December 2013 · Preliminary Stages. 08 - SINGAPORE: Two Type 218SG Submarines Under Contract from TKMS. 08 - CANADA: JSS Construction to Start in 2016. 09 - UNITED STATES: Navy Selects

December 2013 In This Issue … 01 - SAUDI ARABIA: Contacting Submarine

Suppliers

02 - AMI INTERNATIONAL: From the Desk of the CEO

03 - QATAR: Frigate Program Moving Forward

04 - POLAND: Modifications to Naval Modernization Plan 2030

06 - IRAQ: Corvette/Frigate Working Team to be Formed in Near Term

06 - OMAN: New Landing Craft Requirements Emerge

07 - ISRAEL: Frigate Planning with Germany in Preliminary Stages

08 - SINGAPORE: Two Type 218SG Submarines Under Contract from TKMS

08 - CANADA: JSS Construction to Start in 2016

09 - UNITED STATES: Navy Selects Virginia Payload Module (VPM) to Replace SSGNs

10 - AFRICA: Regional Update

10 - ASIA: Regional Update

11 - DIMDEX 2014: MENA Submarine Market: North African Navies Modernize Submarine Forces; Gulf States look to Submarines and Undersea Systems

14 - INTERNATIONAL: Shipyard Consolidation / Merger / Reorganization Highlights

14 - INTERNATIONAL: Combat, Sensor and Integration System Developments

16 - VARIOUS: Did You Know?

17 - AMI: Analytical Services - Access to Analysts

17 - AMI: Documents Available for Download

17 - AMI: Contacting AMI

18 - AMI: Email Directory

Contacting Submarine Suppliers

In mid-November 2013, AMI received information from several sources indicating that the Royal Saudi Naval Force (RSNF) was in contact with ThyssenKrupp Marine Systems (TKMS) for the procurement of up to five Type 209 submarines at a cost of US$3.4B. Sources also indicated that the RSNF had a long term requirement for up to 25 submarines at a cost of around US$16.5B.

Although AMI cannot confirm that the RSNF has met with TKMS concerning submarines, AMI believes that TKMS is one of several Saudi requests for pricing and terms to build new submarines for the Kingdom. In 2012, sources indicated that the RSNF was considering its submarine design options that included the DCNS Scorpene, DCNS SMX-23 Andrasta, the ThyssenKrupp Marine Type 214 (and now the Type 209) and the Pakistani Agosta 90B.

(Continued on Page 3)

Type 209 SS - Candidate for Saudi Arabia

Hot News December 2013

Naval Market Forecast Newsletter Page 2

From the Desk of the CEO

Differentiating Your Offers in the International Market

The competitive rivalry in the naval ship export business is high and procuring navies understand that they can be very selective regarding terms and conditions for potential suppliers. This environment demands that suppliers differentiate their offerings in order to gain competitive advantage over their rivals. That differentiation will come from knowing your customer and understanding their strengths and weaknesses.

What follows are the elements that make up better market intelligence, better customer understanding, better capture planning, and execution – put all these into practice and you gain differentiation/competitive advantage and ultimately higher PWin. We consider these as key elements of any successful Navy and should serve as a reasonable model for better understanding your potential customer’s strengths/weaknesses so that your offer can be tailored to address those and serve as your differentiation from low-cost rivals:

1. Fleet Make-Up – Do the sea services have a long term plan for their fleet development? Do planners consider the purchase of used ships versus new? Seek to identify potential savings in fleet make-up through the consideration of different platforms/alternatives.

2. Concept Design – Do they have a viable approach to development of ship concept designs? How long in advance do they seek inputs and ideas? Seek to contribute to their ideas.

3. Naval Staff Specifications – How do they staff their specification development? Ensure you are providing inputs on any staff specification.

4. Comparative Analyses – Naval staffs continually assess alternatives for all potential procurement solutions. Make sure you have provided your own comparative analyses on your system versus your competitors.

5. Systems Development/Design – Procuring navies will surely require offsets as part of any offering; ensure you have identified solutions for indigenous build and/or technology transfer. Consider partnering with an indigenous supplier for a low cost alternative to adjacent market solutions to products you offer.

6. Systems Integration – As smaller navies develop their indigenous ship construction capabilities, one of the most complex issues they face is systems integration. Consider providing in-depth test & trials plan/process as a first step in understanding systems integration and its vital importance to total ship capabilities.

7. Ship and System Maintenance – Ship and system maintenance is crucial to ensure operational availability – the fundamental of a viable fleet. Consider partnering with regional or indigenous shipyards and suppliers in order to provide maintenance and modernization support.

