As Japan vies with Germany for a lucrative contract to build new frigates for Australia, Tokyo seems determined to learn from the past and avoid the mistakes made in its failed bid to sell submarines to Canberra nine years ago.
There is a lot at stake.
Winning the contract for the decadelong Australian frigate program — known as Project Sea 3000 — would be the largest military export deal in Japan’s postwar history and a major breakthrough for the country’s defense industry.
But just as important, it would offer Tokyo a key opportunity to further deepen interoperability with its closest security partner, after the United States — all the while highlighting the capabilities, exportability and desirability of Japanese defense products.
“We don't see ‘Sea 3000’ as just a project but rather as part of broader efforts to strengthen an already-growing equipment cooperation with an important regional partner amid an increasingly severe security environment," a senior Defense Ministry official told The Japan Times.
Under the project — which has a budget of between 7 billion and 11 billion Australian dollars ($4.3 billion to $6.8 billion) over the next decade — Canberra is seeking seven to 11 general-purpose frigates optimized for undersea warfare to replace its Anzac-class warships.
To get the frigates as quickly as possible — the first one needs to be in the water by 2029 — the three initial vessels would be built overseas in the yard of the designer, while manufacturing of the remaining ships would transition to Henderson in Perth, Western Australia.
To meet the requirement, Tokyo is pitching an as-of-yet unfielded upgraded version of Mitsubishi Heavy Industries’ (MHI) Mogami-class frigates, which are operated by the Maritime Self-Defense Force.
In November, Canberra whittled down its candidates to the upgraded Mogami-class model and Germany’s Meko A-200 from Thyssenkrupp Marine Systems after dismissing bids by Spanish and South Korean rivals.
The Mogami ships, which are difficult to detect by radar thanks to their stealthy hull shape, can be deployed for a variety of operations, including anti-submarine warfare. They also have a modular design that allows for mission-specific configurations.
At the same time, these advanced frigates are not only cheaper to build than larger, general-purpose destroyers, they can also be operated with half the crew — about 90 personnel — all the while fulfilling similar roles.
The class is in a cycle of continual modification as the MSDF is acquiring them in two batches of 12 ships each, with the second batch — a larger and more capable version — to be procured until 2028.
This new upgraded variant is what Tokyo is offering Canberra for co-development or co-production, not just because of its enhanced capabilities, which includes more automation and improved capabilities for air defense and anti-submarine warfare, but also because the successive production timelines could trigger economies of scale and lower costs.
But just like with the submarine program nearly a decade ago, Tokyo again faces formidable competition from Germany, whose relationship with Australia on naval surface combatants goes back to the Anzac frigates. In fact, the Meko A-200 is an evolution of that Anzac class, meaning its selection would ensure continuity.
In addition, Australian media have reported that the Meko A-200 is likely to be “considerably cheaper than Japan’s initial proposed price,” although this has yet to be confirmed.
Asked about this, Japanese defense officials didn’t comment on the price, but Tokyo is expected to pitch Canberra on how its proposal offers more bang for their buck, especially when considering the Mogami’s reduced life-cycle costs and an operating life of 40 years, as opposed to the usual 30 years for ships of this type.
According to experts at the International Security Industry Council of Japan, a nonprofit industry association, the Japanese bid will need to convince the Australian customer of the long-term strategic benefits not only militarily but also industrially. Among the key industrial factors will be supply chain reciprocity and mutual alignment of the procurement processes, the group says.
Experts also point to significant differences in the contracting processes in Japan and Australia and it is not yet clear how much Tokyo will be willing to adapt to Canberra’s processes within this campaign.
Indeed, Tokyo’s biggest obstacle remains its lack of experience in exporting major defense equipment, including dealing with matters around confidential information, maintenance and its readiness to transfer skills and intellectual property rights.
“The Mogami class is a highly capable ship, but this will be as much about the partnership proposal, including aspects such as contracting, cost, build speed, intellectual property transfer and a genuine program for the vessels’ co-development, delivery, sustainment and maintenance,” said Peter Dean, a professor at the University of Sydney’s United States Studies Center.
“If this is an attractive package, then Japan’s chances would be very high.”
Indeed, looking back at Tokyo’s submarine bid in 2016, sources familiar with the negotiations at the time said that the weakness of Japan’s overall package — and not the quality of the MSDF’s diesel-electric Soryu-class subs — was one of the main reasons the bid failed.
“There was some reluctance from the Japanese side to transfer some of the key technologies,” one of the sources said. It also seems that Tokyo was less committed than its German and French competitors to substantial local construction and employment in Australia, the source added.
In addition, unlike its competitors, Japan had little or no defense-industry presence in the country, which led to weaker networking with the Australians and presumably a less-effective marketing campaign.
Japanese defense officials admit there were several shortcomings at the time, with a lack of experience being a key issue.
“The submarine bid came at an early stage for us, only shortly after the Defense Ministry’s Acquisition, Technology and Logistics Agency (ATLA) was established, so we were still trying to figure out how to handle equipment transfers,” the senior defense official said. “Our experience was simply not enough at the time.”
So, what is Japan doing differently this time?
One of the key lessons learned, the official said, is that projects of this magnitude and geopolitical significance require a concerted effort from both government and industry.
“We’ve taken a more holistic approach this time around and decided to team up to take on this huge project.”
One result has been the launch last month of a joint public-private promotion committee exclusively for this endeavor — an unprecedented move for Japan to support defense export projects.
The body comprises representatives from several ministries such as defense, foreign affairs, industry, finance and infrastructure, as well as a number of companies, including MHI, Hitachi, Mitsubishi Electric and NEC.
Japan’s National Security Council has explicitly allowed the joint development and production of the frigates in the event of a successful bid to allay concerns about potential transfer restrictions under Japan’s strict arms export controls.
Tokyo has also boosted its marketing efforts, with ATLA releasing in December an English-language video presumably directed at Australian and other international audiences promoting the Mogami’s strengths in terms of stealth tech, interoperability, manpower efficiency and its evolving unmanned capabilities.
At the same time, preparations have been made for a potential increase in production capacity demand on Japanese shipyards, with sources saying that prime contractor MHI has already transferred Mogami manufacturing technologies to other Japanese shipyards. This means the upgraded class could be made not only in Nagasaki and the city of Tamano, Okayama Prefecture, but also in Yokohama.
Should Tokyo win the bid, Australian workers would likely have to be trained in Japan while Japanese companies would have to identify industrial partners in Australia and begin a process of cooperation.
Officials say Tokyo is committed to producing the majority of the frigates in Henderson. This would help expand Japan's very small defense-industrial footprint in Australia while also allowing the frigates to potentially be maintained in both countries.
At the same time, Japanese officials reiterated Tokyo’s pledge to support Australian industry — something likely to be a key factor in Canberra’s decision-making.
“Connecting their industry and supply chains with ours would be the perfect way to expand the equipment industrial cooperation,” the senior Japanese defense official said without providing details amid the ongoing bidding process.
One industry observer said that given Germany’s large defense-industrial footprint in Australia, Japan should focus more intently on the industrial advantages of their proposal and refrain from relying solely on the project’s long-term strategic benefits for its relationship with Australia and their mutual ally, the U.S.
“There is a relatively muted industrial role in the current campaign and, given that the final selection will be made after Australia’s next general election (set to be held on or before May 17), Japan’s comparative lack of industrial presence in the country may yet become an issue.”
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.