France’s smart maneuvering landed it a lucrative defense contract

The contract would have originally gone to Japan, but France with her smart quick made the contract her own.

In 2014 when the Japanese Prime Minister met his Australian counterpart to make a $40 billion deal for the manufacturing of submarines, which he hoped would revive Japan’s flagging arms export industry, little did he know that the contract would be ultimately awarded to DCNS, a French naval contractor.

Having sniffed out the making of this deal between the two countries, France has, through fluid maneuvers secure this most lucrative deal, which has come as a surprise for many, if not for others, it certainly was for Tokyo who had planned on fast tracking its arms export industry on the back of this deal.

Interviews with more than a dozen Japanese, Australian, German and French industry and government officials have indicated how missteps by Japanese corporate executives, diplomats and officials from its group of ministers have badly undermined its bid for the project.

Case in point: The Japanese Group, which included Kawasaki Heavy Industries and Mitsubishi Heavy Industries, misread the changing political landscape in Australia which did not favour Abbott, who fell from favour.

Secondly, the Japanese Group‘s commitments did not provide for creating skilled shipbuilding jobs in Australia.

Thirdly, as per sources who were familiar with the matter at hand, Japan took ages to realise that it was being outmaneuvered by the Germans and especially the clever French.

Once the deal was sniffed out, the French had swiftly mobilized its matured and experienced military-industrial complex and had hired Sean Costello, an insider from the Australian Submarine industry, which led it to its success in snagging the deal.

For Japan, the loss of the deal represents a major setback for its push to revive its arms export industry, which is part of Abe’s muscular security agenda after decades of pacifism.

“We put our utmost effort into the bid, we will do a thorough analysis of what impact the result will have on our defense industry,” said the head of the Ministry of Defense’s procurement agency Hideaki Watanabe said after the result was announced on Tuesday.

Incidentally, Japan and Australia, key allies of the United States, had wanted to cement their security ties so as to counter the growing Chinese influence in the South China Sea and Indian Ocean.

The French Maneuver

In November 2014, when France got the wind on this deal, Herve Guillou, the CEO of DCNS prevailed on Jean-Yves Le Drian, the French Defence Minister to visit Australia and start the pitching for France.

As per a source who is close to the matter at hand, with Le Drian having to travel to Albany where officials were scheduled to meet in order to commemorate the 100 year anniversary of the first sailing of Australian soldiers to fight on France’s Western Front during World War One, the discussion about France securing the submarine contract took place.

“The French minister wished to be there for this important event. There, he held talks with his Australian counterpart David Johnston and with … Abbott,” said the source who preferred anonymity since he was not authorized to speak to the media.

Excessive self-confidence led it to its dilemma

In December 2014, when the Australian Defense Minister submitted his papers due to political reasons, this political instability eroded whatever hold the Japanese had with Australia’s old guards.

South Australian lawmakers however were a worried lot: they suspected that if the contract were to be awarded to Japan, it would put Australian ship builders at a disadvantage. They suspected that the Abbott government and pressurized its prime minister into holding competitive tender process, which France’s DCNS and Germany’s ThyssenKrupp Marine Systems quickly joined.

In February 2015, Abbott called “best friend in Asia”, and informed him about the new bidding process. As per two sources with the knowledge of the conversation, Abe is said to have sympathized and said he would do his best to comply with the tendering process.

The self-confident Japanese group, convinced of its lead in snagging the deal, dithered its decision making.

“Even though we were in the competition we acted as though nothing had changed. We thought we had already won, so why do anything to rock the boat?” said a source from the Japanese government who was involved in the bid.

Confident in their thoughts, the Japanese delegation failed to attend conference for the Future Submarines project which took place in March 2015. More importantly they did not understand how crucial the lobbying event was for the project, which left the field open to its French and German rivals, said a source from the Japanese government who was within the Japanese bid process.

Subsequently, Japan’s belated attempts to engage with potential local suppliers at a follow up event in August 2015 did not meet expectations and went badly with companies complaining that Tokyo was unwilling to discuss substantive deals.

Furthermore, with Abe lifting Japan’s old decades ban on weapons export, neither Japanese company had any prior Australian military partners.

“The Japanese had been invited in on a handshake deal and were left trying to compete in an international competition having no experience in doing such a thing,” said a source from the Australian defense industry.

Categories: Creativity, Entrepreneurship, Geopolitics, Strategy


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