Here’s what Germany’s submarine builder is bringing to Canada after winning defence contract

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Whether an investment in E3 would qualify may be up to the federal government. But Doornbos said his company is a critical mineral producer, which would fit into the key industrial priorities that the federal government has identified.

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Unlike Hanwha, which, as Lagassé put it, struck deals with “everyone under the sun,” TKMS made a comparatively smaller number of deals.

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These include an agreement with North Vancouver, B.C.-based Seaspan ULC, one of the country’s largest shipbuilding companies, to establish an enterprise for maintenance, repair and overhaul, which would include a team on both coasts to service the submarines.

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It also signed agreements with Mississauga, Ont.-based construction company EllisDon Corp. to construct maintenance and training facilities, Montreal-based CAE Systems Inc. to provide simulation and training and Trois-Rivieres, Que.-based Marmen Inc. to produce selected segments of the submarine in Canada, plus agreements with steel companies for other materials.

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Earlier this month, it signed an agreement with Dalhousie University in Nova Scotia to collaborate on research on a range of submarine-related areas, such as Arctic technologies and marine engineering.

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These deals have been disclosed, but only in the broadest outlines possible.

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Lagassé said there are creative ways for contract winners to comply with Canadian procurement policy — what is known as the Industrial and Technological Benefits policy — without investing the full contract amount. The deals are largely between the companies themselves and the government has limited input.

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“There are frameworks and guidelines in place in terms of what you should be doing,” he said. “But it’s a bit of a light touch and people overestimate how much the government bureaucrats are involved in this.”

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TKMS developed its Type 212CD submarine for German and Norwegian militaries. It is described as an ultra-stealthy platform that can stay underground for 40 days or more at a time without submerging.

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By choosing to procure this submarine, Dan Kerry, Deloitte Canada’s defence lead, said Canada is strengthening its ties to the European defence market.

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“Not only does Canada get what TKMS is promising here in terms of investments in maintenance facilities and supply chains,” he said, “but this also helps Canada export their services back to Germany and the wider EU.”

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In December, Canada became the first non-European country to join Security Action for Europe (SAFE), which gives Canadian defence companies preferential access to bid on EU-funded military contracts.

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Canada is ramping up its defence spending, from two per cent of gross domestic product to four per cent by 2030 and five per cent by 2035, and the EU has made a similar pledge, though Spain dissented.

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Kerry said the benefit of choosing a North Atlantic Treaty Organization partner to supply submarines is that it provides a potential export market. He said it also makes sense given Carney is a former Bank of England governor and has been heavily involved in the economy there.

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“If you think about Mark Carney’s career to date, the guy is quite a europhile,” he said, “so he is very aware of the power of the European economy.”

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