
Defence analysts have said the total value of the submarine contract could be $60-billion to $120-billion over the vessels’ full life cycle, including $24-billion to $30-billion for the acquisition itself.
Earlier this month, Ottawa announced that it had extended the bidding process to pick a submarine builder so the two entrants vying for the prize could sweeten their bids.
It was an acknowledgment that Ottawa wasn’t satisfied with the economic and industrial benefits promised in the initial bids, submitted ahead of a March 2 deadline by Hanwha and TKMS.
The Canadian government notified the two bidders that they were being granted about 20 more days to revise their bids, with this “amendment period” ending on April 29.
