Hyundai chair joins Korean delegation to push Canada submarine deal

Hyundai Motor Group Executive Chair Chung Euisun, center, speaks to officials of the carmaker's plant in Pune, India, Jan. 14. Courtesy of Hyundai Motor Group

Hyundai Motor Group Executive Chair Chung Euisun joined a Korean government delegation to assist Korean shipbuilders’ bid to supply patrol submarines for the Royal Canadian Navy.

According to industry and government officials, Chung flew to Canada on Monday to join the delegation comprised of government officials including presidential chief of staff Kang Hoon-sik and Industry Minister Kim Jung-kwan. Hanwha Group Vice Chairman Kim Dong-kwan and Joo Won-ho, head of HD Hyundai Heavy Industries' (HD HHI) Naval & Special Ship Business Unit, will also join the delegation.

Hanwha Group’s shipbuilding arm, Hanwha Ocean, has formed a consortium with HD HHI to bid on Canada’s Patrol Submarine Project (CPSP), a 60 billion Canadian dollar ($43 billion) program to procure 12 diesel submarines for the Royal Canadian Navy. If the bid succeeds, Hanwha Ocean will take the lead in the project, while HD HHI will serve in a supporting role.

After Canadian authorities recently shortlisted the Hanwha consortium and Germany’s TKMS, Hanwha Ocean and the Korean government have been mobilizing all possible means and seeking support from other major companies to win the deal, which would mark the single largest contract in Korea’s defense export history if successful. The preferred bidder is expected to be selected in June.

The competition is widely viewed as a national-level contest, as Ottawa has asked both Korea and Germany to establish submarine maintenance infrastructure in Canada and offset the purchase with corporate investments in the country.

The presence of the Hyundai Motor Group chair in the delegation is viewed as bolstering Korea’s bid for the project.

Industry officials said it is too early to predict whether Hyundai Motor would invest in Canada, but Chung is expected to explore potential opportunities for his company during his visit.

“Even if it is a national-level project, companies still need to assess whether it is feasible,” an industry official said. “The main focus is expected to be on exploring what business opportunities Hyundai Motor may find in Canada and what kind of support it can offer for Korea’s CPSP bid.”

Hyundai Motor Group has already secured large-scale production bases in the United States, including in Alabama and Georgia, making the construction of a separate plant in Canada potentially redundant.

In March last year, the group committed to investing $21 billion in the U.S. following tariff pressure from the Donald Trump administration, meaning that building production facilities in Canada, which is not entirely free from tariff risks, may not be a feasible decision.

Against this backdrop, Chung’s trip to Canada reflects the growing reality that major defense projects are now beyond the scope of a single company, instead being driven by nation-to-nation negotiations.

“Recent defense projects have effectively become impossible for individual companies to secure on their own,” a second industry official said. “As offset trade has emerged as a key factor in defense, winning contracts through a national-level approach has become the norm.”

Presidential chief of staff Kang Hoon-sik, center, speaks to reporters at Incheon International Airport, Monday, before leaving for Canada. From left are Defense Acquisition Program Administration Minister Lee Yong-cheol, Kang and Minister of Trade, Industry and Resources Kim Jung-kwan. Yonhap

Kang has said that Ottawa asked Hyundai Motor to invest in setting up production in Canada, while asking Germany to expand Volkswagen-related car manufacturing in the country. Volkswagen Group told The Korea Times earlier this month that its planned investment in the Ontario battery plant was an independent decision unrelated to the bid.

Before leaving for Canada, the presidential chief of staff told reporters that “it is not an easy deal” but added that the project is expected to generate at least 40 trillion won ($27.78 billion) in domestic production and create over 20,000 jobs.

“Large-scale defense orders cannot be secured based only on weapon performance or the capabilities of individual companies,” Kang said. “I assume the Canadian government will also consider job creation and other industrial cooperation.”

Chung’s participation in the delegation also contrasts with the situation Hyundai Motor and Hanwha faced last year.

When Korea and the U.S. were locked in tariff negotiations, the auto sector was among the hardest hit. Hanwha, however, played a central role in helping the two countries reach a deal by taking the lead in the “Make American Shipbuilding Great Again” (MASGA) initiative, which involves investments in the U.S. shipbuilding industry.

“Even in that case, Hanwha pursued initiatives like MASGA because they were commercially viable,” a third industry official said. “In the same vein, Hyundai Motor is likely to seek opportunities that can support the submarine bid while also being profitable for itself.”