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Gregory Copley[1]
The Australian defence industry, Department of Defence and Royal Australian Navy (RAN), and the Australian Parliament are engaged in an increasingly complex debate over whether or not to develop the local shipbuilding industry to build and support large naval vessels. Significantly, the Defence Department and RAN, as well as much of the industry, has thus far taken a short-term view and has argued against developing a major national maritime industry expansion to cope with future national maritime requirements.
Gregory Copley, Director of Future Directions International (FDI) Pty Ltd. and FDI Research Committee Chairman, was asked to testify before the Australian Senate Committee on Foreign Affairs, Defence, and Trade’s Inquiry Into Naval Shipbuilding on 3 April 2006, due to his background in strategic analysis and naval shipbuilding. The testimony is reprinted with the permission of the author.
It is upon the Navy, that under the good providence of God, the wealth, prosperity and peace of these islands and of the Empire do mainly depend.
— The Articles of War, the Royal Navy
The Committee’s Inquiry looks at four parameters of vital interest to Australia’s strategic position:
a. The capacity of the Australian industrial base to construct large naval vessels over the long term and on a sustainable basis;
b. The comparative economic productivity of the Australian shipbuilding industrial base and associated activity with other shipbuilding nations;
c. The comparative economic costs of maintaining, repairing and refitting large naval vessels throughout their useful lives when constructed in Australia vice overseas; and
d. The broader economic development and associated benefits accrued from undertaking the construction of large naval vessels.
This submission addresses these terms of reference in a broader strategic framework which is essential to seeing the specific questions within the context of Australia’s strategic requirements.
Former US Secretary of State Henry Kissinger once changed the old homily when he stated: ‘If you don’t know where you’re going, any road will take you there.’ This witness, in a current strategic manual, suggests, rather: ‘If you don’t know where you’re going, any road will ultimately lead to disaster.’ And current pressures on defence spending and on the workload of Australian Defence officials have brought their concerns down to more-or-less immediate and short-term considerations, rather than on the long-term grand strategic and military strategic requirements of Australia.
The Defence Department, in its submission to this Inquiry, questioned the wisdom of building large warships in Australia, warning that local construction had the potential to hurt the wealth of the nation by drawing scarce skills away from non-defence projects, and noted that there was ‘no strong strategic reason’ to build the Navy’s next generation warships in Australia.[2]
That argument reflects, nominally, only short-term concerns about labour availability, but more realistically, reflects the Navy’s traditional ‘cultural cringe’ about Australian project leadership. It does not reflect the ultimate strategic reality in which Australia must survive and prosper over the next half-century, and that the RAN must reverse its century-long failure to fully embrace and work with the national infrastructure.
Similarly, the arguments in the submission by Western Australian small-vessel shipbuilder Austal that local shipbuilding capabilities could not compete in commercial or naval markets for very large steel ships, such as the planned amphibious vessels for the RAN, and that construction of such vessels could hurt the existing shipbuilding industry by draining its workforce, are short-term, self-serving to the company, and fail to address the actual strategic realities in which Australia should function when making such a vital national decision as the Inquiry is addressing.
The submission by Adelaide-based submarine and surface combatant builder ASC that the Navy’s future warships should be built more on commercial lines, with far shorter service lives, to avoid ‘costly mid-life refits’, also reflects self-serving approaches to the subject, and fails to consider the historical reality of defence systems development or Australia’s strategic requirements.
Moreover, the strategic environment in which Australia must operate within the next decade – quite apart from the contextual realities of the next half-century – are changing so substantially that basing decisions on the viability of large-ship naval construction solely on short-term commercial parameters could severely jeopardise Australian security and economic competitiveness in the longer-term.
The Australian public expects that the Senate will, on all matters, act as the chamber of review on all aspects of the governance of the Commonwealth, and therefore take the longer-term and broader view of issues, helping the government and society to think beyond immediate pressures and short-term desires. And it is upon the matter of Australia’s maritime dependencies which the foundation of the national strategic interests lies in the longer-term.
Moreover, failure to provide for the maritime mission to the fullest would do a great disservice to the Royal Australian Navy, which is arguably, in almost all respects, one of the most capable, efficient, and highly-regarded navies in the world, man-for-man and dollar for dollar.
