The Submarine Deal

# The Submarine Deal

Episode Summary

Canada's Patrol Submarine Project (CPSP) is a $60-billion program to build 12 new diesel-electric submarines, and South Korea's Hanwha Ocean is one of two finalists. Whether or not Hanwha wins, the CPSP has catalyzed unprecedented economic engagement between Canada and Korea. This episode explores the deal itself, its supply chain implications, and the opportunities it creates for Canadian companies far beyond defense.

Guest Profile

Ideal guest: Defense procurement analyst or industry executive connected to the CPSP

Guest candidates:

- Defense industry analyst at a think tank (CIGI, CGAI, or CDA Institute) - Executive at a Canadian defense contractor partnering with Hanwha Ocean - Former DND or PSPC official involved in submarine procurement

Talking Points

1. CPSP Overview - 12 diesel-electric submarines to replace the aging Victoria-class fleet - Estimated program value: C$60 billion ($43 billion USD) over the life of the program - Two finalists: Hanwha Ocean (South Korea) and ThyssenKrupp Marine Systems (Germany) - Preferred bidder expected to be selected by mid-2026

2. Hanwha Ocean's Bid - Offering the KSS-III, a proven, in-service, in-active-production submarine - Claims fastest delivery schedule: first 4 submarines before 2035 - Full fleet of 12 delivered by 2043 - Meeting all CPSP requirements including Arctic deployability

3. HD Hyundai's Role - HD Hyundai Heavy Industries serving in a supporting role in Hanwha's consortium - Hyundai Motor Group chair personally joined Korean delegation to Canada (January 2026) - Korean government formally confirmed commitment to Hanwha's bid - Signals that this is a national-level priority for Korea

4. Industrial and Technological Benefits (ITBs) - Hanwha has signed 5 industry teaming agreements with Canadian companies - 3 memoranda of understanding with Canadian universities - Partnership with Babcock (UK/Canada) for through-life support - Commitment to Canadian shipyard involvement and technology transfer

5. Supply Chain Opportunities for Canadian Companies - Submarine builds require thousands of components and sub-systems - Canadian SMEs can qualify as Tier 2 and Tier 3 suppliers - Areas: materials, electronics, software, environmental systems, safety equipment - Offset requirements mean Hanwha must invest in Canadian industrial capacity

6. Beyond Defense: Economic Spillover Effects - A Hanwha win would anchor a multi-decade Korea-Canada industrial relationship - Korean conglomerates follow each other into markets (bandwagon effect) - Increased Korean corporate interest in Canadian real estate, services, and talent - Precedent for defense-to-commercial technology transfer

7. The Broader Canada-Korea Defense Relationship - Korean War history creates deep emotional bonds (Canada sent 26,000+ troops) - Korea has modernized into a top-10 global arms exporter - Potential for cooperation in unmanned systems, cybersecurity, and space - NATO+ partner alignment on Indo-Pacific security

8. Comparing the Bids: Hanwha vs. TKMS - KSS-III (Hanwha) vs. Type 212CD (TKMS) - Delivery timelines, capability differences, and industrial benefit packages - Political considerations: Indo-Pacific strategy alignment vs. European NATO ties - Canadian public opinion and media coverage of the competition

9. What Happens After the Decision - Contract negotiation phase (12-18 months after selection) - Long lead item procurement begins immediately - Canadian workforce development and training programs - Shipyard infrastructure investments required

10. How Canadian Companies Can Position Now - Register in Hanwha Ocean's supplier portal - Attend CPSP industry days and networking events - Develop capability briefs aligned with submarine subsystem requirements - Partner with Korean defense firms already in the Hanwha consortium

Key Questions for Guest

1. How realistic is Hanwha Ocean's delivery timeline, and what are the risks to schedule? 2. What types of Canadian SMEs are most likely to benefit from the submarine supply chain? 3. How do Industrial and Technological Benefits (ITBs) actually work in practice for a project this size? 4. Beyond submarines, what other defense cooperation opportunities exist between Canada and Korea? 5. How does the submarine decision connect to Canada's broader Indo-Pacific Strategy? 6. What should Canadian companies be doing right now to prepare, regardless of which bidder wins?

Listener Takeaways

The CPSP is the largest defense procurement in Canadian history, with massive supply chain opportunities

Hanwha Ocean's bid includes commitments to Canadian industrial participation and technology transfer

Even companies outside the defense sector can benefit from the economic ripple effects

The submarine deal is catalyzing a broader, multi-sector Canada-Korea economic relationship

Canadian companies should start positioning now by registering as potential suppliers and attending industry events

Resources Mentioned

Rise Partners Defense Supply Chain Readiness Guide

Government of Canada CPSP official page

Hanwha Ocean Canada supplier portal

Canadian Association of Defence and Security Industries (CADSI) events calendar

CTA

Want to understand if your company can participate in the submarine supply chain? Rise Partners has mapped Hanwha Ocean's supplier requirements and can help you assess your fit. Contact us at risepartners.co.kr/defense for a supplier readiness review.