Hanwha Defence Canada chief executive Glenn Copeland was swiping through photos he’d taken inside General Motors Co. ’s now-vacant CAMI assembly plant in Ingersoll, Ont., earlier this month while waiting for his panel discussion to begin at a recent auto sector conference. GM halted production at the plant last year after demand for its BrightDrop electric van failed to materialize at the scale necessary to rationalize the costs of running it. The closure of Canada’s first full-scale electric vehicle manufacturing plant was one of the reasons Canada’s auto production fell seven per cent last year, and what to do about CAMI is now one of many headaches for Prime Minister Mark Carney and his cabinet. Copeland, the local face of South Korean submarine maker Hanwha Ocean Co. Ltd. as it bids for an estimated $80-billion contract to make Canada’s first new submarines in a generation, is keen to be part of any solution at CAMI. That interest is just one example of how Hanwha plans to insert itself into some of this country’s major industrial policy issues — from autos to steel to liquefied natural gas — as long as it wins the submarine contract. Charm offensive To that end, Hanwha has wrapped Canada in advertising over the past few months, putting up billboards on buses and in airports and running ads during hockey games voiced over by Peter Mansbridge. More importantly, its executives have crisscrossed the country to strike more than 70 deals to invest in or partner with Canadian industrial and technology companies, universities and government ministries, while its competitor, Germany’s ThyssenKrupp Marine Systems, has made a similar, albeit less promotional, push. The resulting dealmaking blitz has raised hopes that increased military spending will provide a long-lasting boon for the economy, but it is also raising questions about the viability of all these side deals and whether future government procurements will see a similar barrage of public promotion from bidders. The Canadian Patrol Submarine Project , the official name of the procurement that Hanwha and TKMS are bidding on, ties into the federal government’s plans to more than double its defence and security spending to five per cent of the country’s annual gross domestic product by 2035, up from two per cent today. “Even if Hanwha doesn’t win, the Canadian automotive sector is still going to push really hard into defence,” Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA), said. In April, APMA struck a deal to take a 51 per cent stake in a joint venture to build all-terrain military vehicles, with Hanwha owning the rest. Earlier this month, they announced a deal to use steel in the vehicles sourced from Sault Ste. Marie-based Algoma Steel Inc., Canada’s last independently owned mill. But sources, who spoke on condition of anonymity because they were not authorized to speak publicly, said GM, Hanwha and the APMA remain far from striking a deal to produce vehicles at Ingersoll. At 2.3 million square feet, they said the plant is far too large for Hanwha and the APMA alone. But GM is also pursuing contracts for military vehicles, and if it agreed to share resources such as the workforce with other companies, sources say it could make sense to repurpose the plant to make those vehicles. “CAMI Assembly continues to be assessed for future opportunities, and no final decisions or agreements have been made,” GM said in a statement. There is also another much bigger catch: Hanwha would have to win the submarine contract, and then its joint venture would need to win a contract to build military vehicles. Similarly, GM and other potential players would need to win contracts to build military vehicles, all of which has reinforced concerns that some business executives may be overestimating the impacts that Canada’s shift in military spending will bring to the industrial base. Defence and security spending reached $63 billion last year and the planned jump in spending to five per cent of GDP would amount to about $150 billion per year based on 2025 numbers. The country’s four submarines, acquired secondhand from the United Kingdom in 1998 and accepted into service beginning in 2000, are expected to remain operational until the mid-to-late 2030s. Now, the federal government is interested in acquiring up to 12 submarines for the Royal Canadian Navy, and it is expected to cost at least $20 billion and take years to deliver. Secretary of State for Defence Procurement Stephen Fuhr has said the submarine contract “could be the biggest procurement we ever do.” Maintenance and infrastructure for the submarines could raise the total cost above $100 billion over the coming decades. Speeding up the process Beyond the cost, Fuhr and military analysts have said the federal government is moving particularly quickly compared to the past. The request for information for the procurement was announced in 2024 and the federal government narrowed it down to Hanwha and TKMS last August. Prime Minister Mark Carney is expected to announce a decision on the procurement by the end of June, likely this week. “This is an exceptionally fast process in comparison to history,” said Darren Hawco, a retired vice-admiral of the Royal Canadian Navy who now serves as an executive adviser at Deloitte Canada. He attributed the speed to the fragility of the current Canadian submarine fleet, which is down to one submarine, with three others in maintenance or under repair. The military has said both of the offered submarines meet the technical capability