1.1. Maritime Trade Dependence: Australia is significantly more dependent on maritime trade for its economic and strategic survival than at any time in its history, and will become more dependent on this aspect of its life over the coming decades. It is, in fact, far more dependent on maritime trade for continued prosperity and survival than was the United Kingdom when it operated with the Royal Navy’s Articles of War, and the pertinent chapter cited at the head of this Submission.
Australia’s present fortunate strategic circumstances, for example, do not reflect any immediate, or immediately-foreseeable threats to the delivery of vital commodities, such as energy, to Australian shores, nor a threat to Australian commodity exports caused by actions of a hostile maritime nature. However, the degree of dependence on such exports and imports, and the nature of potentially hostile capabilities impacting Australia is changing now and is expected to change dramatically over the coming decade.
Australia’s present production of petroleum was expected to decline by 15 per cent in 2003-04, and again further in FY 2004-05.[3] In fact, Australia’s self-sufficiency in crude oil production fell from 90 per cent in 2001 to 70 per cent in 2004. In other words, 30 per cent of Australian oil, by 2004, had to be imported; a major change from just three years earlier. More dramatically from an Australian strategic perspective, over the next decade from 2004 (i.e. by 2010), Australian self-sufficiency was forecast to drop to somewhere between a further 20 per cent and 50 per cent, a factor which places a significant demand on the onshore and maritime infrastructure requirement for Australia. And even of the domestic production of energy, militarily vulnerable offshore oil and gas in 2004-05 supplied some 85 per cent of national energy demand. As well, most major Australian hydrocarbon prospects lie offshore, as do the resources being tapped for Australia’s most significant LNG exports to buyers such as Japan and the People’s Republic of China (PRC).[4] The vulnerability of the most vital Australian strategic assets, then, is substantial, which accounts substantially for the devotion of Australian special forces resources and deployment to essential infrastructure protection.
In a conventional conflict environment, Australia’s offshore energy infrastructure would be substantially more vulnerable even than in a period of unconventional (terrorist/subversive) threat, placing the greatest onus for protection on the Navy and the Air Force. The broader threat context is discussed in detail later in this submission, but includes the changing reality of growing naval capabilities and clear evidence of maritime strategic intent by the navies of the PRC, India, Malaysia, Indonesia, Iran, Israel, and Pakistan.
In particular, changes are occurring in the regional security situation, including (i) very substantial changes in the naval capabilities of India and the PRC, projecting more strongly into the Indian Ocean and with a view to dominance of choke points and sea lanes of communications (SLOCs) vital to Australian trade; (ii) the growing possibility of strategic competition between India and the PRC, not in the immediate term, but within a decade and beyond [i.e. during the anticipated life-cycle of the proposed Australian naval vessels], which could involve the security of vital Australian maritime imports and exports; and (iii) the proportionately declining capability of extra-regional Australian allies (US, UK, Japan) to substantially act within the Indian Ocean maritime environment to the benefit of Australia.
1.2. The Changing Geopolitical and Threat Environment: At all times in an historical perspective, the linear projection of past, or existing, threat/conflict environments has failed to adequately prepare a nation for the future. Defence forces traditionally prepare ‘to fight the last war’. Australia’s defence planners have made remarkable progress in overcoming this syndrome. However, although the RAN is, in fact, gearing toward a role in coping with a ballistic missile threat to the fleet and to Australian infrastructure (with the acquisition of Air Warfare Destroyers), there is little evidence that full account has been taken of the substantially changing global strategic environment which will challenge Australia over the coming half-century. This goes well beyond a mere understanding and extrapolation of defence technology and weapons trends, and goes into an understanding of the changing nature of sovereignty, and historical aspirations of competing societies.
Some of the longer-term aspects of the strategic framework in which Australia must operate were outlined in the paper Can Australia Survive the Next 50 Years?, presented to the Australia-Israel Chamber of Commerce Future Paradigms series of lectures, on 28 March 2006, in Perth.[5]
Fundamental to the emerging ‘Age of Global Transformation’ is the reality that sovereignty issues are transforming substantially, and that India and the PRC, in particular, are engaged in a major strategic process which has a number of variables which could lead to (a) strategic implosion within the PRC, leading to possible external misadventures; (b) strategic competition between India and Pakistan; (c) strategic competition between the PRC and the United States; (d) possible unmanageable disintegration of Indonesia due to the already-evident ‘fissiparous tendencies’ within what could be described as the Indonesian (Javanese) Empire, with profound implications for Papua New Guinea, Australia, and the key South-East Asian SLOCs; and (e) major strategic changes with regard to Iran and other Middle Eastern and Horn of Africa nations, again vitally impacting SLOCs critical to Australia.
