July 23, 2016

Submarine Matters Articles - Excellent Opinion Piece

Great minds think alike :)

This Opinion Piece of July 23, 2016 provides an excellent discussion on Turnbull electoral and  shipbuilding strategy, as well as steel and original Australian content issues for the DCNS Shortfin submarines.

I’d like to think there was some inspiration from my special report “Australian Election and Shipbuilding” (to donors) and Submarine Matters’ articles (written for free) over the last few days, weeks and months.

Before each of the paragraphs of the Opinion Piece below I will provide a quote or link to “Australian Election and Shipbuilding” (of 13/7/2016) and the relevant Submarine Matters article(s) with the date(s).

Submarine Matters Articles and a Comment
From Opinion Piece
My comment of 19/7/2016 "This new Turnbull Ministry contains an unusually high number of Cabinet Ministers and junior Ministers. The reason for that is Turnbull is insecure. He feels compelled to bestow positions on all the factions and personalities of the Liberal National Party Coalition Government who can bring him down."

“…An unwieldy cabinet of 23 …underline Turnbull’s weakened position and the fact he can’t afford to make more enemies.”

My article of 18/7/2016 “Where I indicated in Australian Election and Shipbuilding (of July 13, 2016) that Prime Minister  Turnbull's imminent post Election Ministerial reshuffle would likely involve:
"However, [Defence Minister Marise Payne's] portfolio, with its domestically influential shipbuilding programs, is now attractive to others, including Abbott"..."Alternatively the centrist (and significantly South Australian) Christopher Pyne may take her position."
The message of a diminuation of Marise Paynes' defence industry power appears accurate. 
Mr Pyne has made unsolicited comments on submarine building policy for at least a year - as these articles on Submarine Matters reveal.
Just announced today (July 18, 2016) in Turnbull's post Election Ministerial reshuffle is Christopher Pyne's new role of Minister for Defence Industry.

“Central to the promise to deliver an economic transformation and the most significant change in cabinet was the gutting of Marise Payne’s defence ministry and the huge portfolio promotion for Christopher Pyne as Defence Industry Minister.”

My article of 21/9/2015 "While the promise of 70% of submarine work in Australia has been mentioned by the outgoing defence minister Andrews in Parliament this is not yet a formal commitment. 70% involves complex costings over a 20 year period. The new Australian Defence Minister, Marise Payne, will be faced with a highly complex $90 Billion shipbuilding situation. 
She and the whole Australian Federal Cabinet will have to:  plan, conduct and complete submarine/ship selections which heavily rely on the knowledge/designs/industrial capacity/contractural clarity of overseas companies…"
Yet on every count there are signs Turnbull’s strongly stated intentions may not be fulfilled, and that includes the central economic transformation of $90bn in defence spending.

“…Yet at the same hearing she would not commit to giving a percentage of how much of the subs would be built in Adelaide, refused to say a minimum would be 70 per cent and said the aim was “to maximise Australian industry involvement”.”

Further from Submarine Matters Articles
From Opinion Piece
From my “Australian Election and Shipbuilding” in WORD that I emailed out to donors on 13/7/2016. “The Australian July 2, 2016 Election result confirms the Government was on the right political track pursuing a South Australian-centric shipbuilding strategy. But it also leaves scope for much instability… The result appears to re-affirm that the Government followed the right electoral strategy in its April 2016 announcements (here and here) that most of the surface shipbuilding tonnage and all of the new submarines should be built in South Australia (SA)… Turnbull in Opposition proved he was not a stayer when confronted with the frustrating grind of negotiation and conflicting interests. The clash of interests now include centrists and conservatives in his own Government. The election results have proven Turnbull does not have the sure hand (that many expected him to have) to win elections.”

My article on Arrium of 4/April/2016 “The steel plant at Whyalla, owned by Arrium, makes “long steel” products - mainly steel reinforcing bars and beams for homes and buildings. 

It is possible that Arrium could gear up to make the few hundred tonnes of steel beams needed in Australia's Future Submarine project. But this would only be needed in the mid 2020s based on the Turnbull Government's plans to delay the Future Submarines build until the late 2020s. For an Australian submarine build, first steel might only be cut in 2028.

The example of any Australian company making submarine steel overwhelmingly involves a fundamentally different type of product, that is flat steel for submarine hulls. 

The precedent of an Australian company producing submarine steel seems limited to Port Kembla-Wollongong based Bisalloy Steels Pty Ltd. This only involved Bisalloy making 8,000 tonnes of steel in the 1980s-1990s for the Collins submarine program. There was research and development involvement from BHP. 

Defence Science and Technology Organisation (DSTO) was also involved - see "High-strength steel and welds" here

My article of 26/4/2016 “Collins steel mainly made in Port Kembla,-Wollongong, NSW”

My article of 20/1/2015 “Australian companies approached by Japan may include BHP-Billiton and BlueScope Steel. However the main company Japan approaches is likely to be current naval steelmaker Bisalloy Steels Pty Ltd based in Port Kembla-Wollongong, New South Wales, Australia. 

In the 1980s-1990s Bisalloy supplied 8,000 tonnes of hardened steel for the Collins submarine program with research and development involvement of BHP and the Defence Science and Technology Organisation (DSTO).

Bisalloy Steels Pty Ltd (company website) has connections to Indonesia (PT Bima Bisalloy), Thailand (Bisalloy Thailand) and from July 2011 investment in the Chinese CJV - Bisalloy Jigang (Shandong) Steel Plate Co. Ltd. It would be crucial that Japanese-Australian submarine steel technology does not find its way to foreign affiliates - particularly China.”
“Turnbull’s announcement of the successful French bidder for the subs on the eve of the election to “see Australian workers building Australian submarines with Australian steel” was at the heart of the Liberal attempts to stave off defeat in several seats in South Australia.”

“What’s more, naval chiefs said the strength of the steel needed for submarines was not produced at Whyalla’s Arrium and only Bisalloy, in Wollongong, NSW, had produced the necessary grade of tensile steel used in the Collins-class submarines.”

More from Opinion Piece of July 23, 2016.

“They also said the same steel had to be used in all parts of the submarine, which could include bits produced in France. Evidence was also given that by Turnbull’s prediction of 2019 for the next election, the design process for the new Barracuda Shortfin French sub would be only three years into its five-year starting phase.

It is possible that even by 2019 it won’t be certain as to what steel will be needed for the hull and the government will again run the risk of going to an election with an unresolved promise to South Australia on submarines.

The government has already given the impression of an all-Australian build, with Australian workers using Australian steel, when it cannot possibly be known what percentage will be Australian made and neither the builders nor the Australian navy can give any real assurance.

But Pyne kept boosting the benefits after his first official meeting as Defence Industry Minister with the leaders of the Future Submarine program on Wednesday, saying it “will bring unprecedented economic benefit to Australia, driving jobs and growth across the country”.

The appointment of Pyne as a South Australian “fixer” to ensure promises are kept is a sign that Payne was not seen as assertive enough and that her cabinet colleagues were anxious. Having made a great deal only nine months ago of appointing Australia’s first female Defence Minister as part of a promotion of women into cabinet, Turnbull could do no more to address the concern….”


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