Canada selects Germany's ThyssenKrupp to build submarine fleet as it boosts NATO spending

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TORONTO (AP) — Canada on Monday named Germany’s ThyssenKrupp Marine Systems as the preferred supplier for up to 12 submarines in what Prime Minister Mark Carney called the country’s largest-ever military procurement.

The decision came before Carney headed to this week’s NATO summit, where allies face pressure to back higher defense spending with concrete plans.

Carney said the procurement will be "the largest in Canadian history" and that the TKMS platform is optimal for Arctic waters and for NATO.

“The submarine is proven and capable,” Carney said, noting TKMS supply submarines to more than one-third of NATO members.

Carney named TKMS the preferred supplier and said negotiations would begin on a final contract. He declined to disclose the price, saying only it would involve “tens of billions of dollars” in investment.

“This is a strong signal for our transatlantic and European partnership,” Germany Chancellor Friedrich Merz said before thanking Carney.

The German company beat out South Korea’s Hanwha Ocean. ThyssenKrupp said its submarines would strengthen interoperability because many NATO allies already operate its conventionally powered vessels.

Canada has pledged to sharply increase military spending after years of lagging behind NATO targets. Carney has pledged to raise defense spending to 5% of gross domestic product by 2035 after Canada reached NATO’s previous 2% spending target this year.

He said Canada’s fiscal plan already provides for defense spending to reach 4% of gross domestic product by 2030, ahead of NATO’s timetable.

Carney said Germany and Norway, the two countries that jointly designed the submarines, will free up production slots to speed deliveries, allowing Canada to receive four submarines by 2034 — two years earlier than TKMS had publicly projected.

The new fleet will replace Canada’s four aging Victoria-class submarines, which were purchased secondhand from the United Kingdom in the late 1990s.

No U.S. company bid because the United States builds only nuclear-powered submarines, while Canada sought conventionally powered diesel-electric vessels.

“The sovereignty of our country, bounded by the three oceans and the world’s longest coastline, depends on our maritime capabilities,” Carney said.