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K-warships need a 'Team Korea' approach

Published: 20 Feb. 2025, 00:02

Lee Cheol-jae

The author is a senior defense reporter at JoongAng Ilbo.

Last year, the Canadian government announced the Canadian Patrol Submarine Project (CPSP), a plan to acquire up to 12 conventional submarines. The contract is valued at up to 20 trillion won ($15 billion), but when factoring in 30 years of maintenance, repair and operations (MRO) costs, the total expenditure could reach 40 trillion to 60 trillion won. If Korea secures the deal, it would mark the largest defense export in its history.

The Canadian Navy’s top priority is Arctic operational capability. The primary theater for these new submarines will be the Arctic Ocean. The CPSP was initially conceived to counter Russia and China and defend Arctic waters. Canada requires submarines that can break through Arctic ice and surface in emergencies, which demands a minimum displacement of 3,000 tons. Globally, only Korea and Japan manufacture 3,000-ton-class conventional submarines.

A domestically developed 3,000-ton diesel submarine, the Shin Chae-ho, was delivered to the Korean Navy on April 4, 2024. [NEWS1]

Germany's defense industry
However, Japan withdrew from the bidding last year, likely due to limited production capacity, as its domestic orders were already stretching its manufacturing capabilities. This initially positioned Korea as the front-runner. But now, the path to exporting K-submarines to Canada has hit a major obstacle: Germany.

ThyssenKrupp Marine Systems (tkMS), Korea’s main competitor, is receiving overwhelming support from the German government and military.

In July 2023, Germany led the signing of a trilateral maritime security partnership between Germany, Canada and Norway. German government ministers have since been lobbying Canadian officials involved in the CPSP. Given that Germany and Canada are NATO allies, the German Navy has been aggressively promoting its submarines to their Canadian counterparts. Berlin has even offered to prioritize delivery to Ottawa over its own navy if a deal is signed.

Beyond military cooperation, Germany has signed agreements with Canada in biotechnology, climate change and clean energy — a strategic move aligned with Canada’s Industrial and Technological Benefits (ITB) policy. Under ITB, any country selling weapons to Canada must generate economic value for Canada in return. tkMS is also expanding its production capacity in anticipation of securing the contract. With Germany’s government, industry and military working in unison, Korea is facing fierce competition.

Korea’s government is missing the battle
Meanwhile, Korea’s defense export leadership has weakened since the Dec. 3 emergency martial law crisis. The country lacks a centralized command to lead an all-out export campaign.

Defense exports are fundamentally government-to-government (G-to-G) transactions. Political influence is crucial, and loan provisions may sometimes be required. Exporting nations must also provide training and operational support for their weaponry. As a result, major defense deals are often shaped during high-level diplomatic talks and finalized through ministerial negotiations.

Yet Korea is now operating under an acting president’s acting authority and a defense minister’s deputy system, leaving it at a disadvantage compared to Germany.

Adding to the challenge, Korea’s two major shipbuilders, HD Hyundai Heavy Industries and Hanwha Ocean, are fiercely competing against each other for the CPSP bid. While they know each other’s strengths and weaknesses well, reports suggest that both companies have been bad-mouthing each other to Canadian officials.

If this infighting continues, Korea risks handing the contract to a foreign competitor — essentially letting Germany reap the rewards of Korean rivalry.

Even if Canada selects a CPSP contractor in 2028, the battle won’t be over. Poland and the Philippines are also pursuing submarine procurement programs. Additionally, according to Israeli defense media, Saudi Arabia is searching for submarines. In total, these deals could create a defense export market exceeding 100 trillion won.

If the Korean government remains passive and companies act independently, this massive market will remain out of reach — nothing more than a pipe dream.

Korea’s defense industry has lagged behind in warships, while Germany and France have long dominated the global naval defense sector. Korea’s warships are only now gaining international recognition, making the CPSP contract a critical steppingstone.

Winning CPSP could serve as a launchpad for Korea to expand into the U.S. market. The U.S. Navy needs Korea’s shipbuilding capabilities to counter the rapidly growing Chinese naval fleet.

From Canada to the United States: The next step
The U.S. Congress is currently drafting legislation that would end the requirement for warships to be built domestically. The proposed law would allow the U.S. Navy and Coast Guard to place orders with shipyards in allied countries.

Among U.S. allies, only Korea has the production capacity, cost competitiveness and delivery record to meet these demands. Korea can build an Aegis destroyer in one-third the time and at half the cost of the United States.

Hanwha Ocean displays its warships and submarines during the 2024 Admiral Yi Sun-Sin Defense Industry Exhibition held in Jinhae, South Gyeongsang, on April 22, 2024, in this photo provided by the shipbuilder. [Hanwha Ocean]

Korea’s shipbuilding industry is experiencing a “super cycle” boom, with three years’ worth of orders already booked. However, shipbuilding follows a cyclic pattern, with inevitable downturns. If K-warships can secure major contracts within the next three to five years, Korea’s shipbuilders will be well-positioned to withstand future downturns.

Fortunately, the government and industry are now working to form a united front. At a forum hosted by Rep. Yoo Yong-won of the ruling People Power Party (PPP) on Feb. 4, Ju Won-ho, head of HD Hyundai Heavy Industries’ special ship division, emphasized the need for close collaboration, saying, “We must carefully prepare together. A united front is essential.”

The King Jeongjo the Great destroyer sails at sea for a test operation on March 12, 2024. [YONHAP]

Hanwha Ocean’s special ship division chief, Uh Sung-cheol, acknowledged the difficulties of compromise, stating, “It is incredibly challenging to make concessions, but we must do so to avoid losing this market and regretting it later.”

Soon, under the mediation of the Defense Acquisition Program Administration, the two companies plan to sign a cooperation agreement for exports. Even with an agreement, however, major hurdles remain. There are legal issues to resolve, but more urgently, the two companies must mend their fractured relationship. Their bitter rivalry over the Korean Next-Generation Destroyer (KDDX) project has left deep scars.

The government cannot afford to sit on the sidelines. The industry’s “One Team” must be strengthened, and a national “Team Korea” approach is needed. Acting leaders and interim ministers must actively engage, other government ministries must cooperate and the National Assembly must participate. Even with a full-scale national effort, winning the CPSP contract is far from guaranteed. United, we survive. Divided, we fall. Let’s keep that in mind.

Translated using generative AI and edited by Korea JoongAng Daily staff.