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Royal Australian Navy Discussions and Updates

Discussion in 'Navy & Maritime' started by icelord, Feb 13, 2007.

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  1. MrConservative

    MrConservative Super Moderator Staff Member

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    As Alexa wrote;

    1. The company is wholly owned by the Spanish government. It would never contemplate exposing Navantia's customers to any sovereign risk.
    2. The company has a healthy military order book with future Armada orders nearing reality and it's in a healthy contest for the FF(X)
    3. The combined Navantia workforce has a great deal of political clout in the regions, especially Galicia.

    None of the above are prohibited by EU laws. For example a contract signed by Navantia Australia (Even though it maybe 100% owned by the Spanish Govt) and the Commonwealth of Australia is subject to Australian commercial law and not EU law. We dont know who are the parties to the contract - thus any speculation is just that.
     
  2. Ocean1Curse

    Ocean1Curse Member

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    I don't wish to encourage this, just want to clear a few things up so let's be brutally honest here. In terms of "risk management," If your ideas are crap you're going to have to be the greatest risk manager of all time. So generating ideas is equally important as is risk management. It's essential you generate your own ideas so risk can be managed correctly. You need both, you can't do one with out the other.

    The easiest way to generate your own ideas is when you've got consistent and quality information. We have good information from defence suppliers posted by some delegent individuals who should be saluted for there voluntary effort, but not from procurement officers on the other side for obvious reasons. Not only do you have to generate those ideas but you have to have the wherewithal to implement those ideas. So look back through this thread. There are great indicators from quality guys who are typically 3 months ahead of every every one else, and we're looking where the trends are. We are talking about value investing over multi decade time horizons. The easiest way to identify a trend is to look at lead indicators. Look at different sectors, see where there's a slow down, and where there's growth, then do a ship selection with on that. And again your trying to get the risk reward as much in your favour. That's the idea generation part.

    Again you can generate a fantastic set of ideas for different capabilities, how ever if the timing doesn't look right, for right here, right now, be patient. The timing will come right, and selecting a vessel may take longer than you think. Procurement overruns happen all the time (boredom trades we actually call them) where nothing's going on, and you're trying to force something. You end up losing money, cook the contract, and you think what an idiot you are, all it's doing is writing checks to the market.

    Thats my take on risk management. Absolutely do not do boredom trades. You'll lose money and look like a muppet.
     
    PeterM and Meriv90 like this.
  3. ngatimozart

    ngatimozart Super Moderator Staff Member Verified Defense Pro

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    You have made some claims and have not provided verifiable evidence for those. We have an expectation that posters provide verifiable sources. For your information posters with blue tags are defence professionals whose credentials have been checked and verified. For security and /or commercially sensitive reasons, they may not be in a position to offer certain information, however where possible they will offer valued and considered opinions. I strongly suggest that you read what they have written and be less combative in your replies. I also strongly suggest that you read back through the thread and read what has been posted.
     
  4. hauritz

    hauritz Active Member

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    Part of the deal if Australia buys the F-5000 is that Navatia will transfer all the design and export rights to, with all intellectual property owned and managed in Australia.

    That sounds like Australia will no longer need anything much from Navantia.
     
  5. MrConservative

    MrConservative Super Moderator Staff Member

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    If the CoA signs a contract with Navantia Australia Pty Ltd. to build future frigates then that contract is subject to Australian commercial law and if that company fails then an Australian Govt official assignee will be appointed. EU state subsidy laws have zero bearing with respect to Australian registered companies such as for example Navantia Australia Pty Ltd. in Australian jurisdiction irrespective of the origin of their securities subscription. I am certain that the CoA will do full due diligence on all parties to a potential contract of national significance and value at a level well beyond your own fiscal, legal and political abilities.
     
  6. John Fedup

    John Fedup Well-Known Member

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    Apparently Australian auditors like doom and gloom reports, just like their Canadian counterparts. Can't really comment on the validity of the report but I have think the Australian approach is less risky assuming Australia and Canada choose either the Navantia or T26 design.

