September 21, 2021

Naval Group Sales After the France-Aus Sub Deal Dumped?

Summarising the comments of some well-placed French sources:  


Naval Group needs to look to the future now that the French-Australian submarine deal is dead. But France is still hurting.  


Australia will begin to detail the failures of Naval Group to show Australia’s disengagement is legitimate. Australia and France will enter into a secret legal battle (because the Australia-France submarine contract is secret) between all the parties. But without losing face. 


It is a big disappointment for France and its naval industry. We thought that with Trump's departure France had avoided the worst from the US. Well no. The French tend to have a little too much confidence in themselves and to believe that the others will be well intentioned. 


France’s Political Environment 


The Biden administration is astonished at the strong reaction of France to the AUKUS sub deal. There is a saying in France “A promise is only binding on those who believe in it. The US is waiting for the comparatively “small country” France to calm down. But France feels alone. 


Let us not forget that France is entering the French Presidential election period and there is a record to defend. This French Presidential race part explains the severity of French reactions to the loss in Australia. President Macron wants to win a second term in 2022. 


This point about Macron's severe tone and France's Presidential Election was finally recognised by Australia's Defence Minister, Peter Dutton, on Friday, October 29, 2021 when Dutton "suggested the French president may be playing to domestic political sensibilities. “Look, don’t forget, too, that France has got an election in April of next year,”".  



Building More Nuclear Submarines for the French Navy? 


To make up for the loss of revenue from Australia, it would be desirable if the French Government asked Naval Group to build 8, instead of the projected 6, Barracuda Suffren-class SSNs for the French Navy. This would give France greater power in Asia.  
 
Recently, some French Parliamentarians insisted that France build 5 or 6 next generation SSBNs (called SNLE-3Gsinstead of 4, to strengthen France's nuclear weapon posture. 

 
Expanding the number of French submarines, would provide greater French independence but there are two problems:  
-  the French budget, and 
-  the fact that the French Government must not become the lifeline of Naval Group
    (even if the Government is the major shareholder in Naval Group). 
 

 

France’s Recent Arms Sales Performance Has Been Tough 


President Macron will try to encourage his European partners to buy French conventional submarines in a renewed pan-European push. But will the Germans (TKMS), Spaniards (Navantia) and Swedes (Saab Kockums) play the French game? Those countries are still likely to compete. 


For India, with their P-75I specifications, which require a confirmed AIP, France's chances will be complicated. France has been unable to develop an operational second generation AIP. 


Over the Netherlands’ Walrus Replacement Competition, many in France have doubts. 


It would be sad if France's submarine export market were limited to South America. 

The worst possibility for France would be that the Spain's s Navantia S-80s win markets. It would be shame. France is helping Brazil build conventional Scorpenes and the non-nuclear aspects of a Brazilian SSN

 

Outside of Naval Group and submarine matters France has been fooled over the plan to sell French built Dassault Rafale jets to Switzerland. US F-35A's won that sale, and France's unhappy sales record continues. 

8 comments:

GhalibKabir said...

It will depend on how much more 'show me' Naval Group can do in India and if it can tangibly help develop India's domestic SSK lines then it may be even be possible to borrow time to perfect the FC-2G or even offer a LiB solution down the line. Another is to offer local production of the F21 Artemis torpedo. IN is short of 100-200 torpedoes anyway and this could complement the local varunastra torpedo

Also since India is going the HEU SSN route, non-nuclear design aspects especially quieter screw etc are other areas Naval group can still come in to help...as a LEU Barracuda is off the list likely....

Will they be incentivised enough is the big question....a desperate enough Naval Group could pull off a 6-9 SSK P75-P75I bid....provided the GoF and Macron can get behind it....

PS: Naval Rafale, support for AMCA for IAF etc. are places the French can leverage India.
Hope IN/IAF are alive to the opportunity potential available now

GhalibKabir said...

https://www.navalnews.com/naval-news/2019/07/naval-group-achieves-breakthrough-with-its-fc2g-aip-system/

It looks similar in status to India's PAFC AIP in terms of testing status

Anonymous said...

Hi Pete
Again a "french" , independant view, sorry for the length

Naval will do fine and has a better future probably than Saab, TKMS or Navantia
They lost 10% of their volume with this contract (Naval Group Union representative).That's in line with a back of the envelppe estimate ,50 B contract ..but only 8 for "the French" out of which 3 to 4 for Naval "per se" over 20 years..The yard and the Engineering Dpts are full at Naval for at least 10 years. In this blog this was an issue you raise vs the Ausralian contract last tear or so.Naval has recruted 500 engineers for the Australian contract and invested heavyly over the last 5 years.It has stopped recruitng

The world is becoming more dangerous and the defense spendings are growing not only in France.. The Austalian change of tack,completely understandable, is a "paradygm shift"..in many ways not necessarily detrimental for Naval , alas may be

What is the meaning now of AIP for Brazil or India..?

