A Japan Maritime Self-Defense Forces Soryu diesel-electric submarine

Japan cagey on building Australian submarines locally

Japan may have hurt its chances of winning a A$50bn contract to build submarines for Australia after failing to provide key details during a recent lobbying trip.

Japanese defence officials and executives from Mitsubishi Heavy Industries and Kawasaki Heavy Industries visited Adelaide, an Australian ship-building hub, to lobby for the contract to replace Australia's six outdated Collins-class submarines by the 2030s. 

However, the consortium's unwillingness to commit to building the 12 Soryu-class vessels in Australia during the visit was criticised by local politicians and labour unions, as was its refusal to discuss the process by which local suppliers could propose any collaboration on the project.

At a briefing last Wednesday for scores of manufacturers, the delegation was asked how potential suppliers could engage with the delegation privately to explore cooperation opportunities. The Japanese delegation said discussing such "teaming" arrangements before the contract was awarded was not allowed under the bidding process.

However, Rear Admiral Greg Sammut, head of the Future Submarine Program at the Australian Department of Defence, told Reuters that while bidders were not allowed to sign exclusive deals with suppliers during bidding, specific talks about future collaboration were fine.

"This doesn't prevent any of the participants from engaging with industry and talking to industry about their capability and how they might be able to collaborate in the future," Sammut said by telephone from Canberra.

Three Australian defence contractors who attended the briefing told Reuters the Japanese presentation also lacked key details, which is likely to add to the perception that Japan's recently revoked decades-old ban on weapons exports has left them inexperienced in bidding for global defence deals.

In particular, the delegation had not shared information on which submarine components might be open to Australian manufacturers to supply, the executives said, adding they were rebuffed when they sought one-on-one meetings.

European rivals ThyssenKrupp Marine Systems (TKMS) of Germany and France's state-controlled naval contractor DCNS have both said they would build the submarines entirely in Australia and said their bids would detail local supply chain involvement.

Jessica Thomas, a spokeswoman for DCNS in Australia, said the French contractor had held discussions with Australian industry to understand local capabilities.

"It would be impossible to submit a compliant [bid] ... without such broad ranging industrial engagement," she said.

Defence expert Rex Patrick told Reuters that both had held multiple one-on-one meetings of the kind Japan said were against the rules.

"The Japanese will have done none of this and so will not be in a position to even understand what is possible with respect to Australian industry involvement, nor appreciate the cost and risk," Patrick wrote in an article for the influential Australian Strategic Policy Institute to be published later this week.

An official from the Ministry of Economy, Trade and Industry insisted the visit went well and said the delegation met potential suppliers.

"We were able to discuss possible future cooperation with Australian companies, although Australian government rules meant we weren't allowed to discuss specific corporate partnerships," they said.

An expert advisory council expected to deliver its recommendation on the bids to the Australian government in November.

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