Race for $39 bn Australian submarine contract hots up

[Zarvan]

PHOTO: REUTERS

SYDNEY: The international race between France, Germany and Japan to win a US$39-billion-dollar contract to build new submarines for Australia is reaching a climax with reports a decision could come next week and that Tokyo is all but out.

The Australian cabinet’s National Security Committee met this week to weigh up the options from France’s shipbuilder DCNS, the Australian subsidiary of Germany’s ThyssenKrupp Marine Systems and the Japanese government-backed consortium led by Mitsubishi Heavy Industries.

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Prime Minister Turnbull has said a decision “will be made in due course, it will be made shortly”, but he declined to elaborate.

The committee’s findings will go to the full cabinet amid unconfirmed reports of an announcement next week.

The Australian newspaper reported that the Japanese bid was considered the weakest and the French “the strongest”.

After a year running as favourite, Japan has now been virtually eliminated from the contest, The Wall Street Journal said, quoting people familiar with the matter.

Tokyo’s bid was considered a “considerable risk” given the lack of experience in building naval materiel abroad, the daily said.

ThyssenKrupp is emerging as a front-runner, according to the journal.

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That leaves Japan considering a last-ditch intervention at the highest level to try to rescue its flagging bid, the Australian Broadcasting Corporation reported Friday.

The ABC has been told a “direct call by Prime Minister Shinzo Abe to (Australian Prime Minister) Malcolm Turnbull to plead Japan’s case is among the options being considered” in Tokyo.

Diplomatic cables, media and all available intelligence on the rival bidders is being pulled together by a team in Tokyo to brief Abe on his options, the ABC said.

With French sources confident of a technically superior offer, Paris newspaper les Echos even speculated that the DCNS bid would win, dismissing the German sub as at a serious disadvantage and “existing only on paper”.

All bidders are keenly aware that politics may play a large part in the final decision.

Shipyard jobs have become a political football in Australia amid fears any off-the-shelf submarine purchases could kill off the domestic shipbuilding industry.

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All three bidders have said they will build a large part or all of their submarines in Australia.

With an Australian general election expected on July 2, Turnbull this week promised new warships would be built in South Australia, which has suffered badly from car plant closures.

Canberra is seeking to replace its current diesel and electric-powered Collins Class submarines, which are set to be retired from about 2026.

The new generation of subs are expected to offer superior sensor performance and stealth capabilities, besides matching the range and endurance of the Collins Class vessels.

DCNS has proposed a conventional version of the Barracuda, ThyssenKrupp the Type 216 submarine and Japan the Soryu.

http://tribune.com.pk/story/1089683/race-for-39-bn-australian-submarine-contract-hots-up/

 

[dreamer4eva]

ThyssenKrupp has been showing ads on Aussie TV pretty much every hour to demonstrate they have presence in Australia from last 150 years. They look desperate to grab this contract or garner public opinion by showing their local credentials, otherwise why would they spend millions of dollars on TV marketing blitz. I have a feeling they are going to get this contract.

 

[randomradio]

I don't get why building 12 subs is so expensive in Australia. I think that figure is wrong. @jhungary

IN plans to have 6 subs built for about $10B.

 

[Stephen Cohen]

I don't get why building 12 subs is so expensive in Australia. I think that figure is wrong. @jhungary

IN plans to have 6 subs built for about $10B.

I checked it

It is 30 Billion ; some of the most expensive submarines in the world are 2.5 Billion a Unit

 

[flamer84]

I don't get why building 12 subs is so expensive in Australia. I think that figure is wrong. @jhungary

IN plans to have 6 subs built for about $10B.

Because the Australians include life time maintenance,weapons.....the whole spectrum associated with operating these submarines in their Navy.

 

[randomradio]

Because the Australians include life time maintenance,weapons.....the whole spectrum associated with operating these submarines in their Navy.

All contracts include that. Even Indian.

 

[jhungary]

I don't get why building 12 subs is so expensive in Australia. I think that figure is wrong. @jhungary

IN plans to have 6 subs built for about $10B.

The program is for 30 billions USD (or 39 Billions AUD) it included the factory and upgrade required for Australia to build those sub. The sub itself cost about 1 billions AUD (or 700-800 millions USD) each, and the factory line and upgrade projected to be 10 billions USD.

 

[flamer84]

All contracts include that. Even Indian.

I doubt it includes 15-20 years of spares,upgrades and maintenance in 1.5 billion/sub.Plus,the workforce is cheaper in India.

 

[Penguin]

The program is for 30 billions USD (or 39 Billions AUD) it included the factory and upgrade required for Australia to build those sub. The sub itself cost about 1 billions AUD (or 700-800 millions USD) each, and the factory line and upgrade projected to be 10 billions USD.

