march 2013 - ipx1.com · one obvious lesson that can be drawn from these times are that navies...

March 2013 In This Issue … 01 - YEMEN: Emerging Mine

Countermeasures Vessel (MCMV) Requirement

02 - AMI: From the Desk of the CEO

03 - CANADA: Design Definition Contract for Arctic Offshore Patrol Ship (AOPS)

04 - URUGUAY: Indigenous Offshore Patrol Vessel (OPV) Construction

04 - TAIWAN: Corvette Program May Require Larger Vessels

05 - UNITED KINGDOM: Spending Plan 2012-2022 Funds All Major Projects; is it Enough?

06 - SAUDI ARABIA: Navy/Coast Guard Makes a Decision on Fast Patrol Vessels

07 - BELGIUM: Patrol Boat Program Goes to France’s Socarnam

08 - BANGLADESH: Fleet Renewal in Full Swing

09 - BRAZIL: Indigenous Submarine Construction Yard Opens

10 - ASIA: Regional Update

11 - IMDEX Asia 2013: Naval Market Outlook for Small Combatant and Patrol Ships

13 - WORLD: Shipyard Consolidation / Merger Highlights

14 - INTERNATIONAL: Combat, Sensor and Integration System Developments

15 - VARIOUS: Did You Know?

16 - AMI: Analytical Services - Access to Analysts

17 - AMI: Documents Available for Download

Emerging Mine Countermeasures Vessel (MCMV) Requirement

On 22 February 2013, AMI received information that the Yemen Navy (YN) was planning to procure two mine countermeasures vessels (MCMV) and three underwater mine detection systems.

Currently the YN has one ex-Soviet Natya I (Project 266ME) ocean minesweeper (MSO) in inventory that is in questionable operational condition and is in need of replacement.

Information received indicates that Yemen is working closely with Qatar, who has offered financing for the three underwater mine detection systems (unmanned), and has left the Yemeni Defense Ministry to determine the specifications for the two MCMVs. Qatar is currently considering its own MCMV program and will also require underwater mine detection systems and it would make sense to join with the YN.

Natya I Class MSO (Indian Colors) Sources state that while the YN desires to procure the two vessels from the UAE, namely Abu Dhabi Ship Building (ADSB). ADSB has never built MCMVs even though they are currently constructing composite hulls at their new composite facility and ADSB has nearly completed an MCMV refit and modernization program for two ex-German mine warfare vessels (with Atlas Elektronik as prime contractor, and hull support expertise from German builder Lurrsen). In order to build the MCMVs at ADSB, it would require a hull design from a foreign source and construction at ADSB would be considered riskier than if the YN bought directly from a current supplier of MCMVs. (Cont. on pg. 3)

Hot News March 2013

Naval Market Forecast Newsletter

From the Desk of the CEO

A Conversation with Fellow Countrymen

Most of the advanced economies of the world are going into a 5th year of an economic recession. This is the longest sustained downturn since the “Great” Depression which ended in a global military cataclysm.

At the same time, the lack of action by the United States, in particular the inability of the US Congress or other institutions to provide meaningful course corrections to generate economic growth is notable. As the United States still generates nearly 25% of the World’s GDP and remains the world’s largest spender on new naval ships and other platforms, our strangled consumption is having a very negative effect on the defense industry globally.

So, while frustrating, the current prolonged worldwide economic downturn in addition to US political intransigents usually provides opportunity for change. Historically, the majority of these changes occur under these types of economic and political pressures.

One obvious lesson that can be drawn from these times are that Navies cannot rely on elected representatives (Parliamentarians or Congressional representatives) to spend time on issues vital to Navies when voters are suffering from larger and more pressing political and economic pains. Most of us living in more modern “legacy” economies in the US and Europe are shouldered with massive debt and are struggling to right size our expenditures—private and governmental. In such an environment defense spending is once again a key target and Navies are very capital intensive and therefore especially attractive place to look for cuts.

Another lesson is that navalists of all political stripes and uniforms tend to talk…lament…mostly amongst themselves! And at levels of complexity that most citizens would find it hard to grasp.

I expect here in America that approximately 10% of the population are either in the military, military employed civilians, veterans, or work in defense industry. So it is the other 90% of our population that we need to engage and motivate to seek and maintain a strong Navy. I suspect that the Europeans and others also face the same dilemma. The 90% majority needs to increasingly become the voice for Parliamentarians and Congressional representatives in order to gain support for our respective Navies while the economies are struggling and in the case of the US, political inaction.

Therefore, my suggestion to all of us is to go back to the halls of the Colleges and Universities, to the social clubs and remind them of the fundamental nature of why our Navies are so vital - protecting our sea lanes of trade and commerce as well as the broader scope of national defense.

Each month I will be offering up ideas to stimulate change in our naval market. I welcome your comments, suggestions, and critiques. You can reach me at [email protected], @GuyofAMI on Twitter, or on my editorial section of our website.

