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'What we want also is a car plant': Canadian industry minister urges auto factory-for-navy sub deal

Published: 24 Feb. 2026, 17:48 Updated: 24 Feb. 2026, 19:09

Industry Minister Kim Jung-kwan, right, poses with Canadian Industry Minister Melanie Joly, left, and Presidential Chief of Staff Kang Hoon-sik during a signing ceremony in Canada in a photo shared on Jan. 29. [NEWS1]

Canadian Industry Minister Mélanie Joly has stressed that her government wants an automobile plant built in Canada in exchange for awarding its next-generation submarine contract to Korea, increasing pressure on the Korean consortium competing against Germany for the project valued at up to 60 trillion won ($42 billion).

Joly made the remarks related to Canada’s Patrol Submarine Project — a defense procurement program to replace the Royal Canadian Navy’s aging submarines with a new fleet of conventionally powered vessels — during a speech in Toronto on Feb. 19, according to Automotive News on Tuesday.

"We will use defense procurement to make sure that we're able to attract new auto investments here in Ontario, definitely, I'm having conversations with the Germans, also with the Koreans," Joly said. "We want to make sure that there's the most industrial benefits out of this procurement. But fundamentally, what we want also is a car plant."

Her comments came days after Stephen Fuhr, Canada's secretary of state for defense procurement, visited Hanwha Ocean’s shipyard in Geoje, South Gyeongsang, on Feb. 2 and signaled broader economic cooperation beyond defense.

At the time, Fuhr emphasized that Canada would weigh which country offers the best overall economic value.

Canada’s Patrol Submarine Project, estimated at up to 60 trillion won, has drawn bids from a Korean consortium of Hanwha Ocean and HD Hyundai Heavy Industries against Germany’s Thyssenkrupp Marine Systems.

Royal Canadian Navy submarine HMCS Victoria sails in the vicinity of Esquimalt Harbour while wearing a poppy on its sail in Esquimalt, British Columbia, Canada on Nov. 5, 2021. [REUTERS/YONHAP]

Given the scale of the project, Seoul has mobilized a government-business “Team Korea” effort. Kang Hoon-sik, presidential chief of staff, led an economic delegation to Canada last month. Defense Minister Ahn Gyu-back and Foreign Minister Cho Hyun plan to visit Canada on Wednesday as well. Hyundai Motor Group Executive Chair Euisun Chung also traveled to Canada last month as part of a special delegation on defense industry cooperation. Bidders must submit their final project proposals by March 2.

Hyundai Motor reportedly proposed developing hydrogen energy infrastructure and related supply chains in Canada instead of establishing a full vehicle manufacturing plant.

The automaker already operates four production plants in North America — three in the United States and one in Mexico — and faces limited room for additional large-scale investment.

Ottawa, however, has repeatedly linked the submarine deal to automobile production, increasing pressure on both the Korean government and companies involved. Germany, on the other hand, reportedly presented plans to expand production in Canada with Volkswagen and Mercedes-Benz.

A model of a Hanwha KSS-III submarine is seen at the Canadian Association of Defence and Security Industries annual defence industry trade show in Ottawa on May 28, 2025. [AP/YONHAP]

Canada’s push to attract an auto plant reflects efforts to rebuild its manufacturing base.

Since the start of the second Trump administration, Washington has emphasized domestic production, prompting global automakers to reshore manufacturing to the United States, leading General Motors and Stellantis to cut jobs at Canadian plants.

Canada has also reached out to China in its search for automotive investment.

Joly traveled to China last month and met executives from BYD and Chery Automobile. For Chinese automakers facing steep U.S. tariffs, Canada could serve as a foothold for broader North American expansion.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NA SANG-HYEON [[email protected]]