Naval (and France)is the only company that can supply "ITAR free" state of the art systems besides China and Russia.Idem for jets , missile..If you leave in a difficult environment what is the value of the US commitment ? If you are a Saudi or a Gulf state or Egypt or Greece how do you feel infront of Iran or Turkey with the US concentrating on China?

55 years ago he French gov decided that they dont want to be in a situation were they would woke up at night and ask if the US would really trade NYC for Paris.France has a long history... and the infamous Munich accord of 1938 where Britain and France let down Tchecoslovakia was still in their memory

So yes it is a big loss short term (Thales, Naval main shareholder stock lost 1 or 2% at most in a declining market last week in Euronext))but this is not the main reason the French are mad.
They feel humiliated by the betrayal and bad faith and by their exclusion of a defense pact in an area where 2 million French citizens are present (how many british?)and with a huge economical Zone

The Naval Union boss declared that they were discussions in 2015 about this contract and the business and reputational risks, associated.A french SSN converted in a diesel ,with american combat systems and weapons to be built in Australia which does not have a solid defense ecosystem....He blames the Australian defense and Gov and Naval management of Naval to engineer that deal..
It was the French gov that push it over to build defense relations with Australia.It is clear by now that the Nuclear option wasoffered on the table

Australian do not feel at ease with a French presence, we know that . If the French leaves , Australian will have to pick up the tab and probably witness poverty, militaru coup,interethnic civil unrest..and discover that Chinese Naval bases or airfields are much closer..

So no it is not primarily a business issue (although that's the way it is presented in Australia and the US..to brush up the incredible mismanagement and lack of vision of an ,after all explainable, change of posture due to China)

Pete said...

Thanks Ghalib

For https://www.navalnews.com/naval-news/2019/07/naval-group-achieves-breakthrough-with-its-fc2g-aip-system/ of 30 Jul 2019.

Clearly India, in its 2021 P-75I shortlist exclusion of Naval Group (NG), did not see NG's ON LAND SIMULATION of of NG's 2nd Gen AIP as meeting the On an operational submarine AT SEA requirement.

If France had (or leased) a test sub then NG's new AIP could have been tested.

It would be a shame, after India builds the 6 Kalvari Scorpenes, if India cannot work something out for 6 AIP Scorpenes.

Pete

Pete said...

Hi Anonymous [your Sep 22, 2021, 2:33:00 AM comment]

You raised Naval Groups lack of an AT SEA tested 2nd generation AIP. See Ghalib's and my discussion on this thread.

NG has no Operational (at sea) AIP for India, and I don't think NG seriously offered a 2nd Gen AIP for NG Scorpenes being built in Brazil.

Its good (as you describe) NG will survive the loss of the Austrlian order.

Regards Pete

GhalibKabir said...

it looks like either the FC-2G is at the same stage as PAFC AIP in which case local make will be cheaper as Indian made Gen-1 AIP or behind the scenes hectic discussions are underway to push Naval Group to be more helpful in the SSK manufacturing realm...the FC-2G plus 3-9 additional Scorpenes could be tied to that... we don't know what jockeying is underway.

Realistically at this stage, amongst NG, TKMS, Kockums, Navantia and Rubin Bureau..NG has the best package barring the TKMS special steel that the germans won't give in any case...a pity Taigei class with its 110 class steel is unavailable....

India doesn't have time as the S-20 export yuans will be in the PN fleet soon and will sport a Stirling AIP

Anonymous said...

This article in India Today.
https://www.indiatoday.in/india-today-insight/story/why-the-us-won-t-give-india-nuclear-submarines-1854818-2021-09-20?utm_source=twshare&utm_medium=socialicons&utm_campaign=shareurltracking

In the photo that was taken at the opening session of the QUAD for unknown reasons, PM Modi was not present when that photo was taken. Why? The seating arrangement was a bit strange with 5 sides, not 4, as Secretary Blinken was acting as the moderator.
There was another photo taken in the WH with all 4 Quad leaders, but that was not at the opening session.
KQN

Pete said...

Hi KQN [your Sep 26, 2021, 1:59:00 PM]

Its no surprise the US and UK won't transfer nuclear sub tech to India.

The India Today article https://www.indiatoday.in/india-today-insight/story/why-the-us-won-t-give-india-nuclear-submarines-1854818-2021-09-20?utm_source=twshare&utm_medium=socialicons&utm_campaign=shareurltracking

you've provided is indicative of the very close India-Russia relationship on all nuclear submarine matters. A relationship in fact extending to highly senstive quieting, reactors, nuclear missiles and nuclear weapons designs for decades.

Russian intelligence has likely penetrated India's nuclear navy for decades and Russian advisors likely on Indian nuclear subs (eg. INS Chakra II/Nerpa, India's future "new" Akula SSN leases) and many other sectors of India's military-industrial complex.

Regards

Pete