threshold, so the decision will come down to other factors, such as how quickly the submarines can be delivered. “From a government point of view, it’s bigger than picking the right submarine and purchasing submarines,” Hawco said. “It’s about choosing a long-term economic and geopolitical partner.” Each bidder is offering something different. TKMS is pitching the Type 212CD, a submarine jointly developed with the governments of Norway and Germany for both countries’ navies. Used by North American Treaty Organization (NATO) partners, it would strengthen Canada’s transatlantic ties to European allies. By contrast, if Hanwha wins the contract, Canada would be the first NATO country to use its KSS III-Batch II submarines, putting South Korea on the map as a military defence exporter to the West. But neither company plans to build the submarines in Canada, at least not initially. Under the Industrial Technological and Benefits Policy, foreign and domestic defence companies are required to invest 100 per cent of the contract value back into the Canadian economy. In situations where the primary work will be conducted overseas, the winning bidder must find ways to offset those expenditures with investments in Canada. Hanwha has generated a steady drumbeat of headlines about its potential investments, but TKMS has also announced several key initiatives that it said already total tens of billions of dollars in value. “Our approach is based on the principle that Canada should not simply buy submarines; Canada should help build, sustain and ultimately own the industrial capability that supports them,” TKMS said in a statement. In January, TKMS signed a “teaming agreement” with North Vancouver-based Seaspan ULC to collaborate on maintaining and repairing the submarines. In February, it struck an agreement with Mississauga, Ont.-based EllisDon Corp. to design and build maintenance and training facilities on both coasts. And it signed an agreement with Calgary-based E3 Lithium Ltd. in April to incorporate lithium into submarine batteries. It also offered to construct a domestic factory to manufacture heavy torpedoes and anti-torpedo defence systems. In non-defence-related offsets, it has proposed funding carbon capture and storage facilities in Alberta using TKMS technology and it has suggested investments in infrastructure in the Port of Churchill in Manitoba so it can export more, including Arctic liquefied natural gas. Plus, there are other deals that TKMS says will generate $86 billion in value for the Canadian economy. Of course, it’s all tied to TKMS winning the submarine bid. Hanwha has also reached a number of deals that strike at Canada’s industrial heartland. In addition to its memorandum of understanding (MOU) to form a joint venture with the APMA to build military vehicles, in January, it announced a $275-million investment in Algoma towards Canada’s first structural steel beam mill. In exchange, Hanwha is entitled to three per cent of the steelmaker’s net sales from the beam mill for 10 years. It also agreed to purchase around $70 million of Algoma’s products for use in constructing the submarines and the infrastructure required to support the fleet. Algoma said the deal is structured as an MOU, contingent on Hanwha winning the bid and in a way that satisfies its commitments to reinvest every dollar of the contract back in Canada. In January, Hanwha struck an MOU with Fermeuse Energy Ltd. to jointly advance a Newfoundland and Labrador LNG development project and in June, South Korea’s presidential envoy Kang Hoon-Sik said his country could invest an additional $1.6 billion in the LNG Canada project in Kitimat, B.C., in which it is already one of five major investors. Hanwha also said South Korea expects to increase its oil purchases from Canada to approximately 16 million barrels this year and up to 20 million barrels next year after the country recently eliminated a three per cent tariff on Canadian crude oil. Hanwha said its deals could provide more than $96 billion in impact to Canada’s GDP. Many of the deals hinge on who wins the submarine contract, but Korea’s removal of tariffs on Canadian oil shows that the bidding process by itself has allowed Canada to expand its trade opportunities. By the same token, many in the business community view the submarine procurement as part of a larger shift that will open up new avenues of foreign investment. Auto executives are hoping that the speed at which the government is moving on the submarine bid will spread to other procurements, thereby unleashing a shower of funding opportunities. For example, producing military vehicles in Ingersoll would help GM shoulder the costs of maintaining such a large plant. But some military procurement analysts are skeptical that even Canada’s increased defence budget will ever create enough volume to sustain an entire auto plant unless it could produce vehicles for export. Historically, Canada exported nearly all its vehicles to the U.S., which has similar labour and environmental standards, but the sector has struggled to break into other markets. “I’m unconvinced right now that sufficient thought has been given to how all of this is going to work, really,” said Philippe Lagassé, a professor at Carleton University’s Norman Paterson School of International Affairs, who studies defence procurement. The Ingersoll plant produced 317,000 vehicles at its peak in 2014, according to AutoForecast Solutions, a U.S.