Submarines Down Under
Japan Loses Aussie Submarine Bid to France

It’s official: Australia selected France to build its submarines today, dashing Japan’s hopes that it could use the contract to launch a new era of weapons manufacturing. The FT:

DCNS of France has beaten competitors from Japan and Germany to win a A$50bn contract to build a new fleet of 12 submarines for the Australian navy.

Tuesday’s announcement deals a blow to Shinzo Abe, Japan’s prime minister, who lobbied hard for a contract that would have boosted defence ties with Canberra and bolstered plans to build an arms export industry.

Insiders in the bidding process believe Japan’s bid failed mainly due to concerns over the ability of Mitsubishi Heavy Industries and Kawasaki Heavy Industries to transfer technology to Australia, where the submarines will be built, and its inexperience in delivering big defence export projects.

Gen Nakatani, Japan’s defence minister, said he would seek explanations for why Japan lost out.

The death of Japan’s bid was reported last week, so this isn’t an immediate surprise. Still, it’s both a personal blow to PM Shinzo Abe, and a disappointment to those within the U.S. who were hoping that the deal would cement ties between Tokyo and Canberra. The FT notes that Australian officials asked Washington to “help manage the Japanese reaction” to the rejection.

By the looks of things, however, it appears that the Japanese did this to themselves:

People on both the Australian and Japanese sides of the bidding process told the Financial Times that Japan’s proposal had been the weakest in commercial terms, with the country’s inexperience obvious throughout.

The Japanese did not establish until well into the bidding process that Mitsubishi Heavy Industries would take the lead, the documents were presented in a way that caused the Australians to demand substantial revisions, and the teams that travelled to Canberra were an unwieldy mix of bureaucrats and business executives who had not worked together before.

If Abe’s dream of having Japan emerge as a leader in the defense industry is to materialize, all those involved in this failed bid will have to look closely at just what went wrong. There is, it appears, lots of room for improvement.

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