Already, within the coming year or two it is possible that Australian maritime trade could be substantially impacted by a resumption of the Eritrea-Ethiopia conflict, possibly jeopardising the security of the Red Sea/Suez SLOC. As well, within the coming year or two, it is possible that Iran could embark on strategic, hostile military operations against Israel (and other Western targets), resulting, significantly, in closure of the Persian Gulf/Strait of Hormuz SLOCs and Indian Ocean-based naval actions between Israel and Iran.
Within this framework, even in the short term, it is clear that Australia’s interests only coincide with, or overlap, US strategic interests to a certain degree, and that Australia must undertake military planning which is independent to some degree from US operations.
Increasingly, over the coming decade, and particularly beyond the coming decade, Australia will have strategic military interests which are distinct from those of the United States, and Australia cannot expect to be dependent upon the US for strategic protection. This is not to deny the ongoing need for a strong US-Australia strategic relationship.
Australia’s trade and strategic relationships with a variety of Asian states had, by 2006, already caused differences in priorities between the US and Australia, differences which, at this stage, caused no US-Australia friction. However, it cannot be assumed in the longer term that Australia and the US will always have an identity of interest on all strategic issues. Moreover, it would be unreasonable to expect that Australia should be able to expect to rely on the United States for its strategic survival. Indeed, giving the changing strategic framework, it is as likely that the US will depend as much in, say, two decades, on Australia as Australia depends on the US.
Moreover, Australia has now spent a century as a strategic dependent of, first, the United Kingdom, and later as a strategic dependent of the United States. It is clearly time, given Australia’s growing needs and the changing environment, that Australia begins to assume strategic responsibility for its own survival, not merely as a junior partner in a coalition condition but as a leader in its own right. Whether Australia wishes to face this challenge or not, the reality is that it has no alternative to the assumption of mastery over its own fate, or face relative strategic decline in relationship with the region.
Everything about the changing – and increasingly fluid – strategic environment facing Australia impacts on the missions of, and demands on, the Royal Australian Navy, and yet the principal considerations with regard to Australia’s ability to sustain itself as a maritime-dependent nation have failed to take into account maritime industrial self-sufficiency or leadership.
The specifics of the growing asymmetry between Australia’s blue water naval capabilities and those of other regional and extra-regional powers since the 20th Century need further detailed study. Until this point – that is, from the late 19th Century colonial period and throughout most of the 20th Century – Australia’s strong naval professionalism, including its ability to sustain global naval projection gave Australia a marked strategic advantage over all other regional powers, including the People’s Republic of China. That is no longer the case. Not only do other regional powers (including India, and, to a degree Pakistan and Iran) have a strong blue water naval projection capability, a number of states now are beginning to assume naval supremacy over Australia in a numerical and technological sense.
Even disregarding the PRC’s substantial penetration of the Indian Ocean (which represents only part of Australia’s maritime region of interests), the Indian Navy (IN) is substantially more capable already in many areas of maritime power projection. At present, and within the framework of foreseeable conflict scenarios of the coming decade, this should not represent a threat to Australian interests, but in the event of an India-PRC conflict – which on no account can be absolutely discounted – India would find Australia’s ongoing supply of LNG to the PRC of strategic concern, placing the question of vulnerability of Australian energy facilities at the centre of the equation.
India already has deployed naval surface-to-surface weapons systems (such as the BrahMos supersonic anti-shipping cruise missile, against which the RAN has no existing or potential guaranteed defences. [BrahMos is a modified and advanced version of the Russian 3M-55 (SS-N-26) Onyx anti-ship missile.] The PRC has a similar capability in the SS-N-22 Moskit (Sunburn) ASM (anti-shipping missile), currently deployed in the Indian Ocean.[6]
[Significantly, the PRC’s People’s Liberation Army-Navy (PLAN) is already deploying high-speed catamaran warship technology copied from Australian technology, but coupled with advanced surface-to-surface missile capability. In other words, China has taken Australian maritime technology and coupled it with other systems to achieve a naval capability which Australia has yet to match. When FDI raised the matter of the PRC’s unlicensed acquisition of the catamaran technology with Austal, the Western Australian shipbuilder which originated it, the company replied that it was beyond China’s capability to copy the Austal technology, a statement which defies logic.]
