Maintenance and Support Critical; Caution on Split Orders
According to CTV News Canada on June 29, this procurement aims to replace the aging Victoria-class submarines of the Royal Canadian Navy. Canada plans to acquire up to 12 submarines, which will include maintenance and support contracts spanning 30 to 50 years. The total value of the project is estimated to exceed $100 billion (approximately 154 trillion won). Currently, only one of the four Victoria-class submarines is operational.
The Canadian government is linking this procurement to the NATO defense spending increase trend. NATO member countries are discussing a plan to allocate 5% of their GDP to defense spending by 2035. The submarine project could serve as a prime example of Canada's commitment to enhancing naval capabilities and increasing defense expenditures.
The evaluation criteria place significant emphasis on maintenance and support capabilities. The Canadian Defense Investment Agency is assessing bids based on four criteria: submarine performance (20%), maintenance and support (50%), financial conditions (15%), and security and economic cooperation (15%). The ability to maintain and operate the submarines reliably over decades is crucial.
The likelihood of split orders is decreasing. Canadian Defense Minister David McGuinty recently stated during a visit to Japan, "Dividing any fleet increases cost burdens." He added, "Maintaining and operating two different fleets is a complex task for any country," suggesting a preference for selecting a single contractor over splitting the order between Hanwha Ocean and TKMS.
Hanwha Promises Early Delivery; TKMS Highlights NATO Interoperability
Hanwha Ocean is emphasizing a rapid delivery schedule and industrial cooperation. The company has stated it can deliver the first submarine to Canada by 2032, with a total of four submarines by 2035. The estimated construction cost per submarine is about $2 billion (approximately 3.1 trillion won). By replacing the aging Victoria-class submarines early, Hanwha claims it can reduce maintenance costs by about $1 billion (approximately 1.5 trillion won).
Hanwha has also proposed operational support measures, including training 200 Canadian submarine crew members at its base in Jinhae. The company has established over 80 partnerships with Canadian firms. According to KPMG analysis, these collaborations could generate over $70 billion (approximately 107 trillion won) in economic impact in Canada from 2026 to 2044. The job creation effect in Canada is estimated at 430,000, with a projected increase in GDP of $96.3 billion (approximately 148 trillion won) during the same period.
TKMS is promoting its operational interoperability with NATO as a key advantage. The argument is that if Canada operates submarines similar to those of its NATO allies, joint operations will be easier. TKMS has indicated it can expedite the delivery schedule for Canadian orders, aiming to supply four submarines by 2036. The company has also proposed that Canada utilize its facilities in Europe, India, and Singapore.
TKMS is also emphasizing economic benefits, having disclosed 19 memorandums of understanding (MOUs). The company promises an economic ripple effect of $160 billion (approximately 246 trillion won) over the contract period, with an estimated GDP increase of $86 billion (approximately 132 trillion won) and job creation of over 650,000, although the timeframe for these figures has not been clearly specified.
The final decision is closely tied to security strategy. Choosing TKMS would enhance Canada's operational interoperability within NATO and strengthen Arctic defense strategies. Opting for Hanwha Ocean could expand security cooperation in the Indo-Pacific region based on large-scale defense collaboration with South Korea. Canada's choice is expected to signal the direction of future security cooperation beyond merely purchasing submarines.
* This article has been translated by AI.
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