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  • Leader
    December 17, 2018

    The competition for a A$50 billion ($34.55 billion) contract to build
    Australia's next submarine fleet is narrowing to a race between Japan and France
    as a bid from Germany's ThyssenKrupp Marine Systems (TKAG.DE) (TKMS) loses
    ground over technical concerns Cheap
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    , multiple sources said.

    Australia is expected to decide the winner of one of the world's most
    lucrative defense contracts within the next six months, ahead of a national
    election in which the deal and the jobs it will create is expected to be a key
    issue for the conservative government.

    TKMS is proposing to scale up its 2,000-tonne Type 214 class vessel, while
    Japan is offering a variant of its 4,000-tonne Soryu boats made by Mitsubishi
    Heavy Industries (7011.T) and Kawasaki Heavy Industries (7012.T).

    France's state-controlled naval contractor DCNS has proposed a
    diesel-electric version of its 5,000-tonne Barracuda nuclear-powered submarine.

    Australia has said it wants a boat in the
    4 Cheap Nike Air Max
    ,000-tonne class.

    Scaling a submarine to twice its original size presents exponential technical
    challenges, experts say.

    That puts TKMS furthest from having the experience to offer what Australia
    wants in a large, long-range, stealthy submarine to replace its aging
    Collins-class fleet, said six industrial sources in Asia and Australia with
    knowledge of the situation.

    "The German proposal is an enlarged version of a smaller existing submarine,
    and that technically is risky Cheap
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    ," said one source.

    TKMS and one of the sources in Australia, who has decades of experience in
    the global arms industry, cautioned against jumping to conclusions as each side
    jockeys for the best outcome in what may ultimately be a political decision.

    Australia wanted a partner to design and build a new submarine, which
    neutralizes any perceived advantage with existing bigger boats, said TKMS
    Australia Director Jim Duncan.

    "The rumors could well be right. Who knows," Duncan told Reuters when asked
    to respond to what the industrial sources said. "My only
    advice Cheap Nike Air Max
    , having spent many years in this environment is: believe
    nothing that you hear and only half of what you see."

    Officials at the Future Submarine Program at the Australian Department of
    Defence did not respond to a request for comment.

    DCNS Australia CEO Sean Costello declined to comment on his competitors, but
    said experience in large submarine design was critical for the Australian


    Tokyo was initially seen as the frontrunner, partly due to close ties between
    Japanese Prime Minister Shinzo Abe and former Australian Prime Minister Tony
    Abbott, who was ousted in a party coup by Malcolm Turnbull last September.

    With Turnbull quiet on the matter, Japan is touting its offer as a way to
    build military ties between two allies in Asia.

    But Tokyo, which until two years ago had a decades-long ban on arms
    exports Cheap Nike Air Max
    , has been hobbled throughout the process by a lack of experience in
    managing overseas defense contracts and the shifting political tide in Canberra.

    With Australia facing an economic slowdown, that has put job creation and
    innovation atop the political agenda.

    Japan was slow to commit to build all vessels at South Australian shipyards,
    a politically significant pledge that both DCNS and TKMS made quickly.

    At the same time, DCNS and TKMS pledged to share sensitive technology with
    the Australian government and promised packages of economic incentives.

    Australia's Defence Department is formulating a recommendation based on
    materials submitted by the bidders late last year and is expected to give that
    to cabinet as early as March.

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