Saturday, May 2, 2015

Submarine resurface as growth business

Technology, geopolitics make nonnuclear subs attractive again; a Baltic battle

Daniel Michaels/Wall Street Journal
1 May 2015

The submarine battle that erupted across the Baltic Sea was about business.
The Swedish government, upset with German ownership of Sweden’s biggest shipyard, last summer compelled ThyssenKrupp to sell its Kockums operation to Sweden’s Saab. The move, which ThyssenKrupp calls “unfair,” cost the German industrial group a billion-dollar submarine contract and hundreds of skilled engineers.
And Sweden’s maneuver established defense contractor Saab as a new rival in the global submarine market. ThyssenKrupp, the world’s top nonnuclear-sub maker, already feels heat from newly active producers in Japan and South Korea, and from old rivals in France and Russia.
For Saab, which quickly won a first stage of the Swedish submarine contract and is jockeying for foreign orders, Kockums “is a good marriage,” says Gunilla Fransson, head of Saab’s security-and-defense unit. “Saab has for many years been very good at defense exports.”
The Swedish-German sub spat is part of a new current for military contractors: Diesel subs have resurfaced as a growth business, thanks to shifting geopolitics and innovation.
For the first time since the Cold War, the world sub fleet is growing. Driven by changing strategic threats, surging global trade and new technologies, countries are buying or upgrading subs, even as some scale back on land and air equipment.
Stealth makes subs particularly appealing to countries feeling threatened by larger rivals. Vietnam is buying its first subs, from Russia, while Australia, Indonesia, Singapore and South Korea are expanding their fleets—a response, in part, to China’s expansion of its navy with ships including its first aircraft carrier and large nuclear subs.
Iran has said in state-controlled media it is developing conventional subs to enhance its Russian-built fleet. Firm numbers aren’t available—countries guard their military plans—but at least 17 nations have made public plans to create or expand sub fleets.
Submarines are unique among large military equipment for their ability to defend a country, project power and protect themselves. Aircraft carriers embody awesome strength but are expensive and vulnerable. Ground-based aircraft can reach far but require support ranging from refueling planes to spare parts.
In a shift, there is new demand for subs powered by diesel engines and electricity, not just for those with nuclear reactors. The Cold War’s end spurred cuts in the global fleet of diesel-electric submarines, to 256 last year, compared with 463 such vessels 15 years ago, according to London-based International Institute for Strategic Studies.
The Kockums unit of Sweden's Saab AB builds ships and submarines, including the navy ship shown here, underground at the Muskö naval base in Sweden.The Kockums unit of Sweden's Saab AB builds ships and submarines, including the navy ship shown here,

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