The last three weeks, DefenceChronicles has collected interesting developments in Germany, which all illustrate how inconsistent the Defence issues have gone in Germany.
Inconsistency in the defence procurement
The Federal Government has recently announced that it will pour in more money than in decades buying ships worth more than €20Bn over the next 10 years. Good!
But more than anything, this figure shows how neglected the Navy was in the past 25 years. If Germany’s Navy has often had to wait too long for ships that were then of disappointing quality, like the F125 frigate or the K130 corvette and even the submarine program, is partly due to the persistent low procurement budget. Low investment in the RDT&E and procurement (not to speak about support, spares & parts) has demobilized the industry and has lead to a lack of competencies.
No one should wonder why this has lead to low quality and high prices.
No one should wonder why the former champion of the Naval shipbuilding in Germany, ThyssenKrupp Marine Systems, is today in such a bad shape, losing money from nearly each of its export submarine contracts and seems unable to produce in time and within the budget a corvette or a frigate.
This vicious spiral must be stopped. As the Americans leave Europe and Russia encroaches from the East, Germany has to contribute more to EU & NATO security: the MKS180 program is the right opportunity to fix up all the ground problems which cripple the German Navy but this could only be achieved through a sustainable procurement budget.
It is a matter of consistency.
Inconsistency in the export policy
The recent debate over the Saudi contract of Lürssen has shed light again on the inconsistency of the German Government’s industrial policy. As everybody knows, the German shipbuilding industry is highly dependent on the export market, given the small flow of domestic orders.
But the Federal Government has made clear that it will lead a restrictive policy beyond NATO markets. Even if this hard line remains party theoretical (after all, the Lürssen’s patrol boats to Saudi Arabia coAst-guards are still cleared for delivery and indeed are delivered!), this general guideline proves that the German government is still inconsistent with the industry.
After having dried up the procurement defence budget for years, it does not help much the industry in finding orders on export markets: how can the industry survive, being crippled and apparently neglected, by the government both at home and overseas?
As the competition has become extremely aggressive with old actors (from Europe and the U.S.A) and new comers (from Asia and South America), the MKS180 is the right time to re-examine the export issue: not only the issue of export licenses but the full support that the German industry should to receive. For everybody is aware that such programs won’t repeat themselves every decade: meanwhile, industry has to be fed with other orders. Foreign ones.
It is, here again, a matter of consistency.
Inconsistency in the industrial policy
Rather than increasing the domestic budgets, supporting any export opportunity and pushing the industry to a needed national consolidation, the German MoD has led the exact opposite politics : as seen, it has decreased the defence budget (procurement, RDT&E and support) for decades and restricted the authorization to export.
Worse: it has opened up the door of its biggest naval project for decades to European competitors, at a time where all European MoDs did exactly the opposite…This inconsistency has led the industry to find foreign alliances, to break the German naval alliance, keystone of the success abroad and to obscure the real issues. DefenceChronicles was quite puzzled to hear people from Lürssen at their stand during the Hamburger Messe demanding to the City Mayor of Hamburg more involvement into the MKS180 competition.
This demand by Lürssen employees is illustrative of the inconsistency of the ground debate over the MKS180 program:
⇒ First, defence orders are by no means a way of favoring a Land against another one, or a tool for the territory development. If it was the case, the Lürssen demand would be somewhat restrictive: DefenceChronicles has never heard Lürssen or Damen speaking of sharing work around important yards; on the contrary, both shipyards speak only of benefitting Hamburg whereas GNYK’s statements embrace not only Hamburg (to its available capacity) but also other sites within Germany.
⇒ Then, and more fundamentally, in the defence industry, the RDT&E is paid by the Government to its industry, because research, development and trials are highly expensive and therefore can only be paid by a Sate. It is how it goes in every Minister of Defence in Europe, in Asia and in the U.S.A. For the MKS180, the RDT&E will be paid by the German MoD (i.e, German taxpayers).
Should this tremendous financial effort really be let only to a foreign contractor which claimed in a famous letter that ‘The highly innovative and worldwide successful shipbuilding know how of Damen would be transmitted to Germany (…) ’ ? Should Damen clinch the deal, the vast flow of money for RDT&E would then first flow to Vlissingen, and not in Germany. This situation would be particularly harmful to the “Deutschland standort”.
It would be far more rational and effective for Germany that the future RDT&E funds for the MKS180 program would go to a German prime contractor associated to a German contractor and not to a foreign prime contractor associated to a German one. Defencechronicles cannot provide a single example of such an altruism elsewhere in Europe or in the world…
⇒ Finally, as DefenceChronicles has already stated elsewhere on this website, the real issue is not the specific defence of Hamburg or Kiel, but the issue of the core competencies in naval shipbuilding. What are the main competencies that Germany should retain into German hands for its strategic autonomy and security? The answer is quite simple: the design capability, the combat management system, the system’s integration, the sonar and its interfaces with the ship, and of course, the prime contractorship to handle with care such a complex surface ship like the future MKS180 frigates. The real challenges are here and nowhere else.
It is, here again, a matter of consistency.
MKS180: the right program to fix German inconsistencies in defence industrial policy
To address all these German inconsistencies in the defence industrial policy , the German Government should follow the path of its European peers:
- increase the defence budget, especially in RDT&E, procurement and support for its industry, after decades of underinvestment, which has lead to the atrophy of core industrial competencies,
- promote the national products on the export market each time there is a national interest at stake, instead of considering that arm’s export is not a tool of a foreign policy;
- favor the national consolidation of the naval shipbuilding industry by the allocation of major programs to German players to ease it and sustain it, as every Minister of Defence does around the world…