After two tortuous years, Adelaide finally secures Future Submarine build commitment with French firm DCNS — but how did we do it?

TWO years ago, the hope of building 12 subs in our state was all but torpedoed. Now, the future of naval shipbuilding in Adelaide is secure for decades to come. But how did we achieve this outcome? We answer your questions.

Workers standing on HMAS Farncomb, docked at ASC's Osborne shipyard.

• What the subs deals means for South Australia
• Hoping deal will keep Arrium afloat
• Sydney harbouring grudge over SA’s success
• Tory Shepherd: Diving deep into the votes
• Malcolm Turnbull: Decision strengthens our future

IT was one of the state’s most euphoric moments — the world’s most advanced conventional submarine gliding into the Port River before almost 5000 dignitaries and guests at the Osborne naval shipyard.

Midday fireworks, a thundering fly-past of naval helicopters and brassy military pomp and ceremony celebrated the August 28, 1993, launch of the first Adelaide-built Collins Class submarine, then worth $850 million.

Celebrating the then Australian Submarine Corporation’s burgeoning success as a hi-tech growth industry was a rare and distinct contrast to the pessimistic economic gloom that had gripped the state since the catastrophic State Bank collapse just two years before.

Australia was wallowing in recession. South Australia’s jobless rate for that August was 10 per cent — a figure that sparked tepid optimism because it was the lowest monthly rate for more than two years.

Launching the first submarine, the Collins, ASC chief Dr Don Williams said: “It celebrates the courage of the decision to build boats in Australia, the skill and commitment of our subcontractors here and overseas, and the ability of Australia’s workforce.”

HISTORY REPEATS

Almost 23 years later, there is a distinct sense of history repeating. A jobs and economic bonanza is being pumped into SA with the decision to build 12 submarines in Adelaide, revealed yesterday at ASC Osborne by Prime Minister Malcolm Turnbull.

Almost exactly two years ago, the Adelaide shipbuilding industry looked like heading the same way as the city’s doomed car manufacturing sector. The then prime minister Tony Abbott was widely believed to have sealed a handshake agreement with Japanese Prime Minister Shinzo Abe for his country to build Australia’s next generation of submarines, sending a $50 billion deal overseas.

TWELVE MORE: ASC workers celebrate on the Adelaide-built Collins Class sub HMAS Farncomb, docked at the Osborne shipyard.

The Australian fleet was to be built at Japan’s Kobe shipyard as part of a landmark agreement to bolster the US alliance in the region and create, for the first time, a Japanese defence export industry.

“If it’s all right for the US, the UK and Israel and France and Germany and China to export arms, why is it wrong for Japan?” Mr Abbott said in April 2014. Just days later, there was another hammer blow for SA.

A fourth air-warfare destroyer, which would have added to the three being built at Osborne in a program worth almost $10 billion, was taken off the table. It came as the state’s jobless rate reached a 12-year high.

ALL AT SEA

The fourth destroyer was to have bridged the so-called valley of death — the jobs gap between the AWD project winding down and the start of the Future Submarine program. At the time, Business SA chief Nigel McBride warned a series of very significant seismic shifts could hit SA, turning the state into a basket case. “All at sea” declared The Advertiser headline on April 11, 2014. The daily paper, a longtime campaigner for domestic naval shipbuilding, had relentlessly argued that an Adelaide build of the future submarine fleet was the best option, in the national interest.

The details of DCNS’ Barracuda submarine.

The Advertiser’s campaign for SA jobs perplexed powerbrokers at the highest levels of the Abbott government who accused the paper of being “obsessed” with a local sub build. But the apparent shift to a Japanese build represented a broken promise by the Coalition.

Four months before the September 2013 federal election, Liberal defence spokesman David Johnston stood outside ASC’s Osborne headquarters and declared: “The Coalition is today committed to building 12 new submarines here in Adelaide.” Speaking just days after the then Labor government’s Defence White Paper, he was attempting to capitalise on the failure to deliver submarines first promised to Adelaide by Kevin Rudd as Opposition leader in August, 2007.

But Senator Johnston’s bold promise would come back to haunt Mr Abbott.

Independent Senator Nick Xenophon’s popularity was further stoked by his focus on backing an SA build of 12 submarines.

The more Mr Abbott appeared to favour Japan, the greater the issue became for Senator Xenophon. In February last year, he threatened to direct his party’s Lower House preferences against the Liberals in SA if submarines were not built in Adelaide.

