World Market for Non-Nuclear Submarines: Current State and Trends
Igor Vilnit, CEO Rubin Design Bureau
Key features of the market for non-nuclear submarines
The market for non-nuclear (diesel-electric) submarines, like any other market, has numerous segments. The conditions in which submarines are required to operate are not uniform. The Australian Navy, for example, requires ocean-going boats, whereas the Singaporean Navy’s interests are limited to coastal waters. The tasks which submarines are required to perform also differ widely. Some customers want boats capable of engaging the adversary’s most advanced ships, submarines, and coastal targets, while others regard the use of submarines merely as an instrument for training their own anti-submarine forces. These different market requirements results in a great variety of boats on offer, from ocean-going to coastal models, with technology ranging from decades-old to the most advanced and extremely bold. The products on offer are also shaped by the financial capacity of the buyer. There is plenty of demand for very complex and expensive submarines with extremely high performance characteristics, as well as relatively cheap and far less capable models. Obviously, there is a close link between the financial and military aspects of submarine programs. Long-range and high-performance submarines are bought by the leading regional powers, or by countries that aspire to that position, and can afford such costs. Countries with limited military budgets, meanwhile, do not place such ambitious tasks before their Navies, and prefer to buy cheaper and less capable submarines.
Additionally, supply and demand on the market for submarines undergoes various changes over time. The end of the Cold War resulted in falling European demand for warships and submarines, forcing the main suppliers to look for alternative markets and whipping up international competition. As technology progresses, the price and performance characteristics of submarines change accordingly. Some suppliers leave the market, others emerge, while still others merge or break up. The priorities facing the buyers’ navies change over time due to shifting geopolitical circumstances and changing economic fortunes. For example, the growing buying power of the Chinese armed forces has driven up demand for submarines in the entire Southeast Asian region. The importers’ attitudes to buying submarines also undergo various changes, as some of them choose to develop their own indigenous capability in submarine-building in order to reduce their reliance on imports. All these market processes take place almost simultaneously, making the market extremely complex and difficult to predict.
There are currently about 35 submarines being built under export contracts. There are three main international suppliers: Germany’s TKMS consortium, France’s DCNS, and the Russian tandem of Rubin and Admiralty Shipyards. Buyers choose one of those three suppliers depending on various technological and economic considerations, as well as political preferences.
Submarines are also designed and built for their own national navies by Chinese shipyards, Spain’s Navantia, Sweden’s Saab (the Kockums shipyard), and Japan’s Mitsubishi and Kawasaki. Shipyards in Iran and North Korea also build small and midget submarines of indigenous design for their own navies.
Several companies have the capability to build non-nuclear submarines using foreign technology. These include Australia’s ASC, South Korea’s Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering, and Italy’s Fincantieri. Finally, several shipyards have in the past assembled submarines from assembly kits supplied by TKMS or DCNS.
There are also a growing number of independent suppliers. South Korean companies are developing the first indigenously designed submarine for the national Navy. The Dutch company Nevesbu is working to restore its former ability to design and build submarines. Britain’s BMT design bureau also comes up with new submarine designs from time to time.
Changes in market segments
Analysis of the submarine models currently on offer yields the following observations.
First, two distinct market segments have emerged since the 1960s:
Over the past 50 years, submarines in both segments have become larger. Looking at the history of Germany’s Type 209 program, submarines in the “medium” segment had reached a total displacement of 1,100 tonnes (Type 209/1100) by the early 1970s, and approximately 1,500 tonnes (Type 209/1400) by the mid-1980s. France’s Agosta boats, launched at about the same time, had similar dimensions. The medium segment is currently represented by Russia’s Amur 1650 boats, Germany’s Type 214, and France’s Scorpene (Scorpene 2000), which range from 1,600 to 1,800 tonnes.
A similar trend can be observed in the ocean-going segment. Oberon-type submarines were replaced by the larger Upholder boats (which, incidentally, failed to enthuse potential buyers). Soviet Project 641 boats were succeeded by the larger Project 877EKM and Project 636 submarines. The Collins boats designed by Kockums for the Australian Navy were even larger (3,000 tonnes). The latest models on offer in this segment include Germany’s Type 216, France’s SMX Ocean, and Britain’s Vidar-36, all of them weighing over 3,500 tonnes.
Several years ago, when the global financial crisis broke out, all the major suppliers started to offer smaller versions of their medium boats, ranging from 700 to 1,100 tonnes. These include Germany’s Type 210mod, France’s Andrasta (currently known as the Scorpene 1000), Russia’s Amur 950, and Britain’s Vidar-7. Even though these models have so far failed to attract any buyers, it is safe to say that they have created a new “budget” segment of the submarine market.
Submarines that represent the ocean-going segment naturally have better performance characteristics and a much higher price. They have also become more capable, bigger, and more expensive over time. This has given rise to the emergence (or resurrection) of the “budget segment” and the secondary market for used submarines decommissioned from their parent navies and sold to new buyers after repairs and/or upgrades.