Guy Stitt, CEO, AMI International

mailto:[email protected]�

Hot News March 2013


(Continued from Page 1)

The Yemini Government did state that it would entertain other international bids in the event that ADSB was not selected. As one of its options the YN could join with Qatar in the acquisition of the MCMV hulls as well, regardless of the builder selected.

Should the YN decide to float an international tender for the two MCMVs, AMI’s source indicates that Qatar may supervise the program since they are already involved in an MCMV procurement of four hulls in addition to the water mine detection systems procurement. The YN has indicated that if an international builder is to be used, they prefer a US source whereas the Qatari’s prefer either Italian or French shipbuilders, stating they are able to get a better price from the European suppliers. Since the US has no MCMV designs to offer, the YN could go it alone with a European design, join in with Qatar for the same design or utilize ADSB as it originally intended to.

The two new units will likely be in the 600 ton range, smaller than the Natya, and will be of a composite hull. They will probably be of a diesel-electric configuration with two azimuthing propellers and one bow thruster. They will likely be armed with one 25mm cannon and two 12.7mm machine guns.

A specification document and Request for Information (RfI) is scheduled to be released by May 2013 to concerned shipbuilders. AMI anticipates that responses will be due back before the end of the year, at which time a Request for Proposals (RfP) will be issued to the preferred suppliers. A construction contract could be in place as early as October 2014, with construction beginning immediately. The two unit class could commission by 2017.

Additional information on this article can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]). Additional information on Yemen can be found by visiting the Yemen Country report at: http://www.amiinter.com/wnpr/yemen/index/html.

Design Definition Contract for Arctic Offshore Patrol Ship (AOPS)

On 07 March 2013, the Ministry of Public Works and Government Services Canada (PWGSC) and Ministry of Defence announced that it had signed a design definition contract with Irving Shipbuilding for the Royal Canadian Navy (RCN) Arctic Offshore Patrol Ship (AOPS) program.

The US$288M definition contract calls for Irving Shipbuilding to refine and complete the AOPS design to production level prior to construction in 2015. The AOPS is based on a Canadian in-house design by British naval design firm BMT. This contract follows the 10 July 2012 US$9.3M contract to Irving Shipbuilding to review its existing in-house design (by BMT) and specifications as well as the development of an acquisition strategy for the AOPS program.

With the final design now being developed, the next step will be contract negotiations with Irving Shipyard that will probably begin in 2014 in order to affect a 2015 start date for the construction phase. All of the vessels will be built at Irving Shipyard in Halifax as the shipyard was selected in early 2012 as the primary builder of large combatant platforms under Canada’s National Shipbuilding Procurement Strategy (NSPS).

The US$3.1B program currently calls for 6-8 AOPS (including through life support) as well as a new Arctic basing structure to support the vessels. The first six AOPS will be ordered in 2015. Units seven and eight could be ordered

AOPS Design Concept


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in 2017 although AMI believes that this program will probably end at six units as cost escalation over the life of the construction phase will probably prohibit these two units from ever being built.

Additional information on this project can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or visiting the Arctic Offshore Patrol Ship (AOPS) project report at: http://www.amiinter.com/wnpr/canada/CA1601.html.

Indigenous Offshore Patrol Vessel (OPV) Construction

According to AMI sources in March 2013, the Uruguayan Navy (UN) is planning to build two offshore patrol vessels (OPV) in local yards utilizing a foreign design, vice original plans to have the units built abroad.

Source indicates that the two units will be built at Tsakos Industrias Navales Shipyard in Montevideo and will be the same design as the NPO-2000 designed and built by ENVC (Estaleiros Navais de Viana do Castello) for the Portuguese Navy.

The 83 meter (272 ft) long 1,800-ton OPV is powered by two Wartsila 12V26 diesel engines for a top speed of 20 knots. It is likely that the UN will utilize the same engineering plant in order to minimize redesigning costs in order to meet the budget of US$40M each.

Armaments will probably include one remote weapon station (RWS) and two 12.7mm machine guns. Sensors will likely be one air/surface search combination and two navigation radars as well as one electro-optical sensor for the RWS.

The NPO-2000 design also has a flight deck for the operation of one medium helicopter, likely the Aerospatiale UH-13 Esquito or Bolkow BO-105 currently operated by the UN.

AMI anticipates that the UN could have an agreement for license construction in place as early as the end of 2013 and a construction contract by early 2014. Based on this timeline the first unit could be commissioned in 2017, followed by the second OPV in 2018.

Additional information on this project can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]) or visiting the Future Offshore Patrol Vessel (OPV) project report at: http://www.amiinter.com/wnpr/uruguay/UY1601.html.