The Shortfin Barracuda submarine the French company, DCNS, wants to provide to Australia.

Senator Xenophon, who had 20 per cent-plus opinion poll support, had already plunged the Liberals into fear for their seats and their strategy into disarray.

SOUTH AUSTRALIAN REVOLT

Days later, Mr Abbott faced a leadership spill and SA Senator Sean Edwards wrung out a concession for his support — that SA would be given the chance to compete for the submarine deal. This resulted in a competitive evaluation process between Japan, Germany and France beginning in February 2015.

But Mr Abbott’s leadership continued to unravel. The subs issue was stinging the Liberals in safe SA seats, critically including chief parliamentary tactician Christopher Pyne’s eastern Adelaide electorate of Sturt. Mr Pyne’s influence was apparent when he appeared with Mr Abbott in August in Adelaide announcing an $89 billion continuous naval shipbuilding program centred on SA.

Frigate construction was brought forward by three years to start in Adelaide in 2020. But, despite Mr Abbott flagging offshore patrol vessel construction would start in Adelaide in 2018 to stem a jobs gap, the $50 billion submarine deal was still the big prize.

TURNBULL CHANGES TACK

When Mr Turnbull deposed Mr Abbott in September last year, a rhetorical and policy switch followed. The submarine project would become a tool of industry policy as well as a defence contract. Conveniently, Mr Pyne assumed the industry and innovation portfolios in a Cabinet reshuffle and fellow SA Liberal moderate Simon Birmingham, a key Turnbull backer, also gained influence.

The submarine project became an arm of Mr Turnbull’s new narrative after taking over as PM. Last October, he declared Australian industry would have the “highest possible” involvement in the subs program. This was further emphasised in the Defence White Paper, released in February, that the specified 12 submarines would be built.

The long-running saga reached a conclusion when Mr Turnbull yesterday named French industrial giant DCNS as the winner and committed to building and sustaining 12 subs in Adelaide. “We do this to secure Australia, to secure our island nation. But we do it also to ensure our economy transitions to the economy of the 21st century,” he said.

And, his colleagues desperately hope, seize the initiative on an issue that has frustrated both major parties for almost a decade.

We answer your key questions

When will work start on the new submarines? Construction will start at Osborne in the mid 2020s and the first submarines will be into service in the early 2030s. This will create about 2800 jobs. DCNS has said 1700 of these will be at Osborne.

What will happen at Osborne’s naval shipyard? Work will start as soon as possible to upgrade the naval shipyard, originally built in the late 1980s for the Collins Class submarine construction. DCNS will build a submarine construction workshop standing almost 30m high, so hull sections can be built vertically, rather than the traditional horizontal way.

When will a contract be signed? Prime Minister Malcolm Turnbull says talks will start straight away with the aim of signing a deal with DCNS this year. Detailed design work and training of an Adelaide workforce will start after that.

What about if the Coalition loses the election?Will the project go ahead? Labor’s Penny Wong says Tuesday’s announcement was in principle, not an announcement of a contract. She says this leaves wriggle room for the Coalition. Labor is committed to building 12 submarines in Adelaide and DCNS believes it would not overturn the contract.

What happened to the overseas build? DCNS was prepared to build the first submarine in France, to train an Adelaide workforce while Osborne’s shipyard was being upgraded. But, politically, an overseas build would have stoked fears of the Coalition overturning its promise. Australian Made Defence Campaign spokesman Chris Burns says he is satisfied all 12 submarines will be built in Adelaide.

What does this mean for the so-called valley of death? Total job numbers at Osborne will, unfortunately, continue to decline, because the project worth almost $10 billion to build three air warfare destroyers is scaling down from a jobs peak. Offshore Patrol Vessels starting in 2018 will maintain a core group before future frigates work starts in 2020. Nine ships will be built in a program worth more than $35 billion and creating more than 2000 jobs.

Will the project’s steel needs save Whyalla’s Arrium plant? No. There will be a significant need for construction steel when building work starts soon on upgrading the Osborne yards. Similarly, the steel needed for the submarines from the mid 2020s will not be in a large enough scale nor be ordered soon enough to, by itself, support Arrium.

How much work will be done in Adelaide on the $50 billion project? The bulk of the work will be done at Osborne. Like any major defence project, components and materials will be sourced and made elsewhere. Critically, Mr Turnbull says Adelaide will be home to the full-cycle dockings, as it is for the Collins Class submarines. This will extend the program’s work well into at least the 2060s.