India currently maintains a fleet-deployed naval air capability which Australia cannot at present match, and India is building a substantial extension of its maritime air power component with two new major carriers (with fourth-generation MiG-29MKI fighters, superior to Australian tactical aircraft), and expanded shore-based, long-range maritime air capability, all with offensive strike capability (air-launched BrahMos, apart from other systems). The PLAN is also planning its foray into carrier-based air power within a decade or so.
In the submarine field, India and the PLAN already field substantial, advanced capabilities which, although possibly not at the same qualitative capability of Australia’s Collins-class submarines, certainly surpass Australia’s capabilities in terms of numbers. In this regard, Pakistan’s submarine capabilities are growing, and have a capability in the area of Australia’s SLOC interests, while ASEAN navies certainly are adding to their submarine capability in areas of Australian SLOC interests. At the same time, Iran’s clerical Government not only has a significant submarine capability with three imported Russian Kilo-class (Proj. 877 EKM) submarines, it also has a stated intent to block Western (including Australian) interests in acquiring oil through the Straits of Hormuz linking the Persian Gulf with the Indian Ocean.
The maritime threat environment is, therefore, becoming more dense, more complex and capable, and more potentially hostile, at a time when Australia will be required to be strategically more self-sustaining and more capable.
The longer, then, that Australia delays in acquiring the instruments of an independent, self-sustaining maritime defence capability, the more it places itself in jeopardy.
2.1. Australia’s historical naval shipbuilding capabilities. Australia has for a century proven capable of building, and even designing, warships and commercial ships of all sizes and missions. Indeed, the construction of ships is a technology which has long been mastered by Australia. The only questions which arise, from the standpoint of this Inquiry, are the matters of (i) cost-effectiveness, and (ii) advanced systems integration. The hull and propulsion systems, on average, are valued at 40 per cent or less of the overall system (i.e. the total warship), and these aspects (hull and propulsion) represent the least complex aspects of the projects.
It is significant, then, that Australia has, with very few exceptions, opted for foreign designs when selecting its major warship solutions.[7] Australia has the demonstrated capability to design, build, and integrate complex ships, including naval vessels. The design development and systems integration entailed in the Collins-class submarines demonstrated that scale and complexity were within Australia’s grasp. Moreover, it is significant that the United States Navy (USN) is currently considering an Australian advanced catamaran design solution for its Littoral Combat Ship (LCS) following the successful – albeit almost forced – decision by the Royal Australian Navy to use an Australian civil catamaran solution (HMAS Jervis Bay) as a logistical solution during the East Timor transition from 1999 onwards.
It is logical to assume, then, that an Australian capability exists to evaluate the specific Australian mission requirement for a new amphibious ship, and then to design a ship specifically for that requirement, and build it. That is well within the Australian skill-set. Moreover, with the same creative Australian private-sector input which developed the high-speed catamaran solutions for the LCS competition in the US (and, indeed, for China’s new class of patrol catamaran), it is probable that a more cost-effective solution could be achieved to the true strategic requirement than from the foreign competitors currently bidding for the two-ship contract.[8]
2.2. Australian Submarine-building Capabilities. Australia proved, with its construction of six Collins-class conventional patrol submarines, that it had, at considerable cost to the taxpayer, been able to build some of the best submarines in the world. Despite the media’s desire to repeatedly transform developmental challenges into ‘problems’, and repeat them, ad nauseum, as clichés, the Collins-class built by ASC has proven to be almost unparalleled in terms of its silence of operation, perhaps only bettered by Japanese-built submarines. It has repeatedly proven its capability to defeat even US anti-submarine warfare sensors in rigorous fleet exercises.
But despite its success, and despite the reality that neighbouring powers are now eclipsing Australia’s great power projection capability with the Collins, due, if nothing else, to their ability to field greater numbers of good boats – such as the Kilo-class and Improved Kilo-class of Russian-built SSKs – Australia has allowed its submarine-building expertise to wither away. If considerations of economic viability were all that were at stake, the Australian Government would not now attempt to teach a submarine builder how to be a major surface combatant vessel builder, granting ASC the contract to build the three Air Warfare Destroyers (AWDs). There will be an expensive learning curve in that exercise, but to what end? If the Commonwealth was committed to ensuring the retention of industrial capabilities within the country, then why would it consider allowing the ASC submarine skills to be eroded? The move begs the question as to whether it would have been better for Australia to have committed to (a) building more Collins-class submarines for the RAN, improving the design as it moved forward; and/or (b) pursuing, as it should have done from a much earlier time, the sale to the export market of Collins-class boats, instead of accepting ‘conventional wisdom’ that the vessels were ‘too expensive’ for the world market.