In summary, having a better quality picture of your competitive battle space and customer environment, plus a superior product and offering, gets wins even against lower cost competitors. AMI International provides in-depth country reports and project reports on all future opportunities, just for this reason. You will find AMI International’s Worldwide Naval Projections Report as a viable asset in answering any number of these key questions. Additionally, AMI’s expanded Senior Advisory Group offers in-depth expertise in many of these areas as well as with local indigenous insights.

Each month I will be offering up ideas to stimulate change in our naval market. I welcome your comments, suggestions, and critiques. You can reach me at [email protected], @GuyofAMI on Twitter, or on my editorial section of our website.

Guy Stitt, CEO, AMI International

mailto:[email protected]�



(Continued from Page 1)

Although sources and press reporting continue to indicate that the RSNF submarine program is moving forward, the Saudi naval leadership has yet to publicly comment on any submarine program. AMI believes that the RSNF probably began considering submarines around 2009 with first AMI source gaining information in 2011. Assuming this timeline, a Request for Information (RfI) was probably first released in 2012, which validates the timeline (timeline only, not the actual offer) of the TKMS offer in 2013. AMI estimates that the RSNF is probably also entertaining other proposals from DCNS and Pakistan. Although this program may seem imminent, AMI believes that it is probably several years down the road and that a specific Request for Proposals (RfP) will not be issued for another three or four years at the earliest (2016-2017). The fact remains that Saudi naval procurements take years to mature and move forward through the procurement system as evidenced by the sea service's surface combatant programs, which have taken many iterations for over a decade.

In regards to the actual procurement numbers, AMI estimates a submarine force of four to six submarines total, not 25 as indicated in press reports. The RSNF has no need for a large submarine force with so few submarine operators in the region (Arabian Gulf, North Arabian Sea and Red Sea). In addition, the sea service will have the daunting task to establish the necessary infrastructure to man, train, maintain and operate its new submarine force. Although, funding for its new submarine force is not expected to be an issue for the RSNF, finding the right mix of international support and adequately manning and integrating the force may be more of a challenge.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting the Future Diesel-Electric Submarine (SSK) project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=227&countryID=55.

Frigate Program Moving Forward

On 04 November 2013, AMI received information that Qatar Emiri Navy (QEN) was given permission to move forward with the acquisition of two frigates. Source indicates that the Commander of the Navy Staff Brigadier Mohammad Bin Nasser Al-Mohannadi will take charge of the procurement project.

Source also indicated that international shipyards would be contacted, most notably:

DCNS of France Damen Schelde Naval Shipbuilding (DSNS) of the

Netherlands Lockheed Martin of the United States

Source made a point that no specific timeline was given as to when requirements/specification documents would be developed or a timeline to contact international yards. The QEN has been planning for a surface combatant (corvette/frigate) since 2007 but has yet to move forward. This program was originally anticipated to be a corvette sized vessel (around 1,700 tons) with DSNS being Lockheed Martin LCS - Candidate for QEN


http://www.amiinter.com/wnpr/projects/project.php?newcontID=227&countryID=55�



a leading contender with the Sigma 9113 corvette design.

It appears that the QEN may be considering a vessel over 2,000 tons when considering the three possible suppliers mentioned. At least two frigates will be procured with three being the most likely number of hulls as the original requirement called for three corvettes when planning began in 2007. AMI estimates a vessel over 2,000 tons with a full array of AAW, ASW and AAW capabilities. It will be designed with a flight deck and hangar for the operation of one medium sized helicopter.

Very similar to Saudi Arabia, although this program may seem imminent, AMI believes that it may be several more years before specific Requests for Proposals (RfP) are released. History has shown that QEN procurements take years to mature and move forward through the procurement system as evidenced by the sea service's corvette program that started in 2007 and has not progressed.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting the Future Corvette project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=88&countryID=52.

Modifications to Naval Modernization Plan 2030

In early November 2013, AMI received information concerning the Polish Navy's (Marynarka Wojenna – MW) most recent update to its Naval Modernization Plan 2030 (US$3.1B budget plan). The plan now calls for the following ship types and potential timelines:

Three diesel electric submarines beginning in 2014 and running through 2022.

One Gawron II class corvette (in progress - restarted in September 2013) to be finished as an Offshore Patrol Vessel (OPV) by 2016.

Three Miecznik class corvettes (1900 tons) from 2014 through 2026.

Three Czapla class OPVs (1700 tons) beginning in 2015 and running through 2026. Will be same hull as Miecznik class corvettes.