Corvette Program May Require Larger Vessels

In mid-February 2013, AMI received information that the Republic of China Navy (ROCN) had launched studies regarding two larger variants of the Hsun Hai class corvettes (catamaran). The Hsun Hai class vessels are estimated to displace around 500 tons. The studies currently being conducted are for a 1000-ton corvette design and 2,000-ton frigate design.

NPO-2000 OPV


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Although this is not yet an official program of record and has no program timeline established, the ROCN is apparently beginning to look at indigenous designs to replace its aging frigate force. The frigate force currently consists of eight 1960s vintage USS Knox class frigates, eight of the newer 1990s-built Cheng Kung (Perry) class frigates and six 1990s French Kang Ding (La Fayette) class frigates. The ROCN is currently considering the acquisition of two ex-US Oliver Hazard Perry class frigates as an interim measure.

Although continuing to procure used surface combatants from the US, the ROCN will have to move forward with its own indigenous designs if it intends to maintain a relevant 22-unit surface combatant force. The ROCN with its limited defense budget in conjunction with its very narrow international supplier base, the sea service will be well served by developing its own surface combatant force with China Shipbuilding Corporation (CSBC) being the builder.

Development of a 1000-ton corvette design and 2,000-ton frigate design is well within the capability of the ROCN and CSBC and its budget and political isolation will serve it best by moving

forward with the indigenous development of these ship designs. Taiwan is also beginning to develop its own radars, anti-ship missiles (ASMs) and Electronic Warfare (EW) systems for its future combatants.

However, it is apparent that the ROCN has very limited capability when it comes to complex naval anti-air warfare (AAW) and anti-submarine warfare (ASW) systems (and integration); surely requiring foreign assistance. The biggest concern for the ROCN is its very limited foreign supply chain.

Additional information on this article can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on the Hsun Hai Corvette can be found by visiting the project report at: http://www.amiinter.com/wnpr/taiwan/TW1101.html.

Spending Plan 2012-2022 Funds All Major Projects, Is it Enough?

In January 2013, the United Kingdom Ministry of Defence (MoD) released Defence Equipment Plan 2012. The plan was developed to bring all Armed Forces equipment programs back into balance following years of neglect and underfunding. As the force restructures for the future, the plan is to provide a stable and well managed budget to keep the programs affordable and deliverable.

More specifically, it authorizes £159B (US$240.5B) for the ten year period 01 April 2012 through 31 March 2022 and an £8.4B (US$12.7B) risk provision within individual projects. It also has a contingency provision of £4.8B (US$7.2B) and unallocated headroom totaling £8B (US$12.1B). This is expected to put all Armed Forces departments in an affordable core equipment plan and flexibility (due to cost growth) that is required to meet Future Force 2020 objectives.

In regards to the Royal Navy (RN), all major current and future programs are expected to be funded (£17.4B - US$26.3B) and include the following projects:

Completion of the two Queen Elizabeth class aircraft carriers with Lightening II aircraft. Completion of the six Daring (Type 45) class destroyers.

Hsun Hai Class Corvette


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Design and development of the Type 26 class frigate to replace the Type 23. Development of the Maritime Afloat Reach and Sustainability Program, which now has five AORs under

contract. This will include a sixth AOR and two AOEs.

An additional investment of £35.8B (US$54.1B) will be made for the completion of the Astute class nuclear powered attack submarines (SSNs) and the development of the Successor class nuclear powered ballistic missile submarine (SSBN) (assuming Main Gate approval in 2016) and its strategic weapon system.

It appears that with DEP 2012, the MoD is once again attempting to address the persistent mismatch between shipbuilding program requirements and available funding. This issue has left the RN (and UK forces overall) with unsustainable and unaffordable force structure, leading to repeated rounds of cancellations or descoping of approved programs, and resulting in predictable increases in per unit acquisition costs. This can be witnessed by cost overruns resulting in the scaling back of major programs (Type 45 as an example, and possibly Type 26) as well as late deliveries.

The first few years of the plan will be the most crucial in determining whether the MoD has really closed the affordability gap (with its projected budget, risk provisions and a substantial contingency provision) and has laid the foundation for the rest of the ten year period.

The full version of the Ministry of Defence (MoD) Equipment Plan 2012 and the National Audit Office (NAO) Equipment Plan 2012 - 2022 can be found on AMI's Worldwide Naval Projections Report (WMPR) - Downloadable Documents at: http://www.amiinter.com/wnpr/download_docs/united%20kingdom/uk_docs.html.

Additional information on this article can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on the United Kingdom can be found by visiting the United Kingdom Country report at: http://www.amiinter.com/wnpr/united_kingdom/index.html.

Navy/Coast Guard Makes a Decision on Fast Patrol Vessels

In late February 2013, press reporting indicated that Saudi Arabia has selected Lurssen Werft for the Royal Saudi Naval Force (RSNF) and Royal Saudi Coast Guard (RSCG) patrol vessel modernization programs. AMI industry sources confirm that Saudi Arabia appears to have reached a decision on a direct commercial procurement of up to 30 35-45M patrol ships and craft, but would not confirm that Lurssen Werft has been contracted to deliver on this new ship acquisition. Other candidates to supply Saudi Arabia with these vessels (whose designs were submitted in 2010 bids for a Ministry of Interior

Program to supply 35-45M patrol ships) include Trinity Marine and Westport (US), and Damen (Dutch).

