And more talks about Option J is out of favour
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Japan falls out of favour for $20bn submarine deal...
Japan has gone from frontrunner to outsider in its bid to win the $20 billion deal to build the navy’s new submarines after the removal of Tony Abbott and a new push to build the fleet largely in Australia.
German shipbuilder TKMS and France’s DCNS are now *considered by insiders to be joint favourites for the lucrative deal, employing aggressive and sophisticated national lobbying campaigns in contrast to the muted approach adopted by Tokyo.
The deposing of Mr Abbott this week was a major blow to Tokyo’s hopes of securing the contract, given that Japan was the former prime minister’s “captain’s pick” for the submarine bid.
Tokyo’s chance of winning the bid are seen to have been further harmed by Defence Minister Kevin Andrews on Thursday giving the strongest indication yet that at least 70 per cent of work on the new submarines was likely to be done in Australia.
Japan has never built submar*ines overseas before and is the only one of the three bidders not to state publicly that it could build most of the new fleet in Adelaide.
Political issues are also clouding the bid, with protests in Tokyo this week, including a fist fight in Japan’s parliament, over a security bill that could see the Japane*se military fighting abroad as part of Prime Minister Shinzo Abe’s push for a less pacifist security policy.
The row raises doubts about whether Mr Abe can muster enough public and political support to allow the unprecedented sale of sensitive Japanese submarine technology to Australia.
Japan’s bid was hatched last year as a result of Mr Abbott’s close relationship with Mr Abe, the prime minister initially wanting to award the submarine *contract to Japan without a competitive process.
Early this year, Mr Abbott was reluctantly forced into accepting a three-way competitive evaluation process for the new submarines, but Germany and France still harboured private fears that while Mr Abbott remained prime minister he might still override the findings of this process and choose Japan as the winner.
Although none of the three bidders has built a conventional submarine as large as the 4000-tonne-plus boats that Australia wants, the German and French companies have experience in designin*g and building their submarines overseas, unlike Tokyo, which has built submarines only in Japan.
Mr Andrews told parliament this week that one of the bidders — a reference to comments made by DCNS chief executive Sean Costello — had suggested it could do more than 70 per cent of the construction work in Australia.
“That means we’re going to have more jobs, a significant part of that build, perhaps 70-80 per cent of submarines built here in Australia,” the minister said.
Mr Costello said the company could do more than 70 per cent of construction in Australia after building the first boat in France to sort out any problems that might emerge. Each of the bidders must provide three options* for the *submarines: an offshore build, an onshore build or a hybrid build combining the two.
However, the Coalition’s elect*oral vulnerability in South Australia makes an onshore or hybrid build in Adelaide the most likely option.
If South Australian front*bench*er Christopher Pyne is appoin*ted defence minister in this weekend’s ministerial reshuffle, as some have speculated, it could all but guarantee that most or all of the submarines are built in South Australia.
The forthcoming defence white paper is expected to call for eight new submarines with an option* for a further four to replace the navy’s six Collins-class boats from the mid-2020s.
The submarines are expected to cost about $20bn for construct*ion and up to $40bn to maintain throughout their service life.