Three Kormoran II class MCMV that began on 23 September 2013. Deliveries scheduled for 2016, 2019 and 2022.

Seven auxiliaries including one Fleet Replenishment Ship (AOR), two intelligence collection ships (AGIs), one hydrographic survey ship (AGS), one Command Ship (LCC) and two Rescue and Salvages ships (ARS). All seven are to be completed by around 2026.

The latest variant of Naval Modernization Plan 2030 essentially replaces the entire sea service by 2030. AMI believes that this acquisition timeline is extremely aggressive considering all of the vessels are to be built in Poland.

Type 214 - Candidate for Poland





The first program is expected to be, and is apparently the furthest along, is the diesel electric submarine. The two candidates being considered by the MW are the German Type 214 and the French Scorpene designs. The MW is planning to have this program under contract by 2014 with all three units in service by 2022. AMI believes that the three units will not be completed until at least 2030 assuming a 2014 start date.

The single Gawron II corvette was restarted in September 2013 and will be completed by 2016 as an OPV; minus missiles, sonar etc. The three unit Kormoran II class MCMV began its construction phase on 23 September 2013 and will deliver units in 2016, 2019, 2022. Considering the slow construction and delivery schedule of the three submarines, three MCMVs and single Gawron II OPV, AMI estimates that the remainder of the modernization plan will face significant delays well past their anticipated start dates.

Although recent press reports indicate that these programs appear to be in the near term, AMI sources indicate that other than the three programs listed above (submarine, MCMV and OPV), the remaining programs are at the very beginning stages making it almost impossible to meet the projected timelines of the Miecznik class corvettes (start in 2014), Czapla class OPVs (start in 2015) and the seven auxiliaries (varied).

Press reports and AMI sources do indicate that the interested foreign entities for all of the naval programs include:

Germany's ThyssenKrupp Marine Systems (TKMS) France's DCNS Norway's Kongsberg Defence and Aerospace Spain's Indra Netherland's Damen Shipyards and Thales Naval Nederland

Domestic companies and representative companies of foreign companies include:

Remontowa Shipyard Naval Shipyard Gdynia Polish Defence Holding (former Bumar Group) OBR CTM Research Center KenBIT Rolls Royce Poland Unitronex Poland (represents ITT Exelis) ELSE Technical and Research Service (UK Northrop

Grumman Sperry Marine) Thales Poland

AMI expects that the modernization plan could take at least a decade longer to complete, possibly around 2036, rather than 2026. And this timeline assumes that the submarine program, MCMVs and the single Gawron II program move forward as projected by the MW.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on Poland can be attained by visiting the Poland country report at: http://www.amiinter.com/wnpr/country/view-country.php?countryID=50.

Gawron II under Construction


http://www.amiinter.com/wnpr/country/view-country.php?countryID=50�



Corvette/Frigate Working Team to be Formed in Near Term

On 06 November 2013, AMI received information that Iraqi Prime Minister, Nouri Al-Maliki had discussions with US President Barak Obama regarding the possibility of the United States supplying new frigates to the Iraqi Navy (IqN).

While the IqN has been planning the procurement of a new class of corvette since 2011, original plans called for two units to be built. Since the talks in November, this number has increased to three and the size may have been increased to around 2,000 tons, thus qualifying it as a frigate and no longer a corvette.

This same source has also indicated that the program may well be for two different size vessels. The first of which would be around 1,500 tons while the other two would be around 2,000 tons.

AMI believes that suppliers such as Fincantieri and Swiftships could be potential candidates as both have been involved in recent naval procurements. Although Iraq is not a member of the Gulf Cooperation Council (GCC), it has improved relations with other countries in the Gulf Region and may consider their respective suppliers for commonality of systems and training. In this case, CMN and DCNS of France, TKMS of Germany, Singapore Technologies Marine (STM) of Singapore and BAE Systems of the UK must also be considered as potential hull suppliers.

With the governmental approval still pending, late 2013 would be the earliest that the IqN could firm up the program's operational requirements followed by an international tender in 2014. Each unit would cost around US$300M and all three vessels could commission between 2018 and 2020.

Additional information on this project can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]) or visiting the Future Corvette project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=589&countryID=74.

New Landing Craft Requirements Emerge

On 20 November 2013, AMI received information that the Royal Navy of Oman (RNO) has a new requirement for up to three mid-sized Utility Landing Craft (LCU). The new LCUs would supplement the two LCUs and three mechanized landing craft (LCMs) currently in service.

Source indicates that the RNO has already been in contact with an Arabian Gulf area yard, more than likely in reference to Abu Dhabi Ship Building (ADSB). ADSB built a 64-Meter LCU for the RNO that was delivered in 2008.