Queen Elizabeth Class Aircraft Carrier

Lurssen FPB-40 Design

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The press report indicated the total program was worth around €1.5B (US$2B) with individual units varying from €10M (US$13M) and €25M (32.5M) per unit. The contract will probably cover the entire procurement of the larger patrol boats needed for both sea services (35-45 meter requirement).

The initial requirements for the RSCG called for up to 33 offshore patrol boats (OPBs) with an option for 12 additional units, and three command and control boats in the same size range (total 36 - 50). The RSNF may also get some of these OPBs as it levied its requirements around a year after the RSCG program began. Additionally, the RSCG has a requirement for around 100 smaller craft in the 15-meter range.

AMI estimates that if Lurrsen has indeed won the Saudi award, the new Lurssen FPB-40 meter design and the TNC-35 design are best fitted to the Saudi requirement. Assuming an early 2013 award and construction contract by late 2013, the first units are expected to begin entering RSNF and RSCG service as early as 2015. AMI estimates that this program will clear Germany's Federal Security Council (authority for military exports and includes Chancellor Angela Merkel on the council), which has issued positive statements regarding the sale.

Additional information on this project can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting AMI's the Coast Guard Offshore Patrol Boat (OPB) project report at: http://www.amiinter.com/wnpr/saudi_arabia/SA1701.html.

Patrol Boat Program Goes to France's Socarnam

In early February 2013, AMI received information that the Belgian Navy selected France's Socarnam for its 55-Meter Patrol Boat Program. This follows information received on 20 December 2012 that they intended to sign an agreement for the procurement of two patrol boats by the end of the year.

Also known as the Ready Duty Ship (RDS), Socarnam's 52-Meter design apparently was selected over other designs which reportedly included suppliers such as Damen Schelde Naval Shipbuilding (DSNS), Austal as well as other European builders. The 52-Meter design is reported as a variant of the French Customs patrol ship Kermorvan. It has a displacement of 448 tons and is powered by two Tognum MTU diesel engines. Both will be delivered by the end of 2015.

This program was anticipated to start in 2009, however was delayed for four years due to limited funding. It resurfaced on 12 July 2012 when the Belgian Ministry of National Defence (MoND) released a tender for the procurement of two Ready Duty Ships.

Additional information on this project can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or by visiting AMI's January 2013 Hot News at: http://www.amiinter.com/wnpr/hotnewsarch/jan13.html#patrol and the 55-Meter Patrol Boat project report at: http://www.amiinter.com/wnpr/belgium/BE1701.html.

Socarnam RDS Design


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Fleet Renewal in Full Swing

As of mid-March 2013, AMI continues to receive information in regards to the Bangladeshi Navy (BN) modernization efforts. These developments fulfill the requirements for a three dimensional naval force consisting of air, surface and subsurface units that was announced by the Minister of Defense in 2009.

Continuing and new projects are as follows:

A. Type 056 Corvette: Source indicates that Wuchan Shipyard in China began construction on the first two units on 08 January 2013. Additional units (at least two) will be built a Bangladesh's Khulna Shipyard (KSY).

B. South Korean Corvette: Source indicates that that the BN ordered two South Korean corvettes with delivery scheduled for 2013. These corvettes could be additional Ulsan I class frigates of which one was built for the BN in 2000 or it could be a scaled down version of the Incheon (FFX) class being built for the Republic of Korea Navy (ROKN). A third possibility is that these vessels could be used Ulsan class frigates or Pohang class corvettes that will be retiring from the ROKN over the next several years as the Incheon class begin entering service. AMI is attempting to verify this information and will update this article as appropriate.

C. 64-Meter Fast Attack Craft (FAC): The first two 64-Meter FAC built at Wuchang Shipyard in China were commissioned into the BN as the BNS Durjoy (P811) and BNS Nirmul (P812). Source indicates that six additional units will be built in country at KSY. Information received on 17 September 2012 indicated that the BN increased 64-Meter FAC program from four hulls to eight. The first unit of the additional four hulls is expected to be ordered by the end of 2013.

D. 50-Meter Patrol Boat: On 22 January 2013, the first 50-Meter patrol boat built at KSY, BNS Padma (P312), was commissioned. AMI estimates that 24 additional units of the Chinese designed patrol vessel will be built at KSY through the end of the decade.

E. Used Vessel Transactions: The BN is expected to take delivery of two used Chinese Type 053H2 frigates that were offered in late 2012. These will supplement the BN's aging surface force until Type 056 corvettes are delivered. The BN may also order the larger F22P frigates in the next decade following completion of the Type 056 program and the 62-Meter FAC program.

