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Hyundai plant for sub contract? Industrial tie-ins may determine victory in Canadian Navy bid

Published: 21 Jan. 2026, 18:30 Updated: 21 Jan. 2026, 19:05

Rear Adm. Angus Topshee, commander of the Royal Canadian Navy, tours the interior of a Dosan Ahn Chang-ho-class submarine on October 2025. [NAVY]

Competition is intensifying for Canada’s next-generation submarine program, known as the Canadian Patrol Submarine Project (CPSP), a deal that could be worth up to 60 trillion won ($40.8 billion), as Ottawa signals that industrial offsets may prove decisive.

Korea and Germany have emerged as the leading contenders. A Korean “one team” consortium led by Hanwha Ocean and HD Hyundai Heavy Industries is competing against Germany’s Thyssenkrupp Marine Systems. Canada is expected to close final bids in March and select a preferred bidder in the first half of the year.

Korean officials are now mobilizing private companies to strengthen their bid. A government delegation led by Kang Hoon-sik, the presidential chief of staff, has asked major corporations to explore concrete cooperation plans and logistic support options, according to government and industry officials.

Hyundai Motor Group, HD Hyundai and Korean Air have been asked to take part in the delegation and are weighing their options, according to government and industry sources on Wednesday.

The project calls for up to 12 diesel-powered submarines. While construction costs are estimated at about 20 trillion won, the total value could triple once long-term maintenance, repair and overhaul work over 30 years is included.

Hanwha Ocean, the project lead on the Korean side, recently set up a Canadian unit and brought in Glenn Copeland, a former naval officer, as its head. He previously worked at Lockheed Martin Canada, where he was involved in the modernization of the Halifax-class frigates.

HD Hyundai, also running as part of the “one team,” presented cooperation plans on local shipyard productivity innovation, clean energy and autonomous navigation technologies when Canadian Industry Minister Mélanie Joly visited Korea in November last year.

The Jangbogo-III Batch-II submarine, a finalist in Canada’s Canadian Patrol Submarine Project (CPSP) [HANWHA OCEAN]

Joo Won-ho, president of HD Hyundai Heavy Industries’ Naval & Medium Size Ships Business Unit, is expected to accompany the delegation.

Offsets have emerged as the central issue. Canadian authorities have indicated that submarine performance alone will not determine the outcome. Instead, they plan to give significant weight to local maintenance infrastructure, logistics support and broader industrial and economic benefits.

As part of those discussions, Canada has reportedly pressed Korea to consider establishing a Hyundai Motor manufacturing facility in the country. German bidders, by contrast, have been asked to consider additional investment by Volkswagen.

With Ottawa specifically requesting a Hyundai plant, Hyundai Motor Group is deliberating possible cooperation options — but the situation is awkward. The group built a production plant in Bromont, Canada, in 1989 with an annual capacity of 100,000 vehicles, but pulled out just four years later. With the group already making massive investments in the Hyundai Motor Group Metaplant America in the United States, there is limited room for additional spending.

Hyundai and Kia together hold about 13.68 percent of Canada’s auto market, selling roughly 260,000 vehicles out of around 1.9 million sold last year. An industry official said, “If demand in Canada isn’t assured, it doesn’t look easy to establish another plant.”

Korean Air, which cooperates with Canadian aircraft maker Bombardier in the military aircraft sector, has also been asked to join the delegation. A Korean Air official said the company is “reviewing from multiple angles where it can contribute,” adding that “nothing has been finalized yet.”

Experts say the government will need to offer bold support measures to draw in private-sector participation. “Global defense exports are increasingly moving toward package deals that combine weapons sales with local factory operations and tie-ups with other industries,” said Yoon Ji-won, a professor of national security at Sangmyung University.

“The state should consider extraordinary support at the national level so companies can move in step with shifting export models,” Yoon said, adding that Canada — bordering the United States and cooperating closely with the North Atlantic Treaty Organization and the European Union — is a key partner where broader trust-building and long-term foothold expansion may matter more than short-term losses.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KO SUK-HYUN [[email protected]]