Record orders for German warships
German naval shipbuilders TKMS secure a record-breaking contract to build submarines for Canada – aimed at confronting Russia. Offset deals reduce dependence on the US.
KIEL/OTTAWA (our own report) – The German warship builders ThyssenKrupp Marine Systems (TKMS) have secured the biggest contract in the company’s history. It will supply a total of twelve submarines to the Canadian Navy for, potentially, around 20 billion euros. As Canada’s Prime Minister Mark Carney announced on Monday, the TKMS 212 CD submarine was chosen ahead of the KSS-III model, which is produced by the South Korean group Hanwha Ocean and had also been under consideration by Ottawa as part of its procurement plans. The deal with TKMS means that the naval forces of Germany, Norway and Canada will in future operate the same type of submarine. In an effort to counter the Russian Navy in the North Atlantic and the Arctic, this group of countries will command an unprecedented fleet of twenty-four Type 212 CD submarines. In addition, TKMS is preparing reciprocal sweetener deals, known as offsets, worth probably tens of billions of euros. They will include the purchase of Canadian liquefied natural gas and the construction of launch facilities for German launch vehicles in eastern Canada. Building a base for carrier rockets in Canada is intended to give Ottawa independence from US launch systems in the space sector. TKMS’ has a huge order book also thanks to major procurements by the German Navy. Indeed, the marine systems group is working on the F127 frigate, understood to be the most expensive project in the history of the German Navy.
Multi-billion contract from Canada
Canada will award a long-planned contract for the construction of up to twelve submarines for its navy to the Kiel-based naval shipbuilders ThyssenKrupp Marine Systems (TKMS). Prime Minister Mark Carney announced the decision on Monday before flying to the NATO summit in Ankara. He said that Ottawa would acquire Type 212 CD (Common Design) submarines, which are to be constructed by TKMS in collaboration with the Norwegian company Kongsberg Defence & Aerospace (KDA). Compared with its predecessor, the Type 212 A, the Type 212 CD features improved sensor technology. Its design is optimised specifically for operations in the cold waters of the North Atlantic and even the Arctic – including operations under ice. The contract means TKMS prevailed over a bid by its South Korean rival Hanwha Ocean, even though the latter can produce the significantly more cost-effective KSS-III model. The price Canada will have to pay is estimated at approximately 20 billion euros.[1] The first Type 212 CD submarines are scheduled for delivery in 2033. It is not yet known whether the Canadian Navy will then have immediate access to the vessels or will have to wait longer for operational readiness. Contract details are still to be finalised. TKMS has announced that the submarines will be built entirely at the group’s sites in Kiel and Wismar. The non-magnetic steel required for the submarines is to be sourced from Canada.
Countering Russia in the North Atlantic
One of the reasons for the Canadian government opting for TKMS’s offer lies in the Canadian Navy’s central operational scenarios. On the one hand, given Canada’s wide Arctic waters and the rapid melting of polar ice, Ottawa is increasingly setting its sights on potential operations in the Arctic. On the other hand, it is one of the Western countries focusing on the mission in the North Atlantic to prevent Russian naval vessels, especially submarines, from advancing from the Arctic Ocean past Iceland into the Atlantic. This is primarily about sealing off the so-called ‘GIUK gap’, i.e. the passage between Greenland (G), Iceland (I) and the United Kingdom (UK). It was to this end that Germany, Norway and Canada decided at the NATO summit in Washington in July 2024 to jointly establish a ‘Security Partnership for the North Atlantic’.[2] Denmark joined the partnership in 2025. The scope of this cooperation is far-reaching. Germany, Norway and Canada are, for instance, each procuring Boeing P-8A Poseidon maritime patrol aircraft, which they will deploy in the North Atlantic.[3] Germany and Norway are already jointly procuring twelve Type 2012 CD submarines. If Canada acquires a further twelve as planned, the three countries will in future be able to operate an impressive fleet of twenty-four submarines of the same design.
Greater autonomy from the US
Another reason for Canada’s procurement from Germany of the TKMS Type 212 CD submarine lies in the offset agreements concluded between the two sides. Berlin’s sweeteners are extremely comprehensive and are carefully designed to strengthen longer-term German-Canadian economic cooperation. In agreeing on procurement with offsets, both countries are seeking to shift, to some extent, away from their economic dependence on the United States. In Canada’s case, this dependence is overwhelming. One offset is TKMS’ intention to set up a centre of excellence for the simulation, training and maintenance of the submarines in collaboration with the Canadian technology group CAE.[4] And, on Tuesday, the German start-up Isar Aerospace signed an agreement with the Canadian company Maritime Launch Services, which is building a spaceport near Canso in the eastern Canadian province of Nova Scotia. Isar Aerospace plans to launch its Spectrum launch vehicle from there, starting in 2028. The Canadian complex will be used to transport small and medium-sized satellites into space.[5] Canada has so far been completely reliant on the United States for space logistics. Another offset deal is a commitment by German gas importer Sefe to source one million tonnes of liquefied natural gas per year from Canada. Again, this project would, at least slightly, reduce Germany’s dependence on the US fracking industry. Investments in Canada’s rare earths have also been under discussion in Germany.