Sources continue to state that the BN will procure diesel-electric attack submarines (SSK) from China. The latest information suggests that up to US$1B has been provided for the program. AMI believes that two used Chinese Song class SSKs could be the candidates for this program. Bangladesh is reportedly training submarine crews in Turkey. Assuming that the US$1B funding figure is correct, this could entail the purchase of two used Song class followed by two new construction submarines after 2020, possibly the Yuan class.

Chinese Type 056 Class Corvette

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In mid-December 2012, the US announced that it would be transferring the USCG Hamilton Class Heavy Endurance Cutter (WHEC) Jarvis (WHEC-725) to the BN by late 2013. Additionally, 16 Defender class patrol craft will also be transferred to the Bangladesh Coast Guard (BCG).

There is no doubt that the BN's fleet renewal is in full swing and when complete will be as advertised, three dimensional. With the new force being primarily South Korean and Chinese, the BN has been able to stretch its very limited funding resources in order to maximize this effort. The renewal effort is more than likely as a result of the continuing naval modernization efforts in the region, which includes Pakistan, India, Thailand and Myanmar.

Additional information on this article can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on Bangladesh can be found by visiting the Bangladesh Country report at: http://www.amiinter.com/wnpr/bangladesh/index.html.

Indigenous Submarine Construction Yard Opens

On 04 March 2013, the Brazilian Government announced the completion and opening of the country's latest naval facility at Sepetiba Bay. The facility will be involved in Brazil's two submarine programs under ProSub, the submarine portion of Fleet Renewal Plan 2008. ProSub encompasses the construction of indigenous Scorpene submarines as well as the first nuclear powered attack submarine (SSN) for the Brazilian Navy (MdB).

The new naval facility is a key component in the forward progress of both submarines, of which the first diesel electric Scorpene is under construction at France's DCNS and Brazil's Itagual Construções Navais. Following unit one, the remaining Scorpenes and the first SSN are expected to be shifted to the new facility.

Both programs were originally scheduled to deliver up to eight Scorpene diesel electric boats through 2031 and six SSNs through 2028. It now appears that both programs are beginning to slip and as mentioned in AMI's Hot News in September 2012.

Information received in September 2012 indicated that the MdB was already experiencing cost overruns in the diesel electric Scorpene program and the delivery timeline would be affected. AMI believes that the Scorpenes could take up to 7-8 years per hull, which has been the historical building rate of previous submarines in country.

In regards to the SSN, it appears the Brazilian Government may have delayed this program as recent press releases indicate that the first submarine will deliver around 2025 around three years behind the anticipated 2022 commissioning date.

Although it appears that the MdB is facing some funding and construction issues early on in both of these programs, one of the key components, the new facility did open close to schedule. The naval facility was built by the DCNS/ Odebrecht joint venture.

USCGC Jarvis

Scorpene Class Submarine



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It is now a matter of whether Brazil can overcome its historical funding and slow shipbuilding rates that have affected most of the sea service's previous major indigenous construction endeavors.

Additional information on this article can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]). Additional information on Brazil can be found by visiting the Brazil Country report at: http://www.amiinter.com/wnpr/brazil/index.html.

Regional Update

As of mid-March 2013, the following are highlights of the Asia Region:

A. CHINA: On 30 January 2013, the fourth Luyang II (Type 052C) class destroyer (Changchun (150)) was commissioned into the People's Liberation Army Navy (PLAN). In February 2013, source indicated that the fourth Luyang III (Type 052D) class destroyer was under construction at Jiangnan Shipbuilding. Also in February 2013, the first new Type 056 corvette was delivered to the PLAN. It is named Bengbu (through translation) (582). The tenth of the 20 unit class was also launched in February.

B. SEYCHELLES: In February 2013, the Seychelles has taken delivery of one Dornier 228 maritime surveillance aircraft from India. The aircraft was license built by India's Hindustan Aeronautics Ltd (HAL).

C. INDONESIA: In early February 2013, the Indonesian Ministry of Defense (MoD) signed a building contract for the second DSNS 105-Meter Sigma (10514) frigate (Nasional Korvet Program) that will be built at PAL Indonesia.

PAL Indonesia has begun construction on a new submarine construction overhaul site at Ujong docks in Surabaya, East Java. The US$150M project will be completed in September 2014 and will support the two

Cakra class submarines already in service as well as the three new Type 209s ordered from South Korea in 2012.

The Indonesian Navy is also continuing plans for three new support bases to operate its maritime security forces. The bases will be built at Sorong, Papau (Naval Base 12), Naval Base 10 in Jayapura, and Naval Base 11 in Merauke.

D. PHILIPPINES: In late February 2013, the Philippine Government has requested a US$110M loan from the Japanese Government in order to procure the ten new 40-Meter patrol boats that have been under consideration since 2012.

