A RAN Collins Class submarine. In a direct response to Prime Minister Malcolm Turnbull's call for the economy to shift from relying on resources to one centred on innovation and high-tech manufacturing, TKMS said their proposal could gift Australia a highly developed shipbuilding industry on par with the Germans who are considered a world leader. TKMS' Chairman of the Supervisory Board Dr. Hans Christoph Atzpodien said his company would make Australia a "regional hub" for shipbuilding, "serving the [navies] of the Pacific." "This approach … is really about … replicating ourselves as TKMS in Australia, so we are prepared to build up another branch of TKMS which is very substantial, long lasting, with a long perspective, serving the Pacific area even beyond Australia," Dr Atzpodien said. "We want to turn it into a local hub for the region depending on other navies … so it gives us huge opportunities," Vice President of Sales, Robert Budell added.

"In this case we want to build in Australia, we want to use Australian people, Australian resources, Australian shipyards, to do the business there because it's a long term business in Australia for Australia," Mr Budell said. TKMS, once all but out of the race because of former Prime Minister Tony Abbott's preference for Japanese built subs to strengthen the ties with Tokyo and the United States, is now firmly back in the game after the political ramifications of offshoring the submarine build to Japan sparked a fierce political backlash against the Liberals in South Australia and came to the fore during the Feburary leadership push against Mr Abbott. It forced the Coalition into opening a competitive tender process in which TKMS, French company DCNS and the Japanese lodged final bids for last month. TKMS says with its Kiel shipyards in northern Germany bursting with orders for 160 submarines, it makes sense for the build to take place in Australia with a mostly retrained local workforce who can then take care of the maintenance. Under its bid, the first submarine would be ready in 2028. We want to turn it into a local hub for the region, depending on other navies

"Australia has not built submarines for fifteen years now, so we're going to have to retrain the workforce, we want to retrain the workforce to build according to our process, our methodology, our process standards," Mr Budell said. "That's part of what we're offering Australia … that kind of training, that kind of transfer of information and knowledge and technology into Australia." It takes on average five years for an engineer to become fully trained to TKMS' standards. The company has a program in Germany where they employ undergraduate engineers and builders as well as fund their degrees. TKMS has already begun discussions with universities to offer similar programs in Australia as well as reached out to unions to assure them they would employ as many Australian workers as possible. However TKMS says it will insist on full control of their shipyard should they win, because without it, they cannot guarantee meeting their promised cost and delivery times. TKMS says it can produce up to 70 per cent of the submarine in Australia using a new "digital shipyards" concept, in which every worker would work from screens preloaded with the designer's 3D virtual models of every layer of the submarine. A German company would supply the submarines' diesel engines and the Siemens AIP motor partially built in Australia but sent to Berlin for testing. In contrast, West Australian company CIVMEC is in the front seat to build and provide the pressure hulls, under TKMS' proposal.

The new submarines will be larger than the current Collins Class, measuring 90 metres and weighing more than 4000 tonnes. TKMS has not yet built a submarine this big but says it's confident of being able to upscale with no problems. The German government is strongly backing TKMS' bid and has recently agreed to the company's request that Australia be allowed its latest stealth advances in AIP technology, currently only used in three German submarines. "We have provided a lot of technology over the years to a lot of countries but we've never had a carte blanche," Mr Budell said. "It's the first time the German government has truly said 'no restrictions, nothing will be held back and full access' and they want to do joint development … so it pleases us immensely that we have this kind of support for this program and we feel it's a strong statement to Australia," he said. In another first, the German government will also audit ThyssenKrupp's bid to make sure it's cost projections stack up.

But German officials are worried Australia will ultimately choose Japanese made submarines at the request of the US in a tactic designed to counter China. In a rare statement on defence procurement policy, which is rarely discussed in public in Germany, Chancellor Angela Merkel backed TKMS' bid, during her joint statement to the press with Mr Turnbull, during his visit to Berlin last month. "We also believe that our offer is attractive as regards the ability to produce in Australia … but I want to be clear, the German government supports the German offer which has been submitted by private business," Chancellor Merkel said in November. Mr Turnbull said innovation would be vital factor in deciding the winner. "Innovation is absolutely vital. It is going to be the key factor which will determine who will succeed or who will do better and who will do worse in a much more competitive global environment," he said.

"Technology is key and there are also very significant spin-offs into the rest of the technology ecosystem from innovative defence industries and that's, I think, well understood in our own country, but certainly elsewhere as well, including in Germany," he said. Latika Bourke travelled to Germany as a guest of the German Government. Follow Latika Bourke on Facebook