Source also indicated that the sea service would scour international builders such as Lurssen in Germany and BAE

ADSB 64-M LCU





Systems in the United Kingdom. AMI estimates that other builders such as ADIK of Turkey, Singapore Technologies Marine (STM) of Singapore, Garden Reach Shipbuilding and Engineering (GRSE) of India, DCNS of France and Navantia of Spain may be potential suppliers.

It appears that international builders will be contacted in the near term as the RNO estimates that a go ahead in the project is scheduled for May 2014. May 2014 will probably be the Request for Proposals (RfP) release date for the down-selected yards that are now being considered.

Although no specifications were mentioned, AMI believes that an LCU similar in size to the 64-Meter craft from ADSB may be what the RNO is looking for and if so, the ADSB 64-Meter LCU may be the leading candidate at this juncture.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on Oman can be attained by visiting the Oman country report at: http://www.amiinter.com/wnpr/country/view-country.php?countryID=46.

Frigate Planning with Germany in Preliminary Stages

In early December 2013, AMI received press information that ThyssenKrupp Marine Systems (TKMS) concluded a deal with the Israeli Ministry of Defence (MoD) for the procurement of two surface combatants for an estimated US$1.37B.

However, AMI has received more recent information from German in country sources that this program is only in the early stages of discussion. Currently, as a result of the German elections in September, a new government has yet to be completed precluding the possibility of any firm deal. All foreign sales of military equipment would need the approval of the German Parliament's Security Committee (has not been formed yet).

The two combatants in question are for the Israeli Navy ((Heil Hayam Ha Yisraeli (HHHY)) under the Future Multi-Mission Surface Combatant (Frigate) Program. AMI believes that Israel will again request German funding for the two vessels, similar to the past agreements for the Dolphin and Dolphin II submarines. Under those agreements, the German government agreed to pay around 33 percent of the construction costs although in this case, it will be a much harder sell due to economic conditions.

AMI estimates that if this deal is concluded, the hull will probably be based on the MEKO A200 (displacement of around 3,600 tons) with the propulsion plant being provided by Tognum's MTU. German sources will probably also provide the anti-submarine warfare suite (ASW) and Italy the main gun armament. Israel will provide the air defense and electronic warfare (EW) suites with locally made systems such as the Elbit Systems ENTC 2000 combat management system (CMS), Israel Aerospace Industries (IAI) Naval Barak II long-range and Barak I short-range SAMs, the Elta EL/M-2258 (S-Band) Alpha 3-D air search and EL/M-2228S automatic missile detection radars and an Elta/Rafael EW suite.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting the Future Multi-Mission Surface Combatant (Frigate) project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=465&countryID=30.

MEKO A200 - Candidate for Israel


http://www.amiinter.com/wnpr/country/view-country.php?countryID=46�





Two Type 218SG Submarines Under Contract from TKMS

In late November 2013, AMI sources indicated that ThyssenKrupp Marine Systems (TKMS) completed a contract with the Singaporean Ministry of Defence (MoD) for the procurement of two TKMS HDW Type 218SG submarines for the Republic of Singapore Navy (RSN). Press sources indicate that the deal was worth US$1.36B, which includes training and logistics support.

The two new submarines will be built at the TKMS yard in Kiel, Germany and the combat system will be co-developed by Germany's Atlas Elektronik and Singapore's ST Electronics. Both submarines will be delivered to the RSN by 2020 and will replace the three used Challenger class (formerly Sjoormen class) procured from Sweden.

AMI estimates that two additional submarines will be procured after 2020 to replace the two Archer class (formerly Vastergotland) built in the late 1980s, essentially updating the entire RSN submarine with four units of the Type 218SG design.

Although no details have been published on Type 218SG, AMI estimates that it may displace well over 2,000 tons as the RSN is probably looking for increased payload and capabilities above and beyond the current force of the Challenger and Archer classes. AMI estimates that it will be able to deploy anti-ship missiles (ASMs), mines, unmanned underwater vehicles (UUVs) and possibly special forces. The design may have characteristics from various successful TKMS designs including the Type 214, the Israeli Dolphin (Type 800) and Type 212.

The Type 218SG will be Air Independent Propulsion (AIP) capable with the majority of sensor and weapons systems being decidedly German although Singapore's ST Electronics will provide many of the sub-components.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting the Future Submarine project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=479&countryID=56.

