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German shipbuilder wins bid over Hanwha Ocean that would have provided $345M for new Sault mill, products
The bid for a major federal submarine contract that could have provided Algoma Steel in Sault Ste. Marie, Ont., with additional infrastructure and hundreds of new jobs was unsuccessful.
Prime Minister Mark Carney announced Monday afternoon that German shipbuilder ThyssenKrupp Marine Systems (TKMS) has won the right to build a multibillion-dollar fleet of up to 12 submarines for Canada’s defence.
The government has chosen TKMS over South Korean competitor Hanwha Ocean to construct a fleet that will replace the Royal Canadian Navy’s aging Victoria-Class boats.
As part of its bid to Ottawa, Hanwha signed a memorandum of understanding in January to give Algoma Steel $345 million for the creation of a structural steel beam mill in Sault Ste. Marie and the purchase of Algoma products.
Hanwha signed an additional memorandum last month with the mill, along with Canada’s Automotive Parts Manufacturers Association, to use Canadian steel in armoured vehicle manufacturing in southern Ontario.
The deals were expected to have provided much needed economic relief to the Algoma region after 1,000 steelworkers lost their jobs this year due to U.S. tariffs and the company’s transition to electric steelmaking.
With hopes for a future mill, Ottawa previously said up to 500 laid off employees could be rehired by the end of 2026.
Hanwha was “very calculated” in choosing the mill as part of its deal, according to Karl Skogstad, a professor at Lakehead University who specializes in the economics of national defence.
From a regional perspective, Skogstad said the government’s decision is disappointing but not surprising.
“The Hanwha bid had a clear northern Ontario benefit to it in terms of the money that was going to go to Algoma Steel. That’s unfortunate for the region for sure,” he said.
“South Korea was a bit of an underdog, but they put in a lot of effort to try to win the bid.”
The Prime Minister told reporters Monday the decision between TKMS and Hanwha Ocean was a “difficult and close” one.
“Both of them put forward strong proposals to maximize the benefits for Canadian workers and businesses. We were blessed with two strong bids.”
In an email to CBC, Algoma Steel spokesperson Laura Devoni thanked Hanwha Ocean for its efforts and said the mill hopes there are future opportunities to collaborate.
“Algoma Steel congratulates Thyssenkrupp Marine Systems on being selected as the preferred supplier for the Canadian Patrol Submarine Project, and commends the Government of Canada on this important step for Canada’s security and industrial capability,” she wrote.
“Algoma is proud to see Canada investing in its own industrial and defence capability, and looks forward to the opportunities that this investment creates for the Canadian steel industry.”
Sault Ste. Marie Mayor Matthew Shoemaker met with representatives from Hanwha Ocean last April.
He said it would have been a win for Algoma Steel and the community had the South Korean company been selected as the country’s maker of submarines.
“Our entire region would have reaped the benefits from that contract,” he said.
“It’s a key responsibility of the federal government with this announcement to make sure that in future defence procurement, Algoma Steel and Canadian steel is used.”
Industry experts say the German company leaned heavily on its status as North Atlantic Treaty Organization (NATO) allies alongside Canada.
The choice to negotiate with TKMS is expected to pull Canada into a closer European orbit when the U.S. is pulling away from NATO.
“All procurement is political when it comes to defence,” Skogstad said. “The politics of it just made it more appealing to go with a NATO country in terms of procurement at this moment.”
The Prime Minister said Monday that if negotiations with TKMS are unsuccessful, Canada retains the right to designate Hanwha Ocean — currently the reserve supplier — as the preferred supplier. — Alex Flood
With files from Murray Brewster
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Credit belongs to: www.cbc.ca
