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August 2013 in This Issue … August 2013 In This Issue … 01 - GREECE: FREMM Frigate Lease Still in FREMM Frigate Lease Still in Early Stages Early Stages In early August 2013, AMI's source in Greece stated that a 02 - AMI: From the Desk of the CEO request was sent from Minister of Defense (MoD) in order to 03 - IRAQ: New Missile Boat (Fast Attack officially request two FREMM frigates under a lease agreement Craft) Requirement from France. This request, in the form of a personal letter to 04 - UNITED ARAB EMIRATES: Considering France’s Direction Generale de l’Armement (DGA) (precise a Submarine Capability content unknown), reportedly emphasizes the Hellenic Navy’s (HN) desire to receive the frigates as soon as practical. 05 - OMAN: Mine Countermeasures Fleet Under Consideration Initial reporting indicates that the request would be for the last two units being built for the French Navy (FN). This approach 05 - MOROCCO: Submarine Fleet Being would be mutually beneficial to both nations, Greece, getting the Contemplated first two units earlier than anticipated, and for France, allowing 06 - UNITED STATES: T-AO(X) Oiler Industry for a reduction-in-force in line with budget cuts while still Studies Underway allowing the shipbuilding industry to continue uninterrupted. 07 - SAUDI ARABIA: Navy Requests 30 Mk If the lease approach is approved by the two nations, the two V Patrol Craft frigates, along with technology transfer that would allow for 07 - CANADA: New Coast Guard Life Boat Greek construction of four additional units, could be delivered in Program Set to Begin 2015 and 2016. The remaining four units would likely be built in Greece, probably at Elefsis Shipbuilding with DCNS assistance, 08 - INDIA: Technology Perspective and beginning in 2016 with all four units delivering at two year Capability Roadmap Released intervals from 2020 to 2026. 11 - ASIA: Regional Update 12 - DIMDEX 2014: AMI International’s World Naval Market Outlook 15 - INTERNATIONAL: Shipyard Consolidation / Merger / Reorganization Highlights 15 - INTERNATIONAL: Combat, Sensor and Integration System Developments 16 - INTERNATIONAL: Naval Vessel Design Developments 17 - VARIOUS: Did You Know? 18 - AMI: Analytical Services - Access to Analysts 18 - AMI: Documents Available for French FREMM Frigate Download 19 - AMI: Contact / Email Directory (Continued on Page 3) Hot News August 2013 From the Desk of the CEO 5. Work the offset strategy harder—make sure your market approach specifically addresses meeting The Defense Market is Dying (Not) – Some Great bigger and harder offset targets now being set by international customers. Unfulfilled offsets are an Contrarian Opportunities over the Next 5 Years opportunity and/or a problem—making them a According to Anup Shah at Global Issues, defense spending priority early in the business plan helps avoid them dropped half a percent from 2011 to 2012—to approximately becoming the latter. US$1.7T a year worldwide. Many observers are projecting 6. Help train new buyers—especially among smaller or future declines in the defense budgets for North America and newer customers--in defense acquisitions/life cycle Europe of up to 10% over the next 6 years. support strategies. These are the two most Offsetting this decline are defense budgets forecasted to rise misunderstood and mismanaged areas in the up to 4% over the same period in the Asia-Pacific and Mid international defense market. East North Africa (MENA) market. The net result for the 7. Build on your in-place processes that have proved global defense market is perhaps as much as a 5% drop in successful in the international market. global spending over the next half-decade--from US$1.7T a --Refine your Bid/No-Bid process to maximize wins year to US$1.62T a year. and promote your ability to no-bid. These numbers do not show a market with the bottom --Identify your “Must-Wins” at least 2 to 3 years in dropping out--so don’t run away from it too fast! advance to ensure sufficient time for positioning. Allocate sufficient resources for success given higher For those planning to stay and grow in the defense business, competitive rivalry. many opportunities will arise as others exit the market in fear or significantly reduce their exposure to the sector. The next 8. In the near term, focus on modernization and upgrades few years will present opportunities for mid-sized defense of military hardware as new construction programs firms to expand by acquiring key capabilities with ample are scaled back or canceled in the large advanced prospects for growth. economies. 9. Be mindful of professional services growth However, following this strategy to stronger performance in opportunities beyond 2015 as a generational turnover an increasingly globalized defense market will mean is beginning to occur and will continue over the next concentrating on some key guiding principles. decade. Here is AMI's view of some of these “high yield” aids that We look forward to supporting you in finding and winning will help you navigate future defense market conditions: these new opportunities in the naval market! 1. Be international—not just in name but in deed. This Each month I will be offering up ideas to stimulate change in means international is a core focus and company our naval market. I welcome your comments, suggestions, and leadership is invested in expanding multi-national critiques. You can reach me at [email protected], operations. @GuyofAMI on Twitter, or on my editorial section of our 2. Don’t view the international market as a “foreign website. military sales” subset to your more important or comfortable domestic market – there should be nothing “foreign” about your approach to the international market! 3. Be prepared to find and enter non-traditional markets and segments in the global space to generate new revenue and offset flat or declining performance in current core markets. 4. Find joint ventures or acquisitions that establish and/or grow existing in-country presence and credibility with the local customer. Guy Stitt, CEO, AMI International Naval Market Forecast Newsletter Page 2 Hot News August 2013 (Continued from Page 1) Also mentioned in the deal regarding the FREMMs is the possible procurement of two offshore patrol vessels (OPV) for Cyprus. According to AMI’s source, Hellenic Shipyards (HSY) is in discussions with the Cypriot MoD. French and Israeli lobbies are also discussing construction possibilities. Information received regarding the Cypriot OPVs is that there is disagreement as to where the two units will be constructed, Greece, France or Israel. AMI’s source has stated that official request documents (Letter of Request) are still in draft and there is no firm decision or agreement as of this writing. AMI will continue to follow these two procurements and report as information is received. 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 by visiting the FREMM Class AAW Destroyer (Frigate Program) project report at: http://www.amiinter.com/wnpr/projects/project.php?newcontID=258&countryID=24. New Missile Boat (Fast Attack Craft) Requirement On 11 July 2013