Regional tensions sparking submarine manufacturing boom in Asia/Pacific.

Stew Magnuson, National Defense
18 August 2015

Asia-Pacific navies are expected to surpass European nations on submarine spending over the next 10 years because of increasing instability in the region, according to a new report.
The submarine market in the Asia-Pacific region is valued at $7.3 billion this year, but is projected to grow at an annual rate of 4.18 percent to reach $11 billion in 2025, according to a new report “The Global Submarine and MRO Market 2015–2025,” produced by Strategic Defence Intelligence, a London-based business information firm. The United States is expected to remain the largest market for submarines, with a projected cumulative spending of $102.2 billion over the next decade.
The growth in Asia is primarily driven by major countries such as China, India, Australia and South Korea, which are focusing more on developing their naval capabilities. This is attributed to the rising number of maritime conflicts and
potential threats in the South China Sea as well as the Pacific and Indian Oceans, the report said.
“Growing Chinese assertiveness in disputes over islands in the South China Sea and the rapid modernization of China’s submarine fleet spurred the demand for submarines in countries such as India, Japan, Taiwan, Australia and Vietnam,” Sravan Kumar Gorantala, an analyst at SDI said in a statement.
Smaller nations such as Indonesia, Thailand, Vietnam and Singapore are also investing in submarine acquisitions in order to strengthen their naval arsenals, according to the report’s executive summary.
China, India and Pakistan prefer nuclear-powered submarines, the report said.
“Major defense spenders like the U.S., the U.K. and France prefer nuclear-powered attack and ballistic missile submarines instead of conventional submarines,” said Gorantala.
The SSN-nuclear attack submarine segment is projected to account for the highest proportion of expenditure in the global market, followed by SSK-diesel-electric submarines and SSBN-ballistic missile submarines. SDI declined to share specific numbers on their respective market shares.
The major factor driving expenditure on the SSN segment is the ability of nuclear-powered attack submarines to be at sea for longer missions without refueling when compared to the SSK submarines. Major investments in this category include U.S. Navy’s Virginia class, Chinese Type 093, 095 and 097, Russian Yasen class, the U.K.’s Astute, and the French Barracuda, among others, the report said.
The U.S. Navy’s expenditure on submarines is expected to increase because of its need to replace its existing aging fleets of Los Angeles-SSN class submarines, Seawolf-class submarines and Ohio SSBNs, the report said.
Europe is projected to spend a cumulative $76.3 billion on submarines in the same 10-year period, largely driven by Russia, the United Kingdom and France. Heightened maritime trade activities and security threats from sea fronts are boosting the demand for multi-role submarines, the report said.
These naval vessels are equipped to handle numerous critical missions such as intelligence, surveillance and reconaissance missions, conventional land attack, sea control, mine warfare as well as operations in littorals. “As a result, SSN submarines and SSK submarines are expected to be more in demand from countries across the world,” said Gorantala.
European programs include the U.K.’s Astute and Successor classes and Russia’s Yase, and Borei classes, which have been initiated in previous years.
The submarine shipbuilding industry is largely characterized by problems of project delays, cost overruns and a lack of skilled labor, the report said. Projects such as India’s Scorpene-class submarine and Australia’s Collins-class replacement have witnessed delays of more than four years. The delays are attributed to difficulties faced by Indian manufacturer, Mazagon Docks in procuring materials from foreign vendors and lower budget allocation by the Australian defence ministry for their respective programs.