While it may have been desirable to also build an advanced surface combatant capability at ASC, in order to create competitive advantages with existing frigate-builder Tenix, it should be recognised that the decision was taken for strategic and political reasons, not based on developing an economic – or even an optimal infrastructural – rationale for the naval shipbuilding capability of Australia. Indeed, the momentum to build up the long-term capabilities of Australia in this sector at one stage seem then to be overturned at the next stage by jumping to new projects. Thus, skills are built for the long term, and then abandoned, indicating a lack of a consistent, bipartisan understanding of Australian strategic needs spanning the terms of governments.
2.3. RAN Project Support Capabilities. In the run-up to the delivery of the Collins-class submarines to the RAN by ASC in 1993, the RAN lost its long-held in-house capability to manage refits for the Oberon-class submarines, which had been in RAN service for some three decades. The RAN had, because of budget constraints, moved so much of its capability from ‘tail’ (i.e. support) to ‘teeth’ (i.e. combat capability) that it lost its ability to manage routine tasks which hitherto had been handled without question. As a result, the Oberon-class submarines left service prematurely and Australia experienced an unnecessary capability gap before full service capability had been achieved for the Collins-class.
It is possible that the real problem is not the capability of Australian industry to meet the design, build, integration, and support needs of the RAN, but, rather, the confidence level of the Royal Australian Navy and the Defence Department. Whereas many governments suffer from a ‘not invented here’ syndrome, favouring local thinking over foreign, the reverse is true in Australia, not just with regard to Naval shipbuilding, but to many aspects of defence thinking. Such a mentality condemns Australia to a ‘junior partner’, or follower, position into the indefinite future, with the unfortunate reality that Australia may not have access, within a few decades, to a ‘senior partner’.
3.1. Direct economic productivity. It is generally assumed that in the construction of low-value-added ships – large oil tankers, bulk carriers, and similar vessels – countries with low skill-sets and low wages have an advantage. This is certainly true when the predominant portion of the vessels’ costs is in steel assembly and engine installation. It is not true of higher-value-added vessels, such as warships, or even specialist ships such as research vessels, and even some LNG carriers. The measure of this lies in the reality that high-wage states, including the US, Canada, Italy, France, Spain, Germany, the Netherlands, the United Kingdom, Sweden, Israel, and others, all maintain viable shipbuilding, and particularly warship-building, industries. Significantly, high-wage countries such as Israel, Sweden, Denmark, and others which maintain sophisticated warship construction capabilities are significantly smaller in resource, and overall GDP terms, than Australia.
3.2. Economic productivity versus strategic security. Economic productivity has as much to do with the relative commercial appeal of certain forms of risk, and optimal approaches to capital formation, as it does with direct economic viability of a project. In some instances, then, certain forms of investment may be less attractive to normal commercial investment than others. However, certain forms of infrastructural investment are vital to develop a long-term national strategic capability, and the support of a national security capability certainly falls within the category of a vital strategic requirement.
All major powers in the world achieved their status by long-range planning, usually commencing their focus some 50 years in advance of realisation. Australia, although progressing gradually, albeit often erratically, toward improved wealth, has not yet begun to undertake coordinated planning for the long-term, independent strategic positioning of the nation in a ‘grand strategy’ sense.
As a result, the planning for an economically viable, strategically critical naval construction and support capability within Australia has never occurred. Australia, for commercial reasons, and during the two World Wars, developed an innovative, world-class shipbuilding, aerospace, and defence industrial capability, much of which was not only allowed, but encouraged, to dissipate with the end of major hostilities so as not to compete with ‘parent’ British capabilities. It is worth recalling that Australia developed the first motorised torpedo in the world, as well as developing many of the initial, and follow-on, milestones for the world aerospace industry, and in all instances abandoned the leadership it should have retained in these arenas.
Theodore Roosevelt, before he became US President in 1904, was appointed as Assistant Secretary of the Navy in 1897, after having already authored the well-received History of the Naval War of 1812. It was from that early ‘bully pulpit’ that he began to shape the destiny of the United States as a great, self-sustaining and wealthy power by ensuring the US had the ability to defend its seaways. He not only foresaw the changing global strategic dynamic, he also understood the specialist technologies which were then required to develop the US shipbuilding industry to make it independent of foreign supply. This marked the beginning of US strategic capability, which blossomed into certainty – and success – when the US went to war with Spain in 1898.
