Australian submarines to be built in Adelaide after French company DCNS wins $50b contract

Updated

A French company has beaten competitors from Germany and Japan to secure the contract to build Australia's next fleet of submarines, with the Federal Government promising thousands of Australian jobs will be created.

Key points: Australia's next fleet of submarines will be built in Adelaide

The project will create 2,800 jobs nationwide

The design will come from French company DCNS

The much anticipated $50 billion contract has been settled in the febrile, pre-election period and ensures the 12 new submarines will be built at Adelaide's Osborne shipyards.

Prime Minister Malcolm Turnbull flew to Adelaide to make the official announcement, confirming French company DCNS had won the bid to build a modified version of its nuclear submarine called the Shortfin Barracuda.

He was flanked by his Defence Minister Marise Payne and local cabinet colleague Christopher Pyne, who holds a marginal South Australian seat.

Mr Turnbull stressed the 12 submarines would be built in Adelaide and the project would create 2,800 Australian jobs.

"This is a great day for our Navy, a great day for Australia's 21st century economy, a great day for the jobs of the future," Mr Turnbull said.

"Australian built, Australian jobs, Australian steel, here right where we stand."

Labor's defence spokesman Stephen Conroy described the decision as a "real victory for the people of Adelaide" but said it came after three years of "fake promises" from the Liberal Party.

Senator Conroy maintains Labor pressure led the Government to make the commitment, and he questioned whether all 12 submarines would be built in Australia.

The Government confirmed that while the bulk of the submarine build will occur in Adelaide, components will come from other parts of the country and the United States.

Mr Turnbull also dodged questions about the exact percentage of the build that will take place in Australia, saying those negotiations have not been settled.

It also comes just days after the Government announced Adelaide shipbuilders would start the construction of 12 offshore patrol vessels in 2018 before starting on a fleet of frigates in 2020.

Speaking to Lateline, Senator Payne played down reports in French media the deal would keep 4,000 people employed at the plant in France.

"There's some enthusiasm around translation involved in that, for starters from French to English, and perhaps French to Australian [is] even worse," she said.

"But the most important aspect of this is that our modelling and our plans clearly show us it is 1,100 jobs in the shipbuilding process, potentially 750 jobs in the supply chain process, and that's without even taking in to account the surface ship announcement we made last week."

Senator Payne said every state and territory wanted to be involved in the project.

"This is truly going to be a national endeavour. It is a seminal point in our ability to acquire key naval platforms for Australia's national security," she said.

Tokyo questions submarine decision

Japan and Germany submitted unsuccessful bids for the contract and Tokyo has already expressed disappointment in the Federal Government's decision and requested an explanation.

Mr Turnbull was questioned about any potential fallout and said Australia and Japan remained committed to a "special strategic partnership".

He later told 7.30 he had spoken directly to Mr Abe about the decision.

While he was prime minister Tony Abbott had entered into an informal agreement with Japanese Prime Minister Shinzo Abe.

Mr Abbott released a statement on Tuesday saying he was confident the relationship with Japan was "more than strong enough to withstand this disappointment" of the decision.

German bidder Thyssenkrupp Marine Systems also released a statement. The company's Australian chairman John White said the company respected the Government's decision.

"We are naturally disappointed but we stand ready to provide support for Australia's future submarines project with our unrivalled experience, leading technology and track record in building submarines in the customer's own country," Dr White said.

He said TKMS remained "committed to the essence" of Australia's shipbuilding projects, to transition its "naval shipbuilding industry to world class naval capability and competitiveness, capable of export".

Senator Payne said national security was the number one driver of the final decision, which was made after a 15-month competitive evaluation process.

"It reflects the fact that we are a maritime-based trading nation and both our national and economic security are linked to the maritime environment of our region," she said.

"This decision was driven by DCNS's ability to best meet all of our unique capability requirements.

"These included superior sensor performance and stealth characteristics, as well as range and endurance similar to the Collins Class submarine."

The company has built more than 100 submarines for nine navies.

Topics: defence-industry, defence-and-national-security, states-and-territories, federal---state-issues, government-and-politics, navy, defence-forces, adelaide-5000, sa, australia

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