January 11, 2016

Likely submarine decision in late 2016. Japan, TKMS, DCNS battle it out.

1. Likely decision will only be publicised in late 2016.

The Australian Government in December 2015 said it will make a decision “in the first half” of 2016 on who wins the Australian future submarine competition.

Pete’s Comment: Given the deep domestic political implications for the Turnbull of making a submarine decision I think it likely that Turnbull will make that decision after the next Federal Election. Too many election sensitive interest groups will be unhappy about "what it means to their local shipyard, dockyard, jobs, city, State and Electorate". If a normal Australian Federal Election is held the earliest possible date for a simultaneous House/half-Senate Federal election is 6 August 2016.[1]

However the most popular months for Turnbull to time the Election are after August - ie. in September or October 2016. Therefore a submarine decision is most likely after the election ie. late 2016.

2. Japanese determination to have a lower upfront price than TKMS and DCNS.

In Comments in early January 2016 “S” provided three main sets of information. The following is the main politican one. The battery and budget sets will follow later this week:

The Japanese government is “extremely serious” in wanting to win a submarine bid.

The Japanese government has therefore asked MHI and KHI, the joint makers of the Soryu, not to place priority on profitability in the bidding war. As a result, they could possibly have an edge over the German and French companies (informed sources said).

Meanwhile, German Chancellor Angela Merkel [on behalf of German TKMS’s bid] has reportedly warned the Australian side that Canberra’s relations with China could deteriorate if it awards the submarine contract to Japan, whose ties with an increasingly assertive China have recently been strained. [Pete notes I have seen no major statements from China that supports Chancellor Merkel’s contention. If there are major Chinese statements grateful if the TKMS sales team, Adelaide, can provide them.]

Japanese Ambassador to Australia, Sumio Kusaka

3. Japanese Ambassador to Australia and the big picture.

In Brendan Nicholson's article in The Australian, January 4, 2016 http://www.theaustralian.com.au/news/inquirer/japan-plays-for-the-submarine-prize/news-story/dc65e959e418395e91795412fb44bc6f (subscription) here are short parts of a long interview of Japanese Ambassador to Australia, Sumio Kusaka. Kusaka "scoffs at suggestions that language and cultural differences could make it difficult for Japan to build Australia’s" [new submarines].

[Kusaka continued]...“Which brings us to the submarines, Australia’s biggest defence project. Depending on whether the government opts for eight vessels or more, the submarines will cost ­between about $12 billion and $20bn to build, and it will take ­another $30bn to sustain them through their lives.”

...“It is an Australia-first policy they have in mind. A very trustworthy commitment,” the ambassador says, adding that Japan is the only country in the world to have constructed and operated a 4000-tonne conventional submarine."

“In contrast, France’s plan for a conventionally-powered “short-fin” Barracuda submarine based on its nuclear-powered Barracuda-class subs would be a huge challenge, Kusaka says. “In our case there is minimal engineering risk. We have proven reliability. That is very important."

…"The region’s peace and prosperity are so important to the US, Australia and Japan that it is only natural for the three nations to co-operate." [Pete's Comment - a reminder that the US is providing one third of the submarine - in the shape of the Combat System/Weapons]. See WHOLE ARTICLE in The Australian.



Anonymous said...

If the Japanese is going to get serious on pricing, it is going to be very tough for the German and French. I had first hand experiences competing against Japanese products (in a different industry) on prices, before the recent yen devaluation, and it was not very different from competing against Chinese products.

imacca said...

[ If the Japanese is going to get serious on pricing, it is going to be very tough for the German and French. ]

Which surely means that effectively, the Japanese Govt is subsidising our Submarine build??

The trade off's between price and Oz industry will be critical.

And on the Soryu not having a VLS / VMPL capability. MWould a HMPL stuffed with 4 or so tube launched Tomahawk cannisters do that job and be easier to integrate into a Soryu??

Peter Coates said...

Hi Anonymous

Yes some price competition between Japan, DCNS and TKMS (and the US monopoly Combat Sytem provider) would be a welcome change to Australia saying something along the lines "we've got $20 Billion in the bank to buy 6, 8, 10 or 12 subs up-front. The actual number of subs doesn't matter."


Peter Coates said...

Hi imacca

It may be in Australia's bargaining/national interests if "the Japanese Govt is subsidising our Submarine build??"

The multi $10 Billion sums means its an international political alliance matter not just "competitive and clean business transaction".

Yes trade off's are many. Having a Japan ready and willing to avoid another Collins South Australian cost blow-out union sheltered workshop is important. The future sub program may well degenerate into not a 40% over international best practice but a standard South Australian Collins/Air Warfare Destroyer solution of 200% over world practice. It could happen.

The build in Kobe, Kiel or Cherbourg should always be a fallback if needed.

The VLS / VMPL capability issue may be less up to Japan and more up to Australia talking to the US Combat System/Weapons integrator about how to best launch Tomahawk missiles.

Japan may well (or would do well to) be talking arms business approach and HMPL advice with such experts as Kockums to expedite Japan's movement into arms selling mode. If Japan wants to compete against TKMS offer of up to 3 VMPLs Japan needs to think beyond what the its standard customer, the Japanese Navy, would predictably want.



MHalblaub said...

Dear Pete,

there no reason for Australia to launch a UGM-109 Tomahawk by a big sized vertical system. VMPL as proposed e.g. by TKMS with an diameter of about 2.5 m uses to much space for just 7 missiles.

Such a VMPL is nice to launch big wire guided UUVs with a weapons load of 2 or 3 heavy weight torpedoes. Vertical is not only limited to upwards direction.

The seven additional missiles are nice to have option.


Peter Coates said...

Hi MHalblaub

TKMS seems to be making a big feature of its ability to deliver one to three VMPLs or one HMPL for the CEP.

Japan seems to treating VMPL or HMPL as low priority unless the customer really wants them.

France is offering everything as possible in its bigger sub (even nuclear reactor? long shot?).

I would say Australia should be thinking in terms of torpedo tube fired Tomahawks for many reasons. Even Israel seems to fire its nuclear missiles through torpedo tubes.

For large UUVs a detachable mission specialised pod should sit on the sub's hull behind the sail on an as-needed basis.

I'll include this discussion in an article next week.