What is significant is that the US consistently pursued maritime leadership from that time, and its major compromises as a strategic power were when it neglected shipbuilding leadership (such as the belated move of the US Navy from battleships to carriers, which not only penalised the US at, and following, Pearl Harbour, but also can be said to have created the sense of vulnerability which allowed Japan to contemplate the Pearl Harbour and Philippines attacks – immediately followed by the attacks on Darwin – in the first place).
Australia’s shipbuilding industry, in the private sector, has demonstrated a strong capability toward innovation, speed, and economy of action. Australian ship exports have grown significantly, including the export sale of Australian designed and built patrol vessels during the past few years to the Republic of Yemen (10 Bay-class-derived fast patrol boats for the Yemen Navy; patrol vessels for the Kuwaiti Ministry of Interior, etc.). Moreover, Australia in the 1990s and early 21st Century successfully built an entirely new submarine construction industry and a new class of submarine (Collins-class) which surpassed virtually any other conventional submarine capability in the world. The fact that the then-Government-controlled Australian Submarine Corporation (now ASC) failed to capitalise on this capability in the export marketplace reflected not that the industrial capability was inferior, but that the corporate management
and export experience were insufficiently experienced and open to competing on the world market[9] Moreover, it is worth comparing the fact that Sweden, a country substantially smaller than Australia in population and GDP terms, not only designed and produced the original submarines on which the Collins-class was based, it also produces one of the few fourth-generation advanced fighter aircraft in the world[10]
The development of advanced technology defence systems, from aircraft to ships, creates a broad network of technological and scientific value throughout the national economy. Participation in defence projects as a component manufacturer creates little other than direct employment. The Committee is urged to study the development of the Israeli Rafael family of companies, which began entirely in the defence sector and now – while still undertaking key defence research, development, and production pertinent to Israel’s unique security requirements – creates spin-off companies which utilise the capabilities in the civil sector. The measurable contribution to the Israeli civil economy is in the billions of dollars, but the immeasurable contributions in security and in stimulating a base of research, and capabilities, are possibly more valuable.
An Australian commitment to full management of Naval ship construction, from conception, through to design, manufacturing, systems integration, and support, can be both directly and indirectly profitable. There is little doubt that it will compete with other sectors of the economy for capital formation and employment, and this generates a challenge for the private and public sectors. However, the failure to make the commitment has a higher, and more dangerous longer-term cost to the society.
The appeal of other capital investments and the demand of other employers currently facing the Australian economy is short-term and will pass or change in nature. The requirement for Australia to develop an independent, self-sustaining and deep strategic industrial capability is long-term, critical, and overdue. Simply stated, Australia cannot expect to become a major strategic power if it does not develop and mature its critical strategic industrial infrastructure as quickly as possible. And if it fails to become a major strategic power, given the current and foreseeable changes in the global strategic framework, then it will gradually deteriorate in terms of its ability to determine its own destiny, including its economic and social outcomes.
4.1. The cost of maintaining, repairing, and refitting large naval vessels throughout the service lives will remain more economic if appropriate skills and facilities exist in Australia compared with undertaking such actions abroad. The cost must be measured not only in direct economic terms, but also in terms of (i) the ability to maintain acceptable overall fleet operational readiness levels while individual ships are off-line for maintenance or repair; and (ii) the risk to the actual ability to have critical work undertaken on the vessels in times of crisis. In most instances, in other words, it would be necessary to have larger numbers of vessels available – with commensurate manning and initial capital costs – if one or more vessels are to be rotated through maintenance, repair, or refit at any given time.
4.2. The suggestion by one Australian company (ASC) that the RAN should consider having ‘commercial standard’ vessels built for naval combat operations – in other words, ships built to a lighter construction standard than warships – so that they would be more economical to build, and thus could be discarded rather than having their service lives extended through refits and upgrades, does not reflect the reality of the combat environment.
Firstly, there are many instances in which vessels built to a purely commercial ship standard would not meet appropriate survival or operational criteria in true conflict situations. For example, combat vessels not only need to be kept afloat after being struck by a weapon or suffering (for example) a collision at sea, as do all ships under the Safety of Life at Sea (SOLAS) requirements, in order to help ensure the safety of crew, the reality is that warships must often continue in operation after suffering combat damage, and the reality is that merely ‘saving lives’ after an initial hit is often not able to considered. Subsequent damage in a combat situation is possible – unlike a merchantman which has suffered an accident – and the necessity exists for the warship to continue its combat functions for as long as possible.
