Germany's warship builder courts Canada in bid for submarine contract

German warship builder Thyssenkrupp Marine Systems (TKMS) is in talks with Norwegian and German companies to offer a multi-billion-dollar investment package to Canada as it competes for a major submarine contract, its chief executive said, aiming to outmanoeuvre a rival South Korean bid.

The discussions extend well beyond submarines and include potential investment commitments in rare earths, mining, artificial intelligence and battery production for the automotive sector, TKMS CEO Oliver Burkhard told Reuters.

The previously unreported plan could strengthen TKMS’s position after it was shortlisted last year alongside South Korea’s Hanwha Ocean to supply up to 12 advanced submarines to the Canadian navy. The effort underscores Germany’s push to deepen defence and economic ties amid rising geopolitical tensions, as the United States signals possible new tariffs on European allies and Russia continues its war in Ukraine.

“It is no longer just about the submarines. It is primarily about what’s beyond,” Burkhard told Reuters on the sidelines of an event in Frankfurt, adding the aim was a “broad economic package” to persuade the Canadian government.

Burkhard said TKMS was in discussions with German space startup Isar Aerospace as part of the initiative, though he declined to name other companies involved. Industry sources estimate the submarine order alone could be worth more than 10 billion eurosб with the overall package potentially far larger depending on commitments from other sectors.

TKMS is the world’s largest producer of non-nuclear submarines and accounts for about 70% of NATO’s conventional fleet. The company is offering its 212CD class submarine, which it is also supplying to Norway’s navy under a joint modernisation programme.

Burkhard said TKMS was asking potential partners about foreseeable investment decisions in Canada and whether these could be included in so-called offset obligations — mandatory financial commitments typically spread over 30 years. “Of course that also includes the defence sector,” he said.

Canada, which has the world’s longest coastline, has said its submarine procurement is designed to maximise domestic economic benefits as part of its defence strategy.

“All defence procurements must advance Canada’s national and military interests as well as provide a clear, measurable net benefit to Canada’s economy,” the country’s ministry for innovation, science and economic development said in a statement.

Burkhard said Germany’s economy and defence ministries, as well as the Chancellery, were involved in the discussions. He added that Canada was expected to make a decision in 2026 and said he would travel to Canada again in March for further talks.

Germany’s economy ministry referred Reuters to the defence ministry, which said it did not comment on confidential consultations. The Chancellery did not respond to requests for comment. Hanwha Ocean declined to comment.

TKMS has between 30 and 40 staff working on the offset obligation package, Burkhard said, highlighting the scale of the effort to secure one of the world’s most closely watched naval procurement contracts.

By Sabina Mammadli