-based consultancy, but military vehicles cost more than a normal vehicle and are produced at a smaller scale. For example, Canada procured 90 light tactical vehicles from GM for around $36 million in 2024. “It’s unclear to me how many different companies will be able to really thrive even in spite of how much more we’re spending, unless we have a very aggressive export strategy, and that has yet to fully come together,” Lagassé said. “That’s being underestimated.” Given that the submarines will not be built in Canada no matter who wins, some analysts say the real value will reside in whether the investments create intellectual property of value for the country. Bentley Allan, a political science professor at Johns Hopkins University who studies the Canadian economy, said the submarine procurement should be evaluated based on how it affects the country’s “industrial ecosystem.” In the past few years, federal and provincial governments in Canada have injected billions of dollars into creating an electric vehicle supply chain . But rather than simply thinking about benefits in terms of the direct jobs created, he said the conversation also should have focused on spillover benefits that could have been created by combining research and development with manufacturing or integrating existing supply chains. “The problem that Canada has historically is that we have these foreign firms that operate assets in Canada, but the R&D for those assets is back in the metropole of the foreign company,” he said, “which means that we don’t have any of the research benefits of having a particular manufacturing asset.” Basic industrial policy dictates that when research and manufacturing are co-located, they can interact in a dynamic way that creates spillover benefits, he said. But examining the benefits of the deal also opens up a wider discussion about whether Canada would be better off if it designed and built the ships in Canada. Copeland, who now works for Hanwha, not surprisingly said it’s not feasible on several different levels. “The kind of money you’d have to invest, and then after you build it, then what? Build them here, create the jobs and then we’ll export them,” he said. “Well, I can show you two or three other countries where the same narrative was played out and they’re not exporting them, and now they’re shutting down production lines.” Copeland said Canada would not be able to deliver submarines by 2032, which is when Hanwha has said it could deliver its first submarine. TKMS has said it could deliver four by 2036. He also points to the River-Class Destroyer project being built in Halifax. The design contract was awarded in 2019, but construction only started last year even as the design continues to be finalized. The first ships are not expected until the 2030s. Dan Kerry, a director at Deloitte Canada, said submarines are amongst the most complex things that can be constructed and can take nine million man-hours to construct, referencing a widely cited U.S. Navy and Department of Defense research paper about a nuclear attack submarine. “This is like a space rocket underwater,” he said. “It has the same complexity as something that goes into space, but it has to survive undetected underwater. What you’re dealing with is something super complex, but it comes with a significant amount of employment opportunities.” To that end, Jim Stanford, director of the Centre for Future Work in Vancouver, said Canada’s economy may benefit more if the submarines are built using materials and parts from domestic supply chains than if the submarines were built in Canada using foreign supply chains. The real problem, he said, is when governments spend money on major projects in which all the benefits flow overseas. In 2025, British Columbia Ferries Services Inc.’s decision to award a $1-billion contract to China Merchants Industry Weihai Shipyards to build four passenger vessels ignited a backlash from workers and domestic shipbuilders because it amounted to a massive transfer of wealth overseas. The firestorm grew after it became public that the Canada Infrastructure Bank, a federal Crown corporation launched in 2017 to invest in major infrastructure projects, helped finance the contract. Stanford, who has been critical of the contract, described it as an example of how not to do industrial policy. But he also said not all of the investment commitments that have been announced by the two submarine companies may come to pass. “One problem that we’ve had with some industrial policy initiatives is the companies say they’re going to do something, but they don’t necessarily,” he said. “Government has to have strong conditionalities to make sure that companies live up to these commitments.” South Korea's Hanwha says it could build military vehicles in Canada if it wins submarine contractKorea’s Hanwha offers rockets in bid for Canadian submarine deal That Hanwha and TKMS have proposed investments in Canadian industry may feel new, but Stanford said many of Canada’s largest industries in the past grew out of deliberate industrial strategies. Since taking office, Carney has spoken publicly about the shift in the global trading order. In January, at a speech in Davos, Switzerland, he described it as a “rupture, not a transition.” As Canada and the U.S. reduce trade, he said middle powers need to strengthen ties with each other. Included in that group would be both NATO allies in Europe and Indo-Pacific countries such as South Korea. Who wins the submarine contract might just reveal more about how he sees the new world order taking shape. • Email: gfriedman@postmedia.com