    Audit: Australian multi-billion shipbuilding plan carries extreme risk
     
  7. Meriv90

    Meriv90 Member

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    [Serious question not rhetoric] I'm sorry I'm not understanding, if Navantia spanish condition isn't that important why aren't you just buying the IP proprieties and build it yourself?

    Like the Canadian Ice Breaker, the Canadians just bought the design from our Norwegian Vard branch and they built it themselves. Another example is the T-129 the Turkish Mangusta derivative after we sold to them for 1,4billions the A-129 tech data.

    So why the need of Navantia?
     
    Last edited: May 16, 2018
  8. 76mmGuns

    76mmGuns Member

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    I have a Q for the experienced members here.

    Have governments, not just Australia's, ever increased the number of naval vessels built because the tender was just that good? I'm thinking - no, but I don't follow other countries closely.

    Eg if navantia wins, they save a lot of time and testing ( was it assail who said something like testing the steel is already done for the Hobart's, staff are already trained, etc) , so the $35bn might conceivably stretch to 11 ships, instead of 9.
     
  9. Todjaeger

    Todjaeger Potstirrer

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    It is a bit more complicated than that. However, that is similar to what was done with the Collins-class SSG ANZAC-class FFH, the Hobart-class DDG, will be done with the SEA 1180 OPV, and so on.

    As I understand it, the CoA purchased the IP rights to build a certain number of each of the classes of vessel that were (or are to be) built in Australia, as opposed to complete IP rights. The principal difference AFAIK is that complete ownership of the IP rights would permit the CoA (or any other IP owner for that matter) to build and/or modify the IP/designs as much as they would like.

    Using the SEA 5000 Future Frigate programme as an example, whichever design (British, Italian, or Spanish) gets selected, the vessels themselves will be assembled in an Australian facility (Techport) in Osborne. The company which is operating the facility might change, but it will still be an Australian facility, as will the other shipyards in Australia which might get block work.

    Unlike Navantia's involvement in the Canberra-class LHD builds, or the upcoming replenishment oiler, during the Hobart-class AWD build Navantia was just involved in the design and ship plans though Volk would be much better at explaining what they did. For the Canberra-class LHD, the basic vessels were built in Spain, because Australia has not had a yard available for constructing naval vessels of such size since the Cockatoo Island yards shut down in 1992. Once the vessel's hull, machinery and superstructure were built and assembled, the vessels were transported to Australia for fitout.

    With that in mind, what the RAN seems most interested in is the design work, and how suitable a design is within the Australian context for the SEA 5000 Future Frigate. The state of a foreign company's overseas shipyards, yard workforce, or balance sheet is irrelevant, unless it impacts the ability of the design team to put together plans for the type of frigate Australia is seeking, fitted with the kit Australia desires.

    From my outsider's non-industry perspective, a design team that already has significant experience putting together designs which Australia is already somewhat familiar with, that also tends to feature much of the same kit Australia is going to use, is likely to have an edge.

    With respect to comments regarding the EU, I do not see how they are realistically applicable. Aside from the assumption that any EU competition rules also include national security exemptions, none of the actual SEA 5000 build work is going to occur outside of Australia. So unless someone could make a credible claim that Italy, Spain, or the UK were going to subsidize (to one degree or another) an Australian frigate build programme, provided their respective national design was selected, then the EU competition rules should not matter.

    This is not like the trade disputes which have been occurring between Airbus and Boeing over the cost of civilian airliners and resulting competition for orders. In the Airbus/Boeing trade disputes, civilian airlines have sought certain classes of airliners which both companies produce, and therefore the airlines have at least partially based their selection decisions on the initial acquisition and operating/support costs. These costs (initial acquisition especially) can be influenced or impacted by gov't policies on taxes, subsidies, etc. which impact the cost to either Airbus or Boeing to actually produce an individual aircraft or part. With the Australian National Shipbuilding plan having RAN ships built in Australia except for vessels too large to be built in current Australian yards, all those production costs which can be subject to influence from gov't policies are subject to Australian gov't policies, not those of the various national gov'ts belonging to the home countries of the designers.
     