Which goes to show you can never compare deals only on the amount and number of vessels

 

[randomradio]

The program is for 30 billions USD (or 39 Billions AUD) it included the factory and upgrade required for Australia to build those sub. The sub itself cost about 1 billions AUD (or 700-800 millions USD) each, and the factory line and upgrade projected to be 10 billions USD.

20B USD for the subs and 10B for the yard. I think the 10B is too expensive, the 20B sounds fine.

Take Reliance in India as an example. They plan on investing up to $3B in building a shipyard from scratch. And this yard is expected to handle the construction of frigates, destroyers, aircraft carriers, LPDs and nuclear submarines. That 10B for upgrading a yard is way too high.

I doubt it includes 15-20 years of spares,upgrades and maintenance in 1.5 billion/sub.Plus,the workforce is cheaper in India.

The workforce doesn't offset the huge difference in costs. Indian deals have LCC component to it as well.

The older Scorpene deal for 6 in India costs $4.6B. It comes with industrial production and ToT. And with a pretty decent maintenance package. The cost you've mentioned is a bit over two times the cost of direct purchase, so it easily covers most of what you've listed out.

 

[flamer84]

20B USD for the subs and 10B for the yard. I think the 10B is too expensive, the 20B sounds fine.

Take Reliance in India as an example. They plan on investing up to $3B in building a shipyard from scratch. And this yard is expected to handle the construction of frigates, destroyers, aircraft carriers, LPDs and nuclear submarines. That 10B for upgrading a yard is way too high.



The workforce doesn't offset the huge difference in costs. Indian deals have LCC component to it as well.

The older Scorpene deal for 6 in India costs $4.6B. It comes with industrial production and ToT. And with a pretty decent maintenance package. The cost you've mentioned is a bit over two times the cost of direct purchase, so it easily covers most of what you've listed out.

It's the same for Australians as they don't want regular Scorpenes or Type 214's but significant larger vessels.

 

[randomradio]

It's the same for Australians as they don't want regular Scorpenes or Type 214's but significant larger vessels.

It's not significantly different. India is also looking at larger subs, and one of the requirements is to fire the Brahmos missile vertically. That means the diameter of the sub has to be a minimum of 6-7m. So whatever ThyssenKrupp has on offer to Australia will be the same sub that's on offer to the IN.

Only the DCNS offer may be different for both countries, maybe not, we are yet to see that. The Rafale deal comes with offsets for French SSNs, so we don't know how that will affect the navy's SSK deal.

 

[Stephen Cohen]

It's not significantly different. India is also looking at larger subs, and one of the requirements is to fire the Brahmos missile vertically. That means the diameter of the sub has to be a minimum of 6-7m. So whatever ThyssenKrupp has on offer to Australia will be the same sub that's on offer to the IN.

Only the DCNS offer may be different for both countries, maybe not, we are yet to see that. The Rafale deal comes with offsets for French SSNs, so we don't know how that will affect the navy's SSK deal.

If this deal becomes the new Bench mark then our P 75 I is doomed

We will have to go for more Scorpenes or Kilos or Amur

 

[Ankit Kumar 002]

If this deal becomes the new Bench mark then our P 75 I is doomed

We will have to go for more Scorpenes or Kilos or Amur

2-3 more kilos, follow on Scorpenes are on the anvil anyway.

But despite what many say, I have a strong gut feeling , Type216s coming.

With the high amount Australia is paying , why not simply buy SSNs?

 

[jhungary]

20B USD for the subs and 10B for the yard. I think the 10B is too expensive, the 20B sounds fine.

Take Reliance in India as an example. They plan on investing up to $3B in building a shipyard from scratch. And this yard is expected to handle the construction of frigates, destroyers, aircraft carriers, LPDs and nuclear submarines. That 10B for upgrading a yard is way too high.



The workforce doesn't offset the huge difference in costs. Indian deals have LCC component to it as well.

The older Scorpene deal for 6 in India costs $4.6B. It comes with industrial production and ToT. And with a pretty decent maintenance package. The cost you've mentioned is a bit over two times the cost of direct purchase, so it easily covers most of what you've listed out.

How much to buy a home in Australia and how much to buy a home in India??

The land cost would already hit 3 to 4 billions for the dock, the building and equipment cost is a lot different between Australia and India, you cannot use your own deal to compare to the deals in Australia. Cause in Australia, it cost that much to build and upgrade a Shipyard.

10 Billions is the benchmark, it's cost roughly the same for the Air Warfare destroyer program on ASC Osborne.

http://www.primespaceprojects.com.a...ome-of-defence-shipbuilding-for-a-generation/

Mr Abbott also said on Tuesday that there had been a $1.2 billion blowout in the air-warfare destroyer program being spearheaded by ASC at Osborne, taking the total project cost to just under $10 billion.