JSS Construction to Start in 2016

In November 2011, AMI received information that the construction phase for the Joint Support Ship (JSS) program will start in 2016. Under the National Shipbuilding Procurement Strategy (NSPS), Seaspan Shipyard in Vancouver will build all of the vessels (two plus option for one). The production contract is expected to be signed in late 2015 or early 2016, around two years behind the anticipated construction start date.

Type 214 - Likely Basis for Type 218SG





The ThyssenKrupp Marine Systems (TKMS) Type 702 design (Berlin class in German Navy) was selected by the Royal Canadian Navy (RCN) in June 2013 for the JSS program. The first unit will probably be delivered in 2019 followed by the second unit in 2020. The option for the third unit, if exercised, could occur as early as 2019 in order to keep program moving forward at Seaspan without any breaks. The key will be the additional funding required for the third unit, which will be at around the same time as Arctic Offshore Patrol Ship (AOPS) and the Canadian frigate programs are scheduled to begin.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting the Joint Support Ship (JSS) project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=378&countryID=12.

Navy Selects Virginia Payload Module (VPM) to Replace SSGNs

In early November 2013, the US Navy (USN) selected the design concept of the Virginia Payload Module (VPM) to replace the four Ohio Class Nuclear Powered Guided Missile Submarines (SSGNs). The SSGNs were converted from Ohio Ballistic Missile Submarines (SSBNs) from 2002 through 2006 and are due to be decommissioned from 2026 through 2028.

In October, the US Naval Sea Systems Command (USNAVSEA) approved the design concept of the VPM as part of a US$743M design change for the Virginia Class Nuclear Powered Attack Submarine (SSN). The VPM is scheduled to be added to the ten units of the Virginia Class SSN Program beginning with Block V around 2019. Each VPM will have four vertical launch (VL) tubes containing seven Tomahawk Land Attack Missiles (TLAMs) (28 missiles) in addition to two, six round Virginia Payload Tubes (VPTs) (already installed) (12 missiles) in the bow for a total of 40 TLAMs per hull.

The ten Virginia hulls of Block V will give the USN a 400 TLAM capability, a comparable replacement for the four unit Ohio SSGN force. The Budget Control Act (BCA) of 2011 (Sequestration) may well determine if this program moves forward as the cost estimates for each VPM is in the range of US$400M - US$500M (estimates continue to change) per copy, although it is still the least costly alternative to replace the Ohio class SSGNs.

Additional information on this article can be attained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on the Virginia Class Nuclear Attack Submarine (SSN) can be attained by visiting the project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=667&countryID=68.

Canadian JSS Concept

VPM Design







Regional Update

As of mid-December 2013, the following are highlights of the Africa Region:

A. MAURITIUS:

A1: 74-Meter Offshore Patrol vessel (OPV): In November 2013, AMI received information that the Mauritius Police Coast Guard would receive the 74-Meter OPV CGS Barracuda from India's Garden Reach Shipbuilding and Engineering (GRSE) in 2014.

The OPV was ordered from GRSE in 2011 under a US$58.5M contract with the keel being laid on 23 April 2012. It was launched on 02 August 2013 and is based on the Indian Coast Guard's (ICG) Vikram class. The new OPV will replace the CGS Vigilant currently in service.

The 1350-ton OPV will be powered by Tognum MTU engines and armed with the Medak Ordnance Factory CRN-91 30mm 2A42 gun and the Bharat Electronics Limited (BEL) EON-51 electro-optical director.

The 74-Meter OPV will be the first completed and exported by India.

Additional information on the African Region can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or visiting AMI International's website at: http://www.amiinter.com.

Regional Update

As of mid-December 2013, the following are highlights of the Asia Region:

A. PHILIPPINES:

A1: MPAC: In late November, AMI received information that the Philippine Navy (PN) was in the process of procuring three additional Multi-Purpose Attack Craft (MPAC). The three craft will be procured from 2013 through 2017.

The new craft, based on the Swedish Combatboat 90, will be built in the Philippines at Propmech Corporation in Zambales Province. The sea service currently has six units in service. The first three were built in Taiwan and the second three in the Philippines. Following units 6 - 9, the PN will probably order three additional units in 2017 as the entire requirement is for 12 hulls.

CGS Barracuda

Philippine Navy MPAC


http://www.amiinter.com/wnpr/israel/index.html�



B. TAIWAN:

B1: Hsun Hai Class Corvette: In early November 2013, China Ship Building Corporation (CSBC) laid the keel for the first 500-ton Hsun Hai class corvette. Based on a catamaran hull design, the new corvettes will be armed with up to sixteen anti-ship missiles (ASMs) and a 76mm gun. It will be able to operate a medium-sized helicopter giving the vessel an anti-submarine warfare (ASW) capability. The first of 12 units will be completed in 2014.