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  10. Joe Black

    Joe Black Member

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    More on the OPV...

    https://venturaapdr.partica.online/...ins-key-role-in-construction-starting-q4-2018

    Some key info on the OPV:

    Lürssen’s Australian OPV80 variant will be 80 metres in length, have a 13 metre beam, a draught of 4 metres, and displace 1700 tonnes.

    The vessels will be fitted with a 40mm gun for self-protection, three 8.4m sea boats, state of the art sensors as well as command and communication systems. This will allow the OPVs to operate alongside Australian Border Force vessels, other Australian Defence Force units and regional partners.

    One feature new to Navy is the placement of a rapid interceptor ramp, whereby a sea boat can be launched within one minute of being manned, down a sloping stern access to the sea. Recovery is by means of the same ramp.

    The vessels will accommodate up to 60 personnel, including a crew of around 40 Navy personnel and will accept modular mission packs such as unmanned aerial systems. These may be contained in two TEU containers on the flight deck, which can otherwise land an RAN MH-60R medium helicopter. With no hangar available, the Romeo helicopter can only visit!
     
  11. Todjaeger

    Todjaeger Potstirrer

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    It would depend on how you view things. Realistically though the only Western country which like builds naval vessels in sufficient quantity to make such a difference is the US.

    Using the RAN as an example, there is a certain sized body of personnel who can be utilized to crew the various RAN vessels and shore establishments. If suddenly an extra two frigates could be added to the fleet, that would likely cause at least two frigates (possibly even more) to be tied up alongside in 'Extended Readiness' as the RAN has the personnel numbers to operate ~12 major surface escorts, and not 14.

    From my perspective, the only time such a circumstance would be worthwhile to pursue if one were to know beforehand that at times there should be vessels unavailable due to extended repair or upgrade times that are measured in years. After all, it 'extra' vessels are acquired at no additional initial costs, having a larger fleet will have higher ongoing support costs, especially future upgrade costs.
     
  12. Blas de Lezo

    Blas de Lezo Member

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    Very right!

    Add to that the engineering of the Turkish LHD and the 5 billion contract to build 5 corvettes + port facilities to Saudi Arabia.

    Lets not forget that Navantia is 100% owned by the Spanish government in what is considered an strategic sector, so the Spanish government will do what it has to to ensure it remains that way.
    It has been a tough few years (Worldwide) but right now Navantia Spain has under construction two BAMs, Two AORs for Australia , four S80 (finally on their way) and very shortly 5 F110 and 5 corvettes based on the Avante class to SA . The gap is gone.
    Top that with Navantia Australia Sea 5000 tender and Navantia Australia leading the efforts in Canada + The FFG(X) and the future does not look as bleak as some people would like to paint it.
     
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  13. John Fedup

    John Fedup Well-Known Member

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    Canada has not built any heavy icebreaker yet.
     
  14. Meriv90

    Meriv90 Member

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    What I'm going to write is an answer to the question of Spanish state and Navantia solidity it isn't relative to the RAN.
    -----------------------------------------------------------------
    First. Order book doesn't imply returns. One could even say by looking to the graphs (if we ignore the "correlation doesn't imply causality") that the bigger the order book the bigger the loss.

    For example Fincantieri reached just now positive returns, with a 30bln order book behind it... 3 times more than Navantia.

    This is from the Spanish newspapers i read and I'm no expert

    Navantia is a pubblic shipyard, with public rules. Thus at the base of the problem we have incompetent managers, that keep increasing in numbers and salary regardless of the company loss.

    It is the same Galicians that say so

    Navantia multiplica el número de altos cargos pese al récord de pérdidas

    For the same reasons market competition don't apply to it, so having 50% of workers over 50year old is possible. (again spanish newspaper ask for source if needed) .

