Australian’s Hope for Multibillion-dollar German Submarine Contract

Posted: November 17, 2014 in War Is The New Economy


New German hope for multibillion-dollar submarine build at Adelaide’s ASC shipyards
 ADELAIDE is re-emerging as the likely home of a multibillion-dollar slice of construction work for Australia’s Future Submarine Project.

In a significant boost for the Osborne-based ASC, it is understood the German proposal to build up to 11 boats there is gaining support with the Federal Government.

Senior government sources have told The Advertiser that German and Japanese bids are the most likely to land the $20-$30 billion deal.

It is understood the ThyssenKrupp Marine Systems proposal involves building one boat in Kiel, Germany, and 11 more at Government-owned ASC, formerly the Australian Submarine Corporation.

Any Japanese domestic political difficulties in securing approval for export to Australia of the technology involved in the Soryu Class submarine could directly benefit Adelaide. It is understood there is some wariness about whether Japanese Prime Minister Shinzo Abe’s coalition partners would accept this technology transfer.

Under one scenario described to The Advertiser, if the Japanese bid was successful but there was no approval for the export of their technology, this would mean a significant fitout of Australian technology in Adelaide into an evolved Soryu Class hull built in Japan.

Electrician Rob Wood works on HMAS Rankin, a Collins Class submarine in the wharf at ASC

Electrician Rob Wood works on HMAS Rankin, a Collins Class submarine in the wharf at ASC in Adelaide.

Defence Minister David Johnston on Wednesday declared that no off-the-shelf submarine matched Australia’s strategic needs, meaning an evolved version of existing designs was being pursued.

ThyssenKrupp Marine Systems has completed a feasibility design of a new 90m-long, 4000-tonne submarine that matches all Australian operational requirements.

The Germans, who last month were lobbying in Canberra, say they could build 12 boats for $20 billion.

Coalition sources also repeated promises that Adelaide would be the base for maintenance and refitting of the future submarines, which is usually two-thirds of the value of any major defence contract.

They also emphasised that the Collins Class submarine build had involved a partnership with Swedish firm Kockums, which was a 49 per cent shareholder in ASC until 2000.

The HMAS Collins rendezvous with HMAS Waller (left) and HMAS Rankin.

The HMAS Collins rendezvous with HMAS Waller (left) and HMAS Rankin.

It is understood the announcement of the successful bidder might come before the Defence White Paper release, expected in the first half of next year, because of concern about the delays in deciding on a Collins Class replacement.

This concern stems from the possibility of a capability gap between the time the Collins boats become unsuitable for use and when the new submarines are operational.

A need to preserve the Osborne workforce has prompted the decision to build eight new navy frigates at ASC, at a cost of more than $10 billion. First revealed by The Advertiser, this and the decision to open the submarine project to a limited tender are expected to be announced within weeks.

Labor committed before last year’s Federal election to building 12 submarines in Adelaide, while the Coalition said it wanted to build 12 here.

The Federal Government has attacked Labor for exposing Australia to the so-called “Valley of Death” capability gap through indecision, while Labor has accused the Liberals of breaking a promise.

An Air Warfare Destroyer under construction at the ASC shipyards in Port Adelaide.

An Air Warfare Destroyer under construction at the ASC shipyards in Port Adelaide.

SA Labor Senator Penny Wong says Education Minister Christopher Pyne and Hindmarsh MP Matt Williams abandoned their state by breaking the submarine construction promise and costing it thousands of jobs.

The influence in Cabinet — Mr Pyne is the only South Australian — is often contrasted with a decade ago, when there was an unprecedented four SA Liberal Cabinet ministers.

At that time, ministers including Alexander Downer and Robert Hill used their considerable influence to argue, in the national interest, the case for building air warfare destroyers at ASC.

ASC’s performance on this contract, like the Collins Class deal, is now being used in some quarters to undermine the case to design and build submarines in Adelaide.

But there also is a view that the Government is bungling the narrative by allowing ASC to be attacked for poor performance on major defence contracts, which often blow out in cost and time because of their complexity.

This is because ASC has been wholly owned by the Federal Government since 2000. The Government, having failed to privatise ASC about a decade ago, is now trying again.

It is believed the break-up of ASC into submarine and shipbuilding arms will be announced within weeks as part of the frigate deal.

This would allow the Government to sell off the shipbuilding arm while, as seems increasingly likely, partner with a foreign firm to enable a significant slice of submarine construction and maintenance to be done in Adelaide.

Originally published as Can Germany save thousands of SA subs jobs?


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