A multibillion-dollar project to build the navy’s new fleet of submarines could give a “very significant” boost to the local economy, say two Ottawa-based firms that are working with the European company chosen to supply the vessels. Prime Minister Mark Carney announced last week that German shipbuilder ThyssenKrupp Marine Systems (TKMS) is Canada’s preferred choice […]
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A multibillion-dollar project to build the navy’s new fleet of submarines could give a “very significant” boost to the local economy, say two Ottawa-based firms that are working with the European company chosen to supply the vessels.
Prime Minister Mark Carney announced last week that German shipbuilder ThyssenKrupp Marine Systems (TKMS) is Canada’s preferred choice to build 12 submarines to replace the Royal Canadian Navy’s aging Victoria-class fleet.
The deal is expected to be worth tens of billions of dollars over the life of the vessels. The federal government is now entering into negotiations with TKMS to sign a contract, a process that will likely take several months.
TKMS has pledged to deliver the first German-designed Type 212CD submarines by 2036. While much of the work will take place on Canada’s east and west coasts, companies in the National Capital Region are poised to play a major role in the construction of the submarines.
Gloucester-based Gastops, for example, signed an agreement with TKMS in February to establish an automation system in-service support centre for the submarines.
“It’s not every day a procurement of this size happens,” Gastops president and CEO Shaun Horning said in an interview with OBJ last week. “This is a generational opportunity for Canadian business.”
Gastops, which has traditionally specialized in diagnostic tools for commercial and military aircraft, will work with TKMS to build a land-based “digital twin” that mimics the operational systems in the actual Type 212CD subs.
Horning said the support centre will allow engineers to test components such as steering, diving and autopilot systems and troubleshoot problems. He wouldn’t comment on the financial terms of Gastops’s agreement with TKMS, saying the project is still in its early planning stages and is “progressing nicely.”
The company now has about 210 employees at offices in Ottawa and Dartmouth, N.S. Horning said that number will increase as work on the support centre ramps up.
“This isn’t a three-year project,” he explained. “We’re talking decades of support that’s required. It’s going to create jobs for a long period of time. For business, having that stability of a long-term program allows you to invest not only in the program, but in other things.”
'A ton of opportunity'
Across town at the Kanata North tech park, Jordan Freed is equally excited about the submarine deal’s potential to accelerate his company’s growth.
Freed is president and managing director of Kongsberg Geospatial. Headquartered on Legget Drive, the Canadian arm of Norwegian aerospace and defence giant Kongsberg has more than doubled its headcount to 100 from 42 in the past four years.
Freed says the firm’s hiring spree will continue as Kongsberg Geospatial gears up to launch a facility in Kanata that will engineer cutting-edge combat management systems for TKMS-built submarines around the world.
Kongsberg Geospatial’s local team will be responsible for much of the ongoing development, maintenance and support of the submarines’ combat management system, which Freed describes as the vessels’ “brain.” The firm is also developing the craft’s navigation system and other key infrastructure.
Kongsberg Geospatial will be looking to integrate technology from other local suppliers into the combat management system, which is expected to become standard equipment in all future TKMS submarines.
That could translate into lucrative spinoffs for other Ottawa-area companies, Freed noted.
“We’ll be a part of this ongoing submarine business for TKMS for decades,” he said, adding he expects Kongsberg to hire an additional 50 to 100 employees in Ottawa and other parts of Canada, such as at the firm’s test facility in Port Coquitlam, B.C. “There is a ton of opportunity.”
Freed said the economic benefits of a project as massive as the submarine procurement could extend far beyond contracts directly related to the vessels themselves.
He noted that Kongsberg recently acquired a minority stake in B.C.-based FireSwarm Solutions, which makes drones that carry ultra-heavy payloads and are used to put out wildfires and conduct military logistics operations.
Kongsberg invested in FireSwarm as part of its commitments under the federal government’s Industrial and Technological Benefits Policy. The ITB requires companies awarded defence procurement contracts of $100 million or more to undertake business activities in Canada equal to the value of the contracts they won.
Thanks in part to Kongsberg’s investment, Fireswarm is setting up a new R&D facility in the National Capital Region. Freed suggested Kongsberg’s involvement in the submarine project could be a catalyst for more new research and manufacturing facilities.
“This can be a real driving force for how we leverage Ottawa tech and Ottawa companies,” he said. “We want to work with Invest Ottawa, we want to work with the local community and our local partners to see how we get the best out of the National Capital Region. There's a lot of opportunity for our region. This is where we're going to grow first.”
The announcement about TKMS follows the unveiling earlier this year of the federal government’s Defence Industrial Strategy, which aims to raise the share of new defence contracts awarded to domestic suppliers to 70 per cent — up from the current 43 per cent — within a decade.
Horning said the decision to re-arm Canada’s navy and launch the DIS are clear signals the federal government is committed to shoring up the country’s military might — and the Canadian defence industry — in the face of rising geopolitical instability.
“I think the exciting part is the government is committed to the men and women in uniform,” he said. “You always want to see those people get the best capability they can.
“Along with that, the Defence Industrial Strategy is about building Canadian sovereign capability — ensuring that money that we’re spending on defence is actually benefiting the Canadian economy and the people of Canada. The commitment of the government to align defence procurement and defence industry I think is a game-changer for industry.” 
