Japan pitches manufacturing boom with $10bn frigate bid

Japan is vowing to kick-start an advanced manufacturing boom in Australia’s defence sector if the government selects its Mogami-class frigate for a $10bn-plus contract to build the navy’s newest warships.

The Mitsubishi Heavy Industries-built Mogami frigate is considered the frontrunner in the race with Germany’s ThyssenKrupp for Australia’s $10bn-plus frigates contract

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Japan is vowing to kick-start an advanced manufacturing boom in Australia’s defence sector if the government selects its Mogami-class frigate for a $10bn-plus contract to build the navy’s newest warships.

The country’s top diplomat in Canberra said at least 12 major Japanese companies were preparing to invest in Australia if its bid was successful, while promising valuable international exposure for top Australian defence firms.

The pitch, during a briefing to stakeholders by Japan’s Mitsubishi Heavy Industries, came less than six months out from a cabinet decision between MHI’s upgraded Mogami frigate and Germany’s MEKO-A200, offered by rival shipbuilder ThyssenKrupp.

Japanese ambassador Suzuki Kazuhiro said “building future naval vessels locally with Japanese guidance” would usher in “real industrial co-operation between our two nations”.

“Many Australian tier two defence firms have excellent technologies, but unfortunately, remain little known in Japan. Why? Because a Japanese (defence) company has not operated here yet,” he said.

“If MHI wins the contract, 12 global Japanese companies would invest in greenfield shipbuilding operations here in Australia, kick-starting advanced bilateral industry collaboration.

“Accompanying synergies and spillover effects in defence and beyond will be conspicuous given the scale of Japan’s foreign direct investment here, and … this will support advanced manufacturing and productivity in a highly educated, high-wage country like Australia.”

Japan’s ambassador to Australia Suzuki Kazuhiro. Picture: Adam Taylor

Mr Suzuki said handing MHI the contract would also cement Japan’s quasi-alliance with Australia, sending a “powerful message … because deterrence is, after all, about psychology”.

“Japan and Australia held 39 joint exercises last year, including multilateral ones – roughly one in every nine days somewhere in the world,” he said.

“To deepen this co-operation, standardising equipment is really the key. That requires a shared defence industrial base, which will improve the resiliency of both our forces and industry.”

The Japanese bid is seen as the favourite, with the frigate out-­gunning the German ship with 32 vertical-launch missile cells compared to the MEKO’s 16.

While the vessel is likely to be more expensive, it is designed to operate with a crew of 90 compared to 120 for the MEKO, which is likely to be a major consideration for decision-makers given the Australian Defence Force’s personnel crisis.

It also has a claimed service life of 40 years compared to 30 for the German ship.

A MEKO-A200 frigate built by Germany’s ThyssenKrupp Marine Systems. Picture: TKMS

But the Mogami is considered the more risky option for the general purpose frigate contract, because the winning bidder will have to build eight ships in Australia after an initial three in its own yards – something Japan has never done before.

MHI’s senior vice-president for defence and space systems, Masayuki Eguchi, tackled the issue head-on, saying while the company didn’t have a record of transferring technology to Australia, it had “plenty of experience and record of technology transfer to the United States and others”.

Japan is still scarred after losing a bid to build Australia’s next-generation submarines to France’s Naval Group, which ultimately lost the contract when the Morrison government committed to the AUKUS partnership.

Mr Suzuki said he believed Japan’s was the better frigate proposal but if it was beaten to the contract, the countries’ relationship would not be affected.