Standard and customized projects
The export market for submarines can also be divided into standard and bespoke (customized) segments. All three of the leading international suppliers offer standard designs, such as Type 214, the Scorpene, or Russia’s Project 636 and Amur 1650 submarines. These boats are not built to any specific customer requirements; their specifications are tailored to suit an “average” set of demands. Adapting a standard project to individual customer requirements usually comes to installing customer-specified weapons systems, and sometimes electronic systems. This approach represents a legacy of the period when foreign customers were offered submarines designed to meet the requirements of the exporter parent navy. Obviously, when contractors design a standard model, one of their top priorities is to minimize their own costs and to maximize profit through the use of tried and tested solutions. Such an approach also has its own advantages for the customer as it reduces the price tag and minimizes the risk of delays. These standard programs – such as Germany’s Type 209 – can have a very long lifespan. For example, the first Type 209/1100 boat was delivered by the German supplier to the Greek Navy in 1971. The first Type 209/1400 boat was delivered to the Brazilian Navy in 1989. Three Type 209/1400 boats are now being built under an Indonesian contract. The Type 209 program has therefore been going strong for over 40 years now. Russia’s Project 877EKM/636 has proved almost as long-lived. The first boat in the series was delivered to the Soviet Navy in 1980. The first export delivery was made in 1986 to the Indian Navy, and more of these boats are now being built under a Vietnamese contract.
Buying bespoke submarines, meanwhile, is something that only the most economically and technologically advanced countries can afford. Such boats meet the customer’s individually tailored requirements, and they differ in very significant ways from the standard models. They are designed for a specific customer, and their series production ends once the initial contract has been fulfilled. Clearly, there are much fewer of these boats in operation compared with the standard designs. The cost of these programs is a lot higher, as are the technical and financial risks. A mismatch between the customer’s requirements and the capabilities of the boat’s designer or builder can cause the entire program to fail. Examples of customized submarine models include Germany’s Type 210 boats (developed for the Norwegian Navy) and Dolphin boats (developed for the Israeli Navy), as well as Sweden’s Collins submarines (developed for the Australian Navy). New submarines to be built for the Australian Navy (the SEA-1000 program) and for the Indian Navy (Program 75I) can also be categorized as bespoke.
Growing complexity and cost
The third aspect of the submarine market has to do with advances in technology. Submarines are becoming more complex and capable, which translates into higher costs. The growing complexity and capability is clearly in the interests of the suppliers, who want to secure a higher price for their product. Operating more complex and expensive submarines also requires increasingly costly infrastructure, training programs, and other spending items. In other words, the growing complexity of the boats serves to expand the market for related services. From the supplier’s point of view, this largely compensates for the fact that as submarines become more expensive, customers tend to place orders for smaller batches.
Improvements in submarines’ specifications and characteristics are achieved by incorporating new equipment and upgrading the existing systems. For example, over the past 30 years non-nuclear export submarines have acquired water discharge torpedo launching systems, the capability to launch missiles (including surface-to-air versions), anti-torpedo systems, advanced sonars, air-independent propulsion systems, anechoic coating, and many other advanced systems. Development of many of these technologies began in the final years of the Cold War under contracts with European navies and the Soviet Navy, but due to changes in the political and financial situation, by the time those technologies were finally ready, suppliers were forced to offer them to foreign customers.
Technological advances have also led to a stratification of the market. Not all the customers require top-performance boats, and not all the naval budgets can shoulder the cost of the world’s best submarines. As a result, there is a lot of demand in the market for a combination of innovative, i.e. expensive, technologies with conservative and affordable solutions. Incidentally, the higher performance of bespoke submarine models is achieved precisely through a greater use of innovative and advanced technologies compared to standard models. On the other hand, boats in the “budget” segment that has emerged in recent years utilize a bare minimum of innovative solutions. For example, they lack such options as air-independent propulsion systems or complex sonars; their weapons systems use the swim-out principle, etc. The greatest variety of technology can be observed in the standard projects of the medium segment. At present, suppliers are building Type 214 boats with air-independent propulsion systems, the equally advanced Scorpene boats that lack such propulsion systems, and Type 209/1400 and Project 636 submarines, which represent 1980s technology. Other major differences include the lines of the boats, the composition of the sonar complex, the use of anechoic coating, the approach to equipment suspension, etc. In fact, it cannot be said that any specific submarine model is clearly superior to all the others. Obviously, the variety of the models on offer reflects the varying needs and buying power of different customers.
Increasing localization of submarine production in the buyer countries
In yet another consequence of the growing price of non-nuclear submarines, most customers now make an effort to involve their own national industry in building – or at least outfitting – the submarines they buy for their navies. It has become quite common for submarines to be built or assembled at the customer’s own shipyards, and to be fitted out with equipment supplied by domestic producers. Such programs require the designer and the “parent” shipyard to adapt their technologies. They must take into account the capability of the customer’s shipyard where the submarines it to be built, and the capability of the importer country’s industry in general. The “parent” shipyard, for its part, must be prepared to supply material packages and components rather than finished submarines, and to establish a working relationship with the customer’s shipyard.
Clearly, the submarine market is very complex, and it is impossible to describe all the recent trends in such a short article. Nevertheless, the following conclusions can be made:
Centre for Analysis of Strategies and Technologies (CAST)