Secondly, in most instances, the ship – the hull and machinery – is not the main technological or cost concern; it is the overall system. Service life extensions and mission changes are the norm; they are not the exception. The ship is merely a platform, and upgrades to offensive and defensive systems, sensors, and other functions are ongoing. Indeed, it is the need to modify weapons systems ‘on the fly’ to perform new missions which is the most pressing need when a crisis hits. The modification of ships, aircraft, and other systems by the British forces during the Falklands crisis in 1982 was profound and urgent; there was no question of weapons systems being taken off-line for protracted periods of time (or to be sent abroad) for modifications or service. The requirement must be met in-country. Australia’s urgent response to the East Timor crisis, with the rapid acquisition, militarisation, and use of the commercial ship, the Jervis Bay, was another example.
That is not to deny that progress in technology and techniques in the commercial shipbuilding and ship repair sectors should be studied, and used, by the naval shipbuilding sector. The cross-fertilisation of skills, technologies, and techniques has been long overdue. However, it would be a mistake to believe that ‘commercial shipbuilding approaches’ can satisfy the combat naval requirement. The construction of the Austal Armidale-class warships to commercial standards, for example, and the use of unarmoured aluminium hulls and superstructures means that those warships have limited viability in a true combat environment. They are useful only as patrol ships in unopposed power projection missions. And the ‘successful’ deployment of the Armidale-class and the Austal Bay-class Customs patrol vessels should not be mistaken for a true naval construction capability, despite the company’s very efficient use of manufacturing processes which could contribute to a naval shipbuilding capability.
This point has been addressed in the above sections of this submission, although the matter could be addressed in greater depth in a more comprehensive study if required.
6.1. Australia has all of the essential ingredients to have a strategic and cost-effective capability in the maritime defence sector, moving into the long-term, and particularly at a time when changing global strategic realities demand that Australia should achieve self-sufficiency in this area. However, it is equally clear that lack of long-term thinking has consistently squandered this capability, and consistently – at great expense to the taxpayer – reverses the momentum toward this essential asset development.
6.2. Australia has consistently underplayed its skills in the strategic industrial base arena by willingly embracing the role of junior partner in its own defence projects. This has added cost to the projects and allowed the priorities and parameters implicit in imported major systems to be imposed on Australian requirements. Given that Australia faces strategic realities which demand increasingly self-sustaining leadership in national security affairs, it is vital that Australia should recognise its skills in the national security industrial resource arena, catalogue them, and begin to develop an over-arching strategic industrial strategy for the future.
6.3. In the short-term, to preserve capabilities already extant in Australia, it is essential that the Commonwealth move to order at least two additional Collins-class submarines, not only to maintain the skill base, but also to meet the growing challenge of a proliferating threat to Australia’s maritime interests. At the same time, the Commonwealth Government – and Australian industry – should begin to work together more effectively to develop an international marketing capability to sell Australian strategic industrial capabilities to qualified and allied states abroad.
6.4. Australia’s capabilities to design, build, and integrate systems, with regard to major naval vessels are unquestioned, if inadequately supported. However, where Australia has shortfalls, in particular, is in some areas of systems and in on-board weapons. Australia has had a policy of procurement of such capabilities, including whole vessel design, from other states, often from lesser powers. But now Australia faces a new strategic environment, and is being eclipsed and challenged by weapons systems built and deployed by, for example, the PRC and India. This places Australia at a strategic disadvantage.
6.5. The practice throughout the Western world of minimising career and capital formation geared toward heavy industry in favour of service industries has destroyed much of the foundation of a balanced strategic economy. This applies as much to Australia as to the US and Western Europe. To overcome some of this distortion of the national infrastructure, and to aid in the development of a viable maritime industry going forward, it will be necessary to take a strong stand toward bolstering the trade skills sectors, as well as, at the same time, striving toward a maritime industry which is highly-automated. By adopting to the fullest degree possible a process of automation and high-technology solutions, along with fully-flexible labour practices, Australia can compensate for its high labour costs, thus continuing to attract investment and orders to Australian shipyards. This practice, which I adopted at my Ailsa-Perth group of companies in the UK in the 1980s and 1990s, we called ‘Sunrise Engineering’, and we successfully moved heavy engineering away from the high-cost, environmentally unfriendly ‘sunset industry’ approach.
