Submarines project an opportunity for manufacturing

Prime Minister Ben Chifley introducing the first Holden car in 1948.

As Holden shuts in Australia and the coronavirus ravages our supply chains, we have one last chance to restore the manufacturing supply chain capacity we destroyed: the submarine adventure

Prime Minister Scott Morrison in backing our $80 to $100bn submarine building project has effectively locked in the nation. It will be very hard for the 2022 government to cancel the 12 vessel contract.

I have written extensively on how we reached this position and the incredible risks we are taking. Today I want to look what we need to do to lock in at least some certain benefit.

The old motor industry and most twentieth century manufacturing relied on labour intensity and scale. Modern manufacturing relies on high technology, 3D printing, digitisation and artificial intelligence.

Scale is no longer important and large numbers of semi-skilled workers are not required. We had the chance to convert our motor operations to that sort of operation but suicidal union strategies and rank ignorance in Canberra destroyed our chance.

The second world war taught Australia that we need industrial strength and must not rely too much on overseas supply chains. So, the post-war government of Ben Chifley based a big part of our supply chain strategy on the motor industry and this was endorsed by subsequent Coalition governments. But by the second decade of the 21st century the lessons of the second world war were well and truly forgotten.

Australia’s Collins Class submarines have been developed into highly capable units. Picture: RAN

Coronavirus has reminded Australia that we are a remote island nation and we require a degree of self-reliance. Its vital for defence. And so, in a strange and ironic way, the actions of Scott Morrison and Malcolm Turnbull in the submarine project are akin to Ben Chifley starting Holden manufacturing.

So, let’s again look at this project and what must be done for the nation.

But first just a few reminders. We are punting that in 15 to 20 years and beyond lead acid battery driven manned submarines will still be a relevant to warfare and not a death trap; and that we can somehow overcome the fact that the US, which provides the weapons system, distrusts the French, who are designing the submarine (there are separate contracts).

While designing and building the submarines might initially cost $80 to $100bn, over their life the total cost will be way in excess of $225bn.

Bathurst born train driver Ben Chifley understood the importance of design and so General Motors Holden over time became an important car design centre.

In the original negotiations with the French, Australia aimed to become a regional submarine design centre working in partnership France. The French were too clever for us and the submarine will be designed in France with 40 or so Australians working there. The French keep the design expertise.

The great danger for Australia is that our 12 submarines will be made in the “Ikea system” where the parts are shipped in and merely assembled here. The Australian government believes we have a deal where a massive parts manufacturing investment will be required in Australia. The French will keep telling us the difficulty. However, to be fair, a number of important supply chain contracts have been signed.

Supply chain capacity

We have some supply chain capacity in the Collins class submarine (which is now an excellent vessel) and that capacity will need to be modernised and expanded.

But we will need a multitude of modern high technology parts makers around the land and the base assembly operation must also use modern technology. We are going to have to develop the required skills if we are going to use this project to establish a major modern manufacturing supply chain. We are looking at an enormous training and industrial investment which will require expertise separate from the navy and defence people.

There are some side plays. The first two submarines will have lead acid batteries. Later submarines may use new battery technologies such as nickel/ zinc or techniques we have yet to discover. However, the submarine is not suitable for lithium-based batteries in their present form.

The submarines are much larger than a normal non-nuclear submarine so they can stay down longer and travel greater distances.

That requires more batteries, more diesel engine power and more crew. That’s why the submarines are so much larger than a conventional submarine like the Collins. The great vulnerability of non-nuclear submarines is that they must come close to the surface to recharge batteries. The Australian navy reckons the submarines will be hard to detect and our submarines will minimise the charging time. Fingers crossed on detection technology developments.

There are many in the navy who believed that the best submarine for Australia was a nuclear vessel. That was also the original French view. But a nuclear submarine requires a total nuclear industry. This was not politically possible.

This is by far the biggest defence technology venture in our history and our partners the Americans shook their heads when we took the step. But we have taken it and we have to make sure than we end up with a supply chain and modern manufacturing expertise that can be used in many other areas. In that aim, we are on the same page as Ben Chifley.