In 2014, a blossoming friendship between Australian Prime Minister Tony Abbott and his Japanese counterpart Shinzo Abe looked to have all but sewn up a $40 billion submarine deal. Then French naval contractor DCNS hatched a bold and seemingly hopeless plan to gatecrash the party.
Almost 18 months later, France this week secured a remarkable come-from-behind victory on one of the world’s most lucrative defense deals. The result: Tokyo’s dream of fast-tracking a revival of its arms export industry is left in disarray.
Interviews with more than a dozen Japanese, French, Australian and German government and industry officials show how a series of missteps by a disparate Japanese group of ministry officials, corporate executives and diplomats badly undermined their bid.
In particular, Japan misread the changing political landscape in Australia as Abbott fell from favor. The Japanese group, which included Mitsubishi Heavy Industries (MHI) (7011.T) and Kawasaki Heavy Industries (KHI), (7012.T) also failed to clearly commit to providing skilled shipbuilding jobs in Australia. And Tokyo realized far too late its bid was being outflanked by the Germans and particularly the French, the sources involved in the bid said.
France, on the other hand, mobilized its vast and experienced military-industrial complex and hired a powerful Australian submarine industry insider, Sean Costello, who led it to an unexpected victory. Read more