[1] Gregory Copley is a Director of Future Directions International (FDI), and Chairman of FDI’s Research Committee.
[2] See Defence Department submission, also cited in The Australian, 31 March 2006: ‘Defence casts doubt on building warships here’, by Patrick Walters, National Security Editor.
[3] M Akmal, S Thorpe, G Burg and N Klign, Australian Energy: National and State Projections to 2019-20, ABARE, eReport 04.11, August 2004, pp. 36-37. Cited in FDI’s study, ‘Australia’s Energy Options’, submitted to Parliament in October 2005.
[4] Future Directions International, ‘Australia’s Energy Options’, Perth, 2005.
[5] For the full text of this paper see Future Directions International, Weekly Global Report, 3 April 2006.
[6] The PRC’s People’s Liberation Army-Navy (PLAN) deployment in the Indian Ocean is approximately as follows: Submarine(s) detached for patrol: 1-2 SS (Improved Kilo-class or Kilo-class); Escort units: possibly 1 DDG (Sovremennyy 956A) as surface action group flagship, with the SS-N-22 Moskit ASMs; 1-2 DD (Luda); 2+ FF (Jiangwei and Jianghu); 10 PGG/PTG (Houjian, Houxin, Huangfen, and Houku); 10 PC (Hainan and Shanghai-II); MCM Forces: 2+ MSC (2+ T-43); Amphibious forces: 1 LST (1 Yuting) possible, mix of LCU and LSM, other small landing craft; Support force: 1-2 oilers, 2+ large freighters used as ammunition/stores ships. Source: Global Information System.
[7] One of the few recent exceptions has been the selection of a local design, and local systems integration, for the 12 56.8m Armidale-class patrol vessels, which were designed, built, and deployed in record time (to replace Fremantle-class, starting 2005; lead ship commissioned 24 June 2005). However, it is important to recognise that the RAN did not regard the Armidale-class vessel as being a ‘major warship’, and did not impose on it the same constraints as it did on the more complex and larger AWDs (Air Warfare Destroyers) and the proposed amphibious ships now under consideration.
[8] Based on the RAN’s desire for a foreign design, Australian contracts have teamed with foreign shipbuilders on this bid. Tenix has teamed with Spanish shipbuilder Navantia; Armaris of France has teamed with ADI. Significantly, the Australian naval tradition of the past century has been in many respects more accomplished than the naval traditions of Spain and France, and yet the RAN feels more comfortable in allowing contractors from Spain and France to take the lead on this Australian vessel requirement. As well, Defense & Foreign Affairs Special Analysis on 22 February 2006, in a report entitled RoK Moves to Develop Defense Supply Relationship with Australia, noted: ‘The Republic of Korea, which has been moving to expand its defence export programs into South-East Asia – notably Indonesia – has begun to focus on the export of technology to Australia, particularly related to the Royal Australian Navy’s three-ship Air Warfare Destroyer (AWD) program, due to enter service in 2013. The AWD parallels in many key aspects the RoK Navy’s three-ship KDX-III Aegis-equipped destroyer program, due to enter service in 2008-12.’ While Australia should unquestionably learn from the experiences of others, it begs the question as to which country Australia would not be prepared to play second fiddle, especially given the reality that Australian combat naval operations during the past century certainly rival those of Spain and France in many respects, and those of the Republic of Korea in virtually all respects.
[9] Australian Submarine Corporation, for example, failed in the 1990s to follow up direct offers of introduction and help in promoting the sale of Australian-built submarines to the Egyptian Navy, despite guaranteed US funding of the project, even though the then-Commander-in-Chief of the Egyptian Navy had requested such help through this writer. The Egyptian Navy still has not achieved its goal of acquiring the new submarines it needs, because of a combination of political factors which Australian industry involvement could have overcome.
[10] Sweden’s population in 2002 was 8,876,744, compared with Australia’s almost 20-million in the same year. GDP comparisons are Sweden US$227.4-billion (2000); Australia US$394-billion (2000). Australia, in 1946, produced the world’s fastest piston-engine fighter, and later designed the fighter developed in the UK as the English Electric Lightning. Today, Australia produces no major combat or civil aircraft as a prime contractor; Sweden produces light transport aircraft and the Saab JA-37 Gripen fourth-generation fighter.
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