Japan fights for contract to supply submarines to Australia

Japanese Defense Ministry officials and executives from Mitsubishi Heavy Industries have taken the first major step to build 12 stealth submarines for the Australian Navy during public briefings for defense contractors in Adelaide.

European firms are also in talks with representatives of the Australian defense industry. German rivals ThyssenKrupp Marine Systems (ThyssenKrupp AG) (TKMS) and France's state-controlled naval contractor DCNS, both said they would build boats exclusively in Australia, seeing the economic benefits of their proposals.

Japan has received a lot of scrutiny due to its reluctance to build any submarines in Australia, where manufacturing jobs depend on political issues. For the first time in history, the Japanese defense department made an offer to Mitsubishi Heavy to sell military equipment to a foreign government. The company's products include aerospace and automotive components, air conditioners, forklifts, hydraulic equipment, machine tools, rockets, generating equipment, ships and launch vehicles, including those for the defense industry.

Australian media reported that Australian Prime Minister Tony Abbott and Japanese Prime Minister Shinzo Abe privately agreed last year that Japan should get the contract. Although both sides denied the existence of such a deal. Masaki Ishikawa, general director of acquisitions at the Japanese Ministry of Defense, told reporters: "This deal cannot be secret, and the current situation has puzzled and confused us a little, where does this speculation come from?"

Abbott calls Japan "Asia's closest friend" to his country. The United States is also interested in fostering friendly ties between its two main allies in Asia. At the same time, officials in Adelaide, the capital of South Australia, insisted that at least 70 percent of local workers be involved in the project. “The state government, the local defense industry is committed to protecting Australia by building a strong defense industry that supports the workers in our shipyards,” the Secretary of Defense said in a statement.

Each participant was asked to provide three evaluations: one for overseas construction, one for partial assembly in Australia, and one for full construction at an Australian shipyard. The Expert Advisory Board is expected to present its recommendations in November.