German defence group to visit ASC as part of $20 billion submarine bid

ADELAIDE’S shipyards will be showcased to a top-level group of German defence and government officials within days as part of the bid to build Australia’s next submarine fleet here.

24th Mar 2015


 

German defence group to visit ASC as part of $20 billion submarine bid


ADELAIDE’S shipyards will be showcased to a top-level group of German defence and government officials within days as part of the bid to build Australia’s next submarine fleet here.


German firm ThyssenKrupp Marine Systems, one of three vying for a construction project worth more than $20 billion, will inspect ASC’s Osborne site to assess its capability to build up to 12 vessels.


The delegation will include German parliamentarians, defence department officials and defence industry representatives, including those from TKMS.


It is understood ASC, formerly the Australian Submarine Corporation, will highlight new investments in the specialised submarine maintenance facility, which now overhauls the ASC-built Collins Class submarines.


This will form part of a briefing on ASC’s submarine construction and maintenance capability, including its 2600-strong workforce and access to a dedicated shiplift and wharf.


It also is understood that ASC also will emphasise to the German delegation that its suppliers are 90 per cent Australian-based firms.


The ASC visit is crucial because TKMS is offering to build all of the submarines in Adelaide if its $20 billion bid to build 12 boats is successful.


Defence Minister Kevin Andrews last month revealed German, French and Japanese builders would participate in a 10-month “competitive evaluation process”, which would consider proposals for designing and building the new submarines.


Industry insiders say the favourites for the deal are TKMS and the Japanese bid, the latter thought to be Prime Minister Tony Abbott’s preference.


The Advertiser today publishes the agenda-setting Submarine Dossier, which presents information about the Future Submarine program from industry, strategic and defence experts.


Many of them argue it is in the national interest for the new submarines to be built in Adelaide, saying this will deliver the best boats at the best price for taxpayers.


It is also estimated the program would generate more than 5000 jobs and contribute up to $5 billion to the Australian economy.


Copies of the Submarine Dossier are being sent to all federal MPs and senators, highlighting the importance of the project to the South Australian economy.


A summit on the Future Submarine Program opens in Adelaide tonight, with speakers including Defence Minister Kevin Andrews and Opposition Leader Bill Shorten.


Asked about the German delegation’s visit, Mr Andrews said ASC had already conceded it did not have the capacity to “go it alone and build Australia’s next submarine”.


“The Government wants ASC and other defence industry in South Australia to have the best chance at bidding for work,” Mr Andrews said.


“This is one reason why the Government has announced that France, Germany, and Japan have emerged as potential international partners.


“South Australia is set to benefit significantly from the Future Submarine Program. There will be more jobs, more opportunities and long-term certainty for South Australia.”


But Opposition Defence spokesman Stephen Conroy argues it is now an open secret that Mr Abbott did a handshake deal with the Japanese to have future submarines built there.


Senator Conroy says the competitive evaluation process is a sham designed to buttress Mr Abbott’s leadership, while still delivering what he wants — “less work in Adelaide and more jobs sent overseas”.


State Defence Industries Minister Martin Hamilton-Smith urged a federal commitment to maximum domestic participation in all major defence contracts to secure Australian jobs, whichever bid was successful.


“There is $250 billion worth of investment and 120,000 man years of work at risk if the Federal Government decides to send our future naval shipbuilding contracts overseas,” he said.


ThyssenKrupp Marine Systems Australia chief executive officer Philip Stanford said the delegation demonstrated the German government’s support for the Future Submarine Program.


He said TKMS, if successful, would either build all the submarines in Adelaide or construct one or two in Germany first to help train an Australian workforce and, therefore, minimise project risk.


“That decision isn’t up to us. We are more than happy to build in Australia if that’s what the (federal) Government wants,” Mr Stanford said.


Writing in the Submarine Dossier, Asia-Pacific Defence Reporter magazine commentator and submarine expert Rex Patrick says ASC should not be mandated as the builder if an Australian construction program is chosen.


Rather, he says a market-based approach might result in TKMS setting up a new facility near ASC at Osborne, or a similar approach from the French firm DCNS and its Australian partner Thales.


“A fair and proper assessment should yield the best decision for both the navy and the taxpayer,” Mr Patrick argues.


Announcing the competitive evaluation process on February 20, Mr Andrews valued the Future Submarine Program at $50 billion, including the decades of maintenance for the completed boats.


He also predicted 500 jobs would be created in SA through significant work through the building phase, including combat system integration, design assurance and land-based testing.


Originally published as Germans go on the offensive for subs bid


 

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