Submarines have long been something of an afterthought in Canadian national defense policy. In the 1960s, they simply leased some from the U.S navy, before acquiring outdated Oberon-class vessels from the U.K. to maintain a bare-minimum capability.
However, the situation changed fast – Russia and China are assertively expanding their presence in the Arctic while the security umbrella formed with the U.S. began wavering. Now, even for the Canadians, submarines are no longer a good-to-have but a must-have for survival.
The CPSP(Canadian Patrol Submarine Project), the single largest procurement in the history of the Canadian navy, marks a pivotal shift – Canada has effectively declared submarines are at the core of the national defense strategy, not on the periphery.
Korea and Germany are the two remaining competitors, locked in a fierce head-to-head for the massive contract. Each side presented proposals beyond the joint national security, to a wide range of industrial cooperation spanning mining, energy and automotives.
The game is in effect a lot more than a security deal – it is a nation-to-nation pact. The Guru traveled to Canada where the final decision is soon to be made, to capture the tension on the ground – Editor’s Note
Hanwha’s 15-year partner Babcock is a global defense giant. It is putting all-out effort into the CPSP contract war, working hand-in-hand with Hanwha. Babcock has an impressive track record in the sustainment of Victoria-class submarines, while Hanwha promises a swift delivery timeline. The combination would be a winning formula, they hope. We met Tony March, CEO of Babcock Canada.
Q. Tell us about Babcock Canada.
Babcock entered the Canadian market in 2008. Since then we have positioned ourselves as a trusted partner of the Royal Canadian Navy. We are the prime contractor for VISSC and the only company responsible for naval logistics programs in Canada.
Q. Tell us more about VISSC
VISSC stands as one of the largest ISS contracts in the Canadian navy. A major part of Babcock’s mandate is executing the Extended Docking Work Period(EDWP). The Victoria-class submarine fleet is normally operated on a 9-year cycle. Once a cycle is completed, the EDWP begins.
Babcock was responsible for the EDWP of 3 submarines: HMCS Chicoutimi, HMCS Corner Brook and HMCS Victoria which is currently underway. Two of these projects involved highly technical and complex repairs, requiring an extensive period of time. On top of that, during each EDWP, Babcock also led modernization initiatives by installing new sonar systems, upgrading WHLS and integrating universal modular masts.
Q. Through the cooperation with the RCN, what has Babcock achieved?
For the last 18 years, Babcock has successfully transferred to Canada key elements of the submarine supply chain. We have also established a wide domestic network of over 450 partner companies. Together with local small and medium sized enterprises, we have contributed 235M dollars to the GDP. We have offered and maintained 2500 or so jobs every year through training and talent development programs. About half of those trained have settled within STEM fields.
Babcock proactively participated in Canada’s ITB policy through VISSC. We have executed more than 75 investments, which include several million dollars into Canadian SMEs. We have also supported more than 30 new product development schemes, which generated an economic impact of more than 410M dollars.
Q. Why have you chosen Hanwha as a CPSP partner?
First of all, Hanwha Ocean and Babcock are the best in their respective fields. On one hand, Hanwha boasts a decades-long track record of successfully completing missions within any given budget and timeframe. On the other hand, Babcock has positioned itself as a well-known in-service maintenance expert by supporting various naval fleets from the U.K., Australia, Canada and more. The combined expertise and experience will suffice to devise an integrated total solution package for the project.
Hanwha is undoubtedly the best-suited partner for Canada, because they are able to deliver the first submarine in 6 years, followed by a one-per-year schedule for the rest of the contracted duration. That means, if they do decide to sign the agreement this year, Canada is to have and operate its lead vessel by 2032, and a whole fleet of 12 in 2043. It is a mind-blowing timeframe but possible due to Hanwha. It also is the single fastest route for Canada to secure modernized submarine assets.
Lastly, Babcock has always been emphasizing that such a deal must include an in-service maintenance role as well as the shipbuilding one. Hanwha has shared this understanding with us since the outset.
Q. At which point are you in the cooperative journey? What is your plan in making the deal happen?
The two of us have proposed a robust solution which includes long-term job creation initiatives, technology and knowledge transfer and real contributions to the Canadian economy. Recently, we welcomed a Canadian government delegation in Korea, presenting our joint solution to them. It drew a very positive reaction, reinforcing the importance of our close partnership.
Q. If Hanwha Ocean wins the CPSP, what will Babcock support?
Babcock is in charge of supporting the development of short and long-term maintenance solutions. We also handle building shipbuilding and MRO capabilities within Canada. An important part of our current localization effort is the “patriation” of Babcock’s WHLS, a core component of the KSS-III submarine, to Canada. Also, we are supporting long-term industrial capability development, job creation, and the continuous growth of existing submarine maintenance businesses in Canada.
Q. Is there a possibility to expand cooperation with Hanwha to countries other than Canada?
Of course. Currently, the CPSP project is our top priority and will be for some time. However, this program and the recently announced Canadian defense strategy provide a clear direction to further develop the relationship between our two companies. It will also help strengthen Canada’s defense industrial base. Based on this, we could consider entering the Canadian export market together.
