Navy overhaul: ‘Show me the money’ mantra for shipbuilders

Australia’s plan to fast-track 11 new general purpose frigates could be seen as a risky investment by shipbuilders concerned by the cancellation of recent defence contracts.

Strategic Analysis Australia director Michael Shoebridge.

A leading defence expert says major international shipbuilders will be assessing the potential “sovereign risk” attached to Australia’s bid to acquire 11 new general purpose frigates, given a “recent history of cancelling and cutting programs that were announced with great fanfare”.

The government on Tuesday revealed it was looking at rapidly acquiring an “off-the-shelf” general purpose frigate, to replace the ageing Anzac-class vessels, through an established inter­national shipbuilding partner.

Four platforms were identified as possible options in the navy surface fleet review that was released on Tuesday.

First, the Meko A-200, a German design built by ThyssenKrupp Marine Systems, Blohm+Voss and HDW, with Egypt having ordered four of the ships in 2018.

Second, the Mogami 30FFM, a Japanese platform built by Mitsubishi Heavy Industries.

Third, the Daegu-class FFX Batch II and II, a South Korean platform built by Hyundai Heavy Industries.

The fourth and final option is Spanish company Navantia’s ALFA3000 ships.

The director of Strategic Analysis Australia, Michael Shoebridge, told The Australian: “My big take-out is that the companies are going to have that Jerry ­Maguire approach of ‘Show me the money’.”

“If I was a Japanese company I would be remembering the nasty experience of the submarine program where they were meant to be supplying Australia with a Japanese submarine and the whole thing got cancelled. And the French were given it and that was then cancelled,” Mr Shoebridge said.

He said it would be understandable for the Japanese to think “there is a bit of sovereign risk. Why should I trust Australians this time?”

“If I was the South Koreans, I would be saying this is interesting but my South Korean defence company Hanwha was trying to win a contact for infantry fighting vehicles but, at the last minute, the contract was cut by two-thirds.

“There’s a bit of a risk there for them, too.”

Mr Shoebridge also said European companies were meeting their own needs, given the rearming task as a result of Russia’s war in Ukraine. “It’s not like we are the most interesting thing on the planet for any of these four companies,” he said.

Defence Minister Richard Marles said the 11 new general-purpose frigates would be a new class of ship for the Royal Australian Navy. The government will also procure six “large optionally crewed surface vessels” which are in development in the US.

These ships will operate in combination with nine tier 1 ships including the three Hobart-class air warfare destroyers and six Hunter-class frigates (down from nine ships).

The changes will take the size of the navy’s surface combatant fleet from 11 to 26 vessels, with the first of the new general purpose frigates expected to be in service by the end of the decade.

The first three frigates will be built overseas, with construction of the remaining 11 ships to be transferred to the Henderson shipyard in Western Australia.

While the government said it would funnel $11.1bn towards the new fleet over the next decade, Mr Shoebridge said the timeline for the delivery of all 11 new frigates was unclear.

“I think the latest they could actually sign a contract with any expectation of getting a ship by 2030 would be 2026. But I think they need to sign a contract in 2024 (and) the ships delivered earlier,” he said. “Navy and Defence have two-year delivery drum beats for other programs. If you get the first frigate in 2030, it would be 20 years before you get the 11th …

“With a one-year drum beat, you could get them by the early 2040s.”

Mr Shoebridge said there was “no detail about delivery” and it might take longer than expected for the first three frigates to be built overseas.

“To get ships like this for under $1bn built in Australia would be difficult,” he said. “To me, the budget already looks under pressure.”

The government said over the next decade, at least 3700 Australian jobs would be supported by plans to upgrade Australia’s surface combatant fleet.

The blueprint unveiled on Tuesday will sustain 2000 jobs and create an additional 500 jobs in South Australia over the decade, with construction of the Hunter-class frigates to commence at the Osborne shipyard this year.

A further 1200 jobs will be created in WA over the same period, with the state to be become the industry hub for the new general purpose frigates.

Eight of the new frigates will be built at the Henderson precinct, with the government saying this would enable a “pathway” to build six new “large optionally crewed surface vessels” in WA, each armed with 32 missile cells, although it is the intention of the navy to crew the vessels.