C. VIETNAM:

C1: DN2000 Class Offshore Patrol Vessel (OPV): On 19 November 2013, the Vietnam Marine Police (VMP) received its first DN2000 class OPV, CSB 8001. Built at Vinashin in Vietnam, five additional units will be built through 2018. The OPVs will be powered by two Wartsila diesel engines and armed with one 20mm cannon and two 12.7mm machine guns.

D. INDIA:

D1: P-8I Maritime Patrol Aircraft (MPA): On 15 November 2013, the Indian Navy (IN) took delivery of its second P-8I MPA from Boeing. This follows the first airframe which was delivered in May. The sea service ordered eight MPAs with all expected in service by the end of 2016.

D2: Dhruv Squadron Commissioned: In early November 2013, the Indian Navy (IN) stood up its first Dhruv (Advanced Light Helicopter - ALH) helicopter squadron, Indian Naval Air Squadron (INAS) 322. Dhruv is the first indigenously designed and manufactured helicopter, all at Hindustan Aeronautics.

Additional information on the Asian Region can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or visiting AMI International's website at: http://www.amiinter.com.

MENA Submarine Market: North African Navies Modernize Submarine Forces; Gulf States look to Submarines and Undersea Systems

Summary: AMI, as market information partners with DIMDEX 2014 organizers Qatari Emiri Naval Forces (QENF) and Clarion Events, reviews the outlook for new submarine and underwater systems procurements among the 15 countries AMI groups in the Middle East/North Africa (MENA) regional naval market. The fourth and final of AMI’s MENA naval market review series will look at the MENA market for amphibious and auxiliary ships and related smaller craft.

Hsun Hai Class Corvette

Indian P-8I MPA

CSB 8001


http://www.amiinter.com/wnpr/israel/index.html�



Submarine Market Overview: AMI forecasts that MENA navies are set to acquire 27 new submarines in the next 20 years at a total estimated acquisition cost (2013 exchange rates) of almost US$9.5B. While not as large as the region’s MENA surface combatant or patrol and fast attack craft segments reviewed in earlier articles, the MENA submarine and underwater systems market is still of significant interest for several reasons. First, it is capital intensive with a relatively higher amount of new spend planned per platform compared to other ship types in other segments. In the MENA markets, the average new spend per submarine is projected to average more than US$350M over the next two decades.

Further, most of the new submarines acquired in the MENA market will be via export purchases. The developing shipbuilding industry in the Gulf and North Africa has not yet reached the extremely complex and specific levels of manufacturing and systems integration expertise that define the world’s submarine market leadership today. Therefore, top tier submarine exporters such as Germany’s ThyssenKrupp Marine Systems, France’s DCNS, Russian shipyards such as Admiralty and other offerors are expected to be very active in competing for new submarine sales in the region.

The MENA submarine market is also expanding beyond the small group of navies that currently operate submarines in their fleets. The “submarine club” in the MENA now includes Algeria, Egypt, Israel, and Iran. AMI forecasts that a number of countries will at least double the number of MENA navies with submarines over the next decade. While some of these submarines may be hulls originally built for or in service with other navies, others will be new construction orders for small and medium sized designs below 1,500 tons full load displacement, presenting good market opportunities to builders and systems providers alike.

And the market for platforms and services for these new submarine operators is a long term opportunity. This means not only new construction awards, but training, maintenance, submarine-specific facilities and infrastructure and support services requirements stretching over the next decade plus.

As interest in new submarines grows in the MENA region, many navies are also accelerating investments in unmanned maritime systems—increasingly including underwater vehicles (UUVs)--to meet growing undersea mission requirements. In highest demand in the MENA region are unmanned systems for underwater survey, scouting and reconnaissance, as well as mine and anti-submarine warfare.

While construction and systems integration in the MENA region has advanced to see several locally-built unmanned surface vessels offered, the market for UUVs is also expected to be mainly exports. Here leading industry names such as Atlas Elektronik, Saab, Bluefin and others are expected to be heard, while new market entrants in the UUV market from countries such as Turkey are also expected to compete for new UUV opportunities in the region.

The MENA Submarine and Undersea Systems Market - By the Numbers: The US$9.5B new submarine market in the MENA region is detailed below. While the 27 hulls forecasted to be acquired in the region though 2032 represents only 4 percent of all new naval platforms expected to be acquired, total spending amounts to about 17 percent of all funding during this period.

