Korean company eyes joint venture in Canadian auto sector despite losing sub bid - Toronto Star

Hanwha Group, which lost this year's contest to build the navy's new fleet of submarines, is considering a partnership to make military vehicles in Canada.

National Defence Minister David McGuinty, left Prime Minister Mark Carney tour the Hanwha Ocean Shipyard in Geoje Island, South Korea on Oct. 30, 2025.

OTTAWA — The South Korean defence company that lost this year’s lucrative contest to build the navy’s new fleet of submarines is still exploring a marquee part of its failed pitch: a partnership to make military vehicles in Canada with a group of auto parts firms. 

The joint venture was part of Hanwha Group’s bid to clinch the submarine contract, after Canada’s Defence Investment Agency urged the companies vying for the opportunity to sweeten their bids. At the time it was announced, earlier this year, the military vehicle proposal was contingent on Hanwha winning the contract. 

But the chief executive of the company’s Canadian branch, as well as the head of the Automotive Parts Manufacturers’ Association (APMA), now say the idea is still alive — a sign the South Korean firm remains interested in getting more involved in Canada’s defence industry as Prime Minister Mark Carney’s government plans for tens of billions of dollars in new military spending over the coming decade. 

“That’s still, I think, a very valid partnership,” Hanwha Defence Canada CEO Glenn Copeland told the Star this week, adding that he has had conversations with officials about the possibility at the “top levels” of the federal government. 

APMA president Flavio Volpe also confirmed the proposal is still in the works, noting that it was in Carney’s “pitch book” for global investors at last month’s summit in Toronto under the name “Project Arrow Defence Industries.” 

“Of course they were disappointed that they weren’t the successful bidder” for the submarines, Volpe said. “But we agreed that we would reconvene … to see if we wanted to continue.

“We think that Korean industry, Korean innovation and the Canada-Korean relationship are all very positive benefits of doing this thing together.”

Industry Minister Mélanie Joly’s office passed questions about the proposal to Innovation, Science and Economic Development Canada, which declined to comment because any discussions with government about “future business venture are subject to commercial confidentiality and cannot be disclosed.” 

The federal government’s plan to replace its aging, second-hand fleet of four Victoria-class submarines triggered a months-long contest for a new contract to build up to 12 modern subs for the Canadian navy.

Hanwha staged a public campaign that featured billboards and ads voiced by former CBC journalist Peter Mansbridge, but ultimately lost to a German-Norwegian partnership with the shipbuilding firm TKMS, which the government chose as its submarine supplier in July. 

At the time, Carney suggested the purchase could cost “tens of billions” of dollars over several decades, but stressed that part of the deal would see an equivalent amount of money invested in Canadian industries to support construction and maintenance of the new fleet.

The government’s secretary of state for defence procurement, Stephen Fuhr, has said details about the contract, including how many submarines the Canadian Navy will end up acquiring, will be negotiated over the coming months. 

It’s part of the federal government’s effort to use its major increase in planned military spending — which it argues is needed to protect the country in a world with increasing international instability and great power rivalry — to bolster Canadian industry. Last year’s federal budget devoted an additional $81.8 billion over five years to defence, while the government’s “Defence Industrial Strategy” promises $180 billion in defence procurement by 2035. 

Copeland told the Star earlier this year that the proposal to start a joint venture with Canadian automakers to build military vehicles was in response to signals from the Carney government that it wanted the submarine bidders to make pitches to boost important sectors of the Canadian economy. 

He stressed in an interview this week that there are still “no guarantees” the military vehicles venture will happen, but he said there is still an “opportunity space” as talks continue.

The partnership could use auto factories in Ontario that have stopped working amidst the trade war with the United States — which has seen U.S. President Donald Trump impose 25 per cent tariffs on the Canadian auto sector — or perhaps build new facilities, he said.

Volpe said the Canadian side of the partnership could include several Ontario-based companies, including major auto parts firms like Linamar and Martinrea International. 

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But, he added, “there are a lot of other dominoes that need to fall into place to make this successful.” That includes whether the Canadian Armed Forces decides to buy what they’re proposing to build, which include the K9 Thunder, K10 Ammunition Resupply, Redback Infantry Fighting and Chunmoo rocket launch vehicles, according to the original proposal. 

Fuhr’s office did not respond to questions from the Star about whether the military is interested in buying these vehicles. 

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Alex Ballingall is the Deputy Ottawa Bureau Chief for the Star. Reach him via email: aballingall@thestar.ca