E. VIETNAM: In late February 2013, Russia's Rubin Submarine Design Bureau announced that the Vietnam People's Navy (VPN) first two Kilo (636) class submarines would be delivered to Vietnam by the end of the year. Additionally, units three and four will be launched by year’s end. Unit five is already under construction and first steel was cut on unit six in January 2013. All six units are being built or fitted out at Russia's Admiralty Shipyard.

Changchun (150)

Sigma 10514 for Indonesia



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F. SINGAPORE: In late February 2013, the Singaporean Ministry of Defense (MoD) has awarded a contract to Sikorsky for two additional S-70B Seahawk helicopters. The helicopters will be operated from the Formidable class frigates and will be delivered to the Republic of Singapore (RSN) beginning in 2016. The RSN already operates six S-70Bs.

Additional information on the Asian Region can be obtained by contacting Pat Bright at AMI International (Tel: + 1 757 963 7719 or E-mail: [email protected]) or visiting AMI International's website at: http://www.amiinter.com.

IMDEX Asia 2013: Naval Market Outlook for Small Combatant and Patrol Ships

Summary: AMI, as market information partners with IMDEX Asia Organizer Experia Events, continues its coverage of Asia-Pacific (A-P) Naval Market in the run-up to IMDEX Asia Singapore 14-16 May 2013. This fourth and final feature article looks ahead to the robust market for smaller ships for patrol, maritime security and special operations missions. This is one of the largest and rapidly expanding segments of the A-P naval market.

While many A-P nations are investing in a wide range of larger surface ships and submarines as part of fleet expansions, the need for small fast and capable craft remains greater than ever. The growth in maritime security challenges—from piracy to fisheries enforcement, to countering illegal smuggling and trafficking at sea—requires more and better maritime presence. And as larger ships can’t be “two places at once” there is an expanding role for smaller ships and craft to fill these gaps.

The expansion in naval special operations forces in the region has also driven growing demand for small and exceptionally fast craft with maximum speeds reaching up to 70 knots. Special operations at sea require highly specialized craft with the most modern sensors, weapons, communications as well as innovative designs using a wide variety of advanced materials—including composites. A new generation of “high-value” fast craft increasingly blurs the capability line and cost differential, between surface and helicopter platforms for special ops insertion, extraction and other missions like vessel boarding, search and seizure.

AMI forecasts indicate that global market value for new small combatants, patrol and special operations platforms forecasted to be bought over the next 20 years amounts to some US$60B. This represents almost 100% growth for the 20 year global market segment value compared to AMI forecasts of 2008. In the A-P region, the segment is worth over US$14B, or almost 25% of the world market value for the segment, with similar growth rates compared to forecasts of five years ago.

Looking at the number of hulls that make up this market segment, some 2100 corvettes, fast attack craft (FAC), offshore patrol vessels (OPV), and patrol/special operations craft (PV) ranging from 10-90M in length are forecasted to be purchased worldwide through 2032. About 20% of those will be acquired in the A-P region. Contracts for more than 100 hulls worth almost US$7B is expected to be awarded in the A-P region over the next 5 years—a significant opportunity for local and exporting shipyards alike.

Singaporean S-70B


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Small Combatant, Patrol and Special Operations Craft Market Forecast:

The “top 5” A-P spenders for this market segment over the 20 years are (in order):

1. Indonesia 2. India 3. Republic of Korea 4. Japan 5. Malaysia

These five countries make up about 50% of the forecasted demand for the A-P region for this segment through 2032. A closer look at that market by platform size and type (below) reflects even more segmentation. Demand (in platform numbers) concentrates in patrol vessels and fast attack craft, which tend to be 60 meters or smaller and valued at acquisition costs below US$25M per hull. On the small end (10M), costs per hull are substantially less—ranging up to US$2M per hull.

In contrast, the smaller number of Offshore Patrol Vessels and corvettes forecasted reflect their larger size and greater number of onboard systems: 60-90M in length and displacing above 1000 tons fully loaded. Not surprisingly, valuations for these types of ships are higher, with multi-mission corvettes total acquisition cost reaching up to US$200M per hull, while the less complex OPVs acquisition costs range between US$25-100M per hull fully equipped.

Additional information on this article can be obtained by contacting Bob Nugent, VP for AMI’s Advisory Services at AMI International (Tel: + 1 571 384 7931 or E-mail: [email protected]).