And planned new spend for submarines for the MENA region –US$350M per hull—comes in somewhat lower that other regional submarine markets. This reflects that submarine demand in the region includes programs to acquire smaller special operations and/or coastal submarines. These tend to be less costly compared to larger “fleet” submarines above 2,000 tons that are the center of the submarine market in other regions. As the MENA submarine market matures and expands, the average value per hull for new submarine orders is expected to trend upwards.



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)

Asia & Australia 112 1032 11% 70238 206285.9 34% 627

Caribbean & Latin America 28 309 9% 13551 37281.8 36% 484

Middle East & North Africa 27 631 4% 9486 56154.7 17% 351

NATO 57 516 11% 52533.2 177369 30% 922

Non-NATO Europe 9 70 13% 1790 9150.7 20% 199

Russia 44 166 27% 25400 54656 46% 577

Sub-Saharan Africa 0 40 0% 0 2839.3 0% N/A

USA 44 1042 4% 81311.2 291033.9 28% 1848

Total Global Market 321 3806 8% 254309.4 834771.3 30% 792

Estimated Number/Amount Spent on New Construction between 2013 - 2032

And as seen in the MENA market for larger surface ships, the new submarine market is not limited to only a few potential customers. Seven of the fifteen countries AMI tracks in the MENA region have current or projected procurement programs to acquire new submarines.

Most of these are in the North African and Eastern Mediterranean regions. Egypt has started a program to upgrade their submarine force from Cold War era Soviet designs to the widely exported and operated Type 209 from ThyssenKrupp Marine Systems (TKMS). In contrast, Algeria, currently operating Russian Kilo Project 636 conventional submarines and may expand its fleet with additional Russian-built hulls.

No GCC navy in the Gulf currently operates conventional submarines, although several have naval special warfare submersibles and special operations mini-subs. This is expected to change as countries such as Saudi Arabia and UAE actively assess future submarine requirements with an eye towards future new build orders.

And the market for new UUVs and related underwater systems extends to a number of other Gulf and North African navies who do not currently plan new sub buys. This is especially true of UUVs with mine warfare capabilities. A number of threat assessments and exercises by Gulf navies continue to highlight the operational challenges in deploying naval forces fully ready to detect, find, fix and destroy the newest generation of naval anti-ship mines

Conclusion: The MENA region is particularly reliant on sea lines of communication vulnerable to underwater threats. These threats could imperil massive energy exports through “choke points” such as the Straits of Hormuz, interruption of which would do significant harm to the economies of the MENA region.



These recognized vulnerabilities and gaps in undersea capabilities among MENA nations helped spur the growing market (new and modernized) of undersea systems across the region. Offerors and exhibitors at DIMDEX will find regional naval leaders facing urgent capability gaps and seeking near-term solutions in the undersea warfare domain.

Additional information on this article can be obtained by contacting Bob Nugent (Affiliate Consultant) at (Tel: + 1 360 850 7444 or E-mail: [email protected]).

Shipyard Consolidation/Merger/Reorganization Highlights

AMI is currently tracking shipyard consolidation, merger and reorganization highlights within the defense industry. The following are the highlights for the months of November and December 2013:

A. UralVagonZavod (UVZ)/Sagem Defense Securite: On 13 November 2013, UVZ of Russia and Sagem Defense Securite of France signed a Strategic Partnership Agreement (SPA) in the presence of Russian Federation Prime Minister, Dmitry Medvedev and French Prime Minister, Jean-Marc Ayrault.

Both parties have agreed to organize a long-term strategic partnership regarding the use of Sagem’s optronic and other high-tech products on armored vehicles and artillery products produced by UVZ.

Sagem, a member of the Safran Group, produces advanced optronics, avionics, electronics and safety-critical software for both military and civil markets. UVZ manufactures military equipment as well as road-building machinery and railway vehicles.

Additionally, both Sagem and UVZ have been involved in setting up production facilities in other countries and this SPA could lead to a partnership in the industrial enterprise solutions business as well.

Additional information on this article can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).

Combat, Sensor and Integration System Developments

AMI is currently tracking combat, sensor and integration systems developments. The following are the highlights for the months of November and December 2013:

A. THALES: On 13 November 2013, Thales signed a contract with Damen Schelde Naval Shipbuilding (DSNS) for the delivery and integration of the complete mission systems suite on two Indonesian Nasional Korvets (Sigma 10514).

The systems suite will consist of the following:

TACTICOS Combat Management System (CMS) SMART-S Mk2 Air Search Radar Sigma 10514





STIR 1.2 Mk2 EO Fire Control System KINGKLIP Sonar Link-Y Datalink FOCON Integrated Communications System (ICS)

The first system is due to deliver by the end of 2014 when the first unit is to begin and will complete in 2017. All total, 17 vessels are planned to deliver through 2027 if all options are exercised.