Foreign orders
For ThyssenKrupp Marine Systems, the contract with Canada is a major boost to corporate growth. On 31 March, the group was already reporting order books worth 20.6 billion euros – more than ever before.[6] Sales have risen by 10 per cent to 1.17 billion euros in the first half of the 2025/26 financial year (summer to summer). Admittedly, this was significantly less than the sales figures boasted by German arms giant Rheinmetall. The rapidly expanding weapons maker managed to increase its turnover by around 8 per cent to 1.94 billion euros in the first quarter of 2026 alone.[7] Nevertheless, we can see that the surge across the defence industry has now reached Germany’s naval shipbuilding sector, with TKMS rising to 61st place in the SIPRI ranking of the world’s biggest arms manufacturers. Further orders are expected from foreign customers. At the end of June, TKMS celebrated the christening at its Brazilian shipyard in Itajaí, the third frigate for the Brazilian Navy as part of the Tamandaré Programme. One frigate has already been in service, a second is due to set sail for trials this year, and a fourth has been ordered.[8] Brazil is now planning to order a further four TKMS frigates. To handle with the growth in orders, discussions have been underway on the option of the group taking over the neighbouring ‘German Naval Yards’ shipyard in Kiel. However, Rheinmetall, with its new marine division, is now also showing interest in producing from the yard.
Domestic orders
TKMS also stands to benefit from new contracts with the German Navy. Firstly, following the failure of the F126 frigate project, the group has been tasked with building – as a replacement – new frigates of the tried-and-tested MEKO A-200 class at short notice. The initial order is for four vessels, to be delivered at a price of 6.63 billion euros. The construction of a further four, costing 5.3 billion euros, is referenced as a follow-up option.[9] The value of these contracts, like the value of the contract to build the 212 CD submarines for the Canadian Navy, is not included in the company’s order book as recorded on 31 March, and which were already breaking all records. In addition, work is progressing above all on the F127 frigate, which TKMS is building in collaboration with Naval Vessels Lürssen, a shipyard acquired from Rheinmetall. Eight F127 frigates are currently planned. They are intended to take on key roles in the German Navy over several decades. The cost is currently estimated at more than 26 billion euros. As experts note, this makes the project arguably the most expensive in the history of the German Navy.[10]
Still dependent
Critics complain that the F127 frigate’s air defence system is to use Standard Missile-type surface-to-air missiles and the SPY-6 defence radar.[11] Both systems are produced by the US corporation RTX (formerly Raytheon), so this perpetuates partial dependence on the US. Experts argue, however, that there is currently no equivalent European alternative to either of these. In any case, dependence on US satellites and GPS will probably remain in place for the next decade. Only if this dependence were overcome would genuine military autonomy be on the cards. One step away from dependence on the US is being taken with the Iris-T product family of guided missiles to be produced by German arms maker Diehl, but these guided missiles will only become deployable in the next decade.
[1] So läuft der U-Boot-Deal mit Kanada. handelsblatt.com 07.07.2026.
[2], [3] See: Von der Ost- an die Nordflanke.
[4] Susanne Preuß: TKMS pokert um den 56-Milliarden-Auftrag. faz.net 16.06.2026.
[5] German aerospace company signs 10-year deal to use N.S. space launch pad. cbc.ca 07.07.2026.
[6] TKMS im ersten Halbjahr des Geschäftsjahres 2025/26 weiter auf Wachstumskurs: neuer Rekord-Auftragsbestand; deutliche Steigerung bei Umsatz und bereinigtem EBIT. tkmsgroup.com 11.05.2026.
[7] Rheinmetall verfehlt Umsatzerwartung. handelsblatt.com 04.05.2026.
[8] TKMS feiert die Taufe der Fregatte „Cunha Moreira“ (F202), des dritten Schiffs des Tamandaré-Programms. tkmsgroup.com 26.06.2026.
[9] Bundesregierung will vier neue Kriegsschiffe für rund 6 Milliarden Euro beschaffen. n-tv.de 02.07.2026.
[10], [11] Clemens Speer: Fregatte Klasse 127 – Das teuerste Marineprojekt der Geschichte im Detail. suv.report 17.06.2026.