Global Small Combatant Market Forecast

(2013-2032)Region # Hulls US$M # Hulls US$M # Hulls US$M # Hulls US$MAsia & Australia 280 5615.4 119 6976 57 1805 456 14396.4Caribbean & Latin America 109 3338.8 68 1524.8 53 2741 230 7604.6Middle East & North Africa 113 5328.4 301 9859.8 93 3984 507 19172.2NATO 27 1816 86 9743 37 1649 150 13208Non-NATO Europe 17 290.4 2 190 19 480.4Russia 37 1315 37 1315Sub Saharan Africa 8 73.3 13 360 12 665 33 1098.3USA 670 3089.7 20 600 690 3689.7Totals 1261 20867 607 29063.6 254 11034 2122 60964.6

In Progress Planned Projected Totals

10-90m Small Combatant Forecast

(2013-2032) Totals Corvette, FAC, OPV, PV 10--25 26-40 41-55 56-70 71-80 81-90 PV OPV Corvette FAC Asia & Australia 67 71 140 150 22 6 456 247 42 18 149

Vessel TypeLength (meters)


Hot News March 2013


Shipyard Consolidation/Merger Highlights

AMI is currently tracking shipyard consolidation and merger highlights within the defense industry. The following are the highlights for the months of February and March 2013:

A. LLOYDS REGISTER: In February 2013, Lloyd’s Register (LR) announced that increased shipbuilding coupled with a rising global economy is forcing ship-owners and builders alike to seek out new technologies to increase the fuel efficiency of vessels. Additionally, a coming change in the classification business reinforces the need for change; as witnessed by the merger of DNV and Germanischer Lloyd.

As such, LR continues to aggressively seek out companies suitable for acquisition, as they have for the past four years, whose specific focus is these eco-solutions in order to offer competitive prices in leading edge technology advice and solutions. These eco-solutions include the use of methane, fuel cells, and LNG fueled ships.

In the last two years, LR announced the creation of two global technology centers, one in Southampton and the other in Singapore; more than £120M (US$180.8M) in investment and solidifying their commitment to these new technologies.

Future possible locations for acquisitions or the opening of new technology centers will likely be in South America or Asia as LR continues to expand its already strong European, Middle East and Africa operations.

B. THYSSENKRUPP: On 28 February 2013, ThyssenKrupp announced that they had acquired Australian Marine Technology (AMT), a leader in marine engineering and design in the Pacific.

Although the actual amount of the acquisition has not been disclosed, AMT was formed in 1987 to provide in-country technical assistance and project management to Blohm + Voss (now part of ThyssenKrupp) in its design for what became the ANZAC Ship Project.

AMT will become combined with ThyssenKrupp Marine Systems (TKMS) Australia; a company of the Industrial Solutions business area. The acquisition strengthens the already strong Australian sales market that ThyssenKrupp already enjoys, particularly in the railroad, marine, steel, pipe and mining equipment fields.

Additional information on this article can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).


Hot News March 2013


Combat, Sensor and Integration System Developments

AMI is currently tracking combat, sensor and integration systems developments. The following are the highlights for the months of February and March 2013:

A. RAYTHEON / CHEMRING: On 19 February 2013, Raytheon Missile Systems (RMS) and Chemring announced they had agreed to develop a naval capability to defend against surface targets on vessels ranging from small patrol boats up to large combatants.

The new initiative combines Chemring’s Centurion multi-mission launcher with a variety of Raytheon’s missile, providing a sea-based, inside-the-horizon defensive system that will couple with existing ship systems to meet customers’ specific self-defense needs.

The new system is currently in the integration engineering phase with live-fire testing scheduled to begin in mid-2013. Testing is expected to include at least two different missiles in order to establish a multi-mission capacity against maneuvering, high-speed surface threats.

The missiles will be fired from the Chemring Centurion launcher with tracking, identification and targeting being provided by the ships’ onboard sensors.

B. SAAB: On 13 February, the Swedish Defense Material Administration awarded Saab two contracts worth US$29.7M for the upgrade of Torpedo 62 and support for the associated underwater weapon system.

The Torpedo 62 is an advanced heavy-weight torpedo for engaging surface targets and the upgrade contract will add new functions for communications and warhead initiation. Deliveries under these contracts will take place between 2013 and 2016.

C. RHEINMETALL: On 13 February, Rheinmetall announced they had received a contract for 12 TMX/EO Mk 2 fire control radars and TMEO Mk 2 electro-optical systems for the Malaysian Navy’s Second Generation Patrol Vessel (SGPV).

According to the contract, deliveries will commence in 2015, corresponding to the planned launch date of the first unit of the proposed four unit class that will be commissioned from 2016 through 2019.

For additional information on this article can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).

Chemring Centurian Launcher


Hot News March 2013


A. RUSSIA: In late February 2013, the VMFR's third Steregushchiy class (Project 20380) frigate, RFS Boiky, completed main system tests during its initial sea trials. Second stage sea trials will begin in March 2013.

B. FRANCE: In December 2012, the first of four new 12-Meter patrol craft for the French Customs Service was delivered to the sea service. Built at Chantier Bernard, the DF-61 is based at Lorient.

C. RUSSIA: On 08 February 2013, the keel laying ceremony for the first of two Mistral class LHDs for the Russian Navy (VMFR) was held at the French STX Shipyard in St. Nazaire. The RFS Vladivostok will be delivered in 2014.