B. NORTHROP GRUMMAN: On 04 November 2013, Northrop Grumman (NG) announced that they had received a contract from the US Navy to supply three AN/SPQ-9B fire control radars for amphibious and Arleigh Burke class ships.

The three radars will deliver in the second quarter of 2015 and will be installed on USS Portland (LPD-27), USS Tripoli (LHA-7) and USS Oscar Austin (DDG-79). Oscar Austin will be the first Arleigh Burke class destroyer to be modernized and will verify the system for further installation on the Flight III units.

SPQ-9B is a high-resolution X-band radar system that enhances the ship’s ability to defend against small, high-speed threats such as sea-skimming missiles and low-flying aircraft and will be integrated into the ships’ fire control systems.

C. SAGEM: In late November 2013, Sagem (a member of the Safran Group) announced that they had been selected by Daewoo Shipbuilding and Marine Engineering (DSME) to supply the navigation system to be installed on three 1,400 ton submarines being built for the Indonesian Navy.

The Sagem navigation system (NAVS) comprises of two Sigma 40XP ring-laser gyro units, a computer and navigation software. This contract follows Sagem’s selection to upgrade the navigation systems in South Korea’s Chang Bogo class submarines.

Sagem currently has navigation systems on over 60 submarines of 14 different classes worldwide including the Barracuda, Amethyste and Scorpene classes.

Additional information on these articles can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).

USS Oscar Austin

Chang Bogo Class SS




Various

USNS Lewis B. Puller MLP Concept

A. UNITED STATES: On 05 November 2013, a keel laying ceremony for the third Mobile Landing Platform (MLP), USNS Lewis B. Puller (MLP-3), was held at General Dynamics NASSCO in San Diego, California. The Puller is the first MLP to be modified as an Afloat Forward Staging Base (AFSB). It will be delivered in the second quarter of 2015.

B. VENEZUELA: In early November 2013, the Venezuelan Ministry of Defense (MoD) has requested an increase of the defense budget from US$5.07B in 2013 to US$5.56B for 2014.

C. UNITED STATES: On 14 November 2013, the America class amphibious assault ship (LHA), USS America (LHA-6), completed builders trials in the Gulf of Mexico. America is due to be commissioned in 2014.

D. TURKEY: On 21 November 2013, the Turkish Coast Guards' (TCG) second Dost class Offshore Patrol Vessel (OPV), TSCG Guven (702), was commissioned.

E. UNITED STATES: In mid-November 2013, AMI received information that the second Egyptian Navy Ezzat class Fast Attack Craft (Fast Missile Craft), F. Zekry (683), would be transferred to the Egyptian sea service by the end of 2013.

F. GERMANY: On 12 December 2013, the German Navy christened the first of four F-125 class destroyers (Baden-Wurttemberg) at ThyssenKrupp Marine Systems’ Hamburg shipyard. The ship is scheduled to commission in November 2016.

USS America

TSCG Guven



Analytical Services – Access to Analysts

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All of AMI’s analysts can be reached by calling 1-360-373-2686, E-mailing at [email protected] or contacting one of the individuals directly as listed at the bottom of this Hot News.

Documents Available For Download

A. CHINA: US Congressional Research Service (CRS) - China's Political Institutions and Leaders in Charts (12 November 2013): Report provides a snapshot of China's leading political institutions and current leaders in nine organization charts and three tables.

B. NORWAY: Norwegian Ministry of Defence (Mod) - The Norwegian Defence Budget 2014: Key Priorities for the Government (2013): Document highlights key defense priorities for 2014.

C. UNITED STATES: US Department of Defense (DoD) - Arctic Strategy (November 2013): Document highlights US interests in the Arctic, DoD supporting objectives, strategic approach and challenges and risks.

Information concerning AMI’s line of downloadable documents and country reports, can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).

AMI International HOT NEWS Naval Market Forecast Newsletter – December 2013

AMI International PO Box 30 Bremerton, WA 98337 USA

AMI Main Office (Washington) Tel: +1 (360) 373-2686 AMI Main Office (Washington) Fax: +1 (360) 478-8962 Rick Dorn Office (Nevada) Tel: +1 (360) 674-6494





Pat Bright Office (Virginia) Tel: + 1 (757) 963-7719

E-mail: Mr. Pat Bright: [email protected] Mr. Richard Dorn: [email protected] Mr. Tony Beitinger: [email protected]