    Second. It isn't immune to the EU rules, it has already been found guilty of state aid in the past.

    El Tribunal de Justicia de la UE asegura que las ayudas a Navantia pueden ser ilegales

    https://www.eldiario.es/galicia/justicia-Navantia-librarse-IBI-Ferrol_0_348215912.html

    http://europa.eu/rapid/press-release_IP-04-633_en.htm

    As you can see the spanish goverment has been state aiding Navantia for the last 20 years.


    P.S. Todjaeger thanks for the answer :) and thanks to Jonh Fedup for correcting me
     
  15. Todjaeger

    Todjaeger Potstirrer

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    How would any economic issues going on with Navantia in Spain impact the RAN's sustainment costs, when the work done for the RAN will be carried out in Australia by Australian workers and yards?
     
  16. ASSAIL

    ASSAIL Defense Professional Verified Defense Pro

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    Those risks are to cost, schedule and industrial capacity not to commercial viability and as in every national enterprise such as the $90billion shipbuilding plan, these risks are manageable
     
  17. Meriv90

    Meriv90 Member

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    By quoting Volk, if problems arise in Spain for Navantia and they must cut personnel they could end up cutting employees assigned to the Australian project.

    Navantia presenta a los sindicatos la fórmula para rejuvenecer la plantilla

    Many situations pass trough my head. You could have your Australian manager promoted to a Spanish higher position, or your Australian manager simply retires without a replacement ready etc... etc...


    The good side is it would mean more job for locals.
     
  18. hairyman

    hairyman Member

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    Surely the RAN could up its recruiting and training extra sailors to accommodate two extra ships, as it would take several years to build two additional ships, it would not happen overnight.
     
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  19. pgclift

    pgclift New Member

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    Agree with that conclusion.

    In summary, the stated audit objective was to assess the effectiveness to date of the DoD’s planning for the mobilisation of its continuous shipbuilding program in Australia and the audit does not seek to provide assurance on the detailed management and progress of individual programs or platforms.

    In respect of the main audit objective, the report is generally favourable.

    However, the ANAO had made a finding that (regardless of the selected option) “A key potential risk relates to any decision to integrate the Aegis Ballistic Missile Defense capability into the selected frigate, which would require significant development work and be a departure from the Government’s guiding principle of minimising unique Australian design changes”.

    Interestingly the ANAO does not make any recommendation about ABMD integration risk (and as Assail has inferred), the only recommendation from the audit relates to defence revisiting the 2016 White Paper costings to update the affordability of the 2017 Naval Shipbuilding Plan.

    Defence has rejected that recommendation.

    The report is available by searching ANAO, Performance Audit, Naval Construction Programs -Mobilisation and if the link works it’s at:

    https://www.anao.gov.au/work/performance-audit/naval-construction-programs-mobilisation
     
  20. Todjaeger

    Todjaeger Potstirrer

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    Could that happen? Sure. Is it likely? IMO, and having gone through a couple of layoffs, no. In my experience, personnel who get laid off tend to be people in positions that are either no longer productive, no longer profitable, or can be replaced by other personnel who can perform the same functions for lower wages.

    This is why places like shipyards tend to layoff the yard workers when there are no open orders booked, and then reduce the management staff when the pool of yard workers shrink and there are less people to manage.

    As I understand it, the Australian-based subsidiaries of overseas ship builders (BAE, Fincantieri, Navantia) are going to have their Australian subsidiaries doing some design and certification work, QC and possibly some design modification as needs are dictated by the build programme. Once their work for the SEA 5000 project is done, then I would expect they would either be reassigned to other projects, or change companies, depending on what opportunities are available, where, and the required skills/qualifications. Keep in mind that a fair number of all the Australian subsidiary employees are Australian and that the foreign companies have to abide by Australian employment laws with regards to the employees of their Australian subsidiaries.

    In short, rather than continue with a discussion on the potential economic forecasts for Navantia which would be unlikely to have an impact on RAN projects, how about we confine discussion to the RAN.