D. UNITED KINGDOM: On 04 March 2013, the Royal Navy (RN) commissioned its second Astute class Nuclear-Powered Attack Submarine (SSN), HMS Ambush (S95), at Naval Base Clyde in the United Kingdom.

E. IRAQ: On 17 February 2013, the Iraqi Navy (IqN) took delivery of the tenth and eleventh Swiftships 35-Meter patrol boats (PB-310 and PB311).

F. KUWAIT: On 20 February 2013, the Kuwaiti Navy (KN) announced that it had ordered two 64-Meter, one 42-Meter and five 15-Meter landing craft from Abu Dhabi Ship Building (ADSB) in the United Arab Emirates (UAE).

G. FINLAND: On 25 February 2013, the keel was laid for the Finnish Coast Guard's first 96-Meter (UVL-10) Offshore Patrol Vessel (OPV) at STX Finland Oy's Rauma Shipyard.

H. RUSSIA: In late February 2013, the VMFR's third Buyan (Project 21630/21631) class patrol boat, RFS Makhachkala, was commissioned and entered service with the Caspian Sea Flotilla.

Russian Steregushchiy Class Frigate

Mistral Class LHD

Iraqi Swiftships Patrol Boat

RFS Makhachkala

Hot News March 2013


FPB-72 Mk 2 for Nigeria

I. UKRAINE: In late February 2013, the Ukraine Minister of Defense (MoD) it would establish a new river force that would be based out of the Odessa naval base. The force will comprise two new construction Gyurza-M class (Project 58155) patrol boats that are currently under construction.

J. UNITED STATES: On 02 March 2013, the US Navy (USN) christened the first Montford Point Class Mobile Landing Platform (MLP), USNS Montford Point (MLP-1), in San Diego, California.

K. NIGERIA: On 11 February 2013, the Nigerian Navy (NN) commissioned three French-built OCEA FPB-72 Mk 2 class patrol boats and two Israeli-built Shaldag class patrol craft. All were delivered to the NN in late 2012.

L. ITALY: On 05 March 2013, steel was cut for the sixth Italian Navy FREMM class frigate at Fincantieri's Riva Trigoso Shipyard.

M. UNITED STATES: On 05 March 2013, Lockheed Martin and Austal Ships were awarded follow-on contracts for four additional Littoral Combat Ships (LCS). Lockheed Martin received a US$696.7M contract for LCS hulls 13 and 15. Austal Ships received a US$681.7M for LCS hulls 14 and 16.

N. VENEZUELA: On 05 March 2013, Vice President Nicolas Maduro has assumed power in Venezuela following the death of President Hugo Chavez. Presidential elections will occur by 14 April 2013.

AMI – Analytical Services – Access to Analysts

Your subscription to AMI’s product line is a premium service, which includes the ability to reach back to AMI’s analysts 24/7 – via either e-mail or by calling during normal business hours. AMI’s analysts can provide immediate updates concerning emerging developments or answer any questions that you may have concerning AMI’s Hot News, Worldwide Naval Projections Report (WNPR), the Naval Systems Projections Database (NSPD) or Missiles Online.

All of AMI’s analysts can be reached by calling 1-360-373-2686, E-mailing at [email protected] or contacting one of the individuals directly as listed at the bottom of this Hot News.

Ukrainian Gyurza-M


Hot News March 2013


AMI – Documents Available For Download

A. UNITED STATES: Congressional Research Office (CRS): Navy DDG-51 and DDG-1000 Destroyer Programs: Background and Issues for Congress (11 February 13): Updated in February 2013, the document highlights program issues and options for Congress when considering the continuing budget resolutions.

B. UNITED STATES: Congressional Research Office (CRS): Navy Force Structure and Shipbuilding Plans: Background and Issues for Congress (22 February 2013): Updated in February 2013, the document highlights the US Navy Force Structure and Shipbuilding Plans regarding issues and options for Congress when considering the continuing budget resolutions.

Information concerning AMI’s line of downloadable documents and country reports, can be obtained by contacting Rick Dorn at AMI International (Tel: + 1 360 674 6494 or E-mail: [email protected]).

AMI International HOT NEWS Naval Market Forecast Newsletter – March 2013

AMI International PO Box 30 Bremerton, WA 98337 USA

AMI Main Office (Washington) Tel: +1 (360) 373-2686 AMI Main Office (Washington) Fax: +1 (360) 478-8962 Rick Dorn Office (Nevada) Tel: +1 (360) 674-6494 Pat Bright Office (Virginia) Tel: + 1 (757) 963-7719 Bob Nugent Office (Washington DC) Tel: + 1 (360) 850-7444

E-mail:

Mr. Pat Bright: [email protected] Mr. Richard Dorn: [email protected] Mr. Tony Beitinger: [email protected] Mr. Bob Nugent: [email protected]




