South Korean and German officials face an unusual condition in their competition to build Canada’s next submarine fleet: commitments from their countries’ automakers to expand manufacturing operations in Canada.
Senior executives from Hyundai and Hanwha Ocean plan to visit Canada later this month alongside South Korean government officials for meetings with Prime Minister Mark Carney, according to The Globe and Mail, citing sources familiar with the arrangements. The visit follows Canada’s request that Seoul arrange production commitments from Hyundai as part of the submarine procurement.
Ottawa made similar requests to Germany regarding Volkswagen-related manufacturing expansion.
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South Korea’s Presidential Chief of Staff Kang Hoon-sik confirmed Industry Minister Mélanie Joly sought Hyundai’s investment to “offset” the submarine purchase. “Canada is intensifying Korea’s competition with Germany by saying, ‘We’ll buy weapons, but we need something in return,’ and ‘Germany’s Volkswagen is open to our request,'” Kang said earlier this month.
Hanwha Ocean and Germany’s ThyssenKrupp Marine Systems are competing for a contract covering up to 12 submarines worth tens of billions of dollars. Canada narrowed the field to these two contenders last year.
Stephen Fuhr, Secretary of State for Defence Procurement, has stated repeatedly that Canada will choose the bid creating the most Canadian jobs. “Every defence investment must also generate real industrial and economic benefits here at home,” said Gabrielle Landry, press secretary to Joly.
Hyundai currently operates no production facilities in Canada. Volkswagen has committed to an electric vehicle battery factory in St. Thomas, Ontario.
Carney visited both bidders last year, touring ThyssenKrupp’s German facilities in August and Hanwha Ocean’s South Korean shipyard in October. Canada expects a contract award by 2028 and delivery of the first submarine by 2035, replacing Victoria-class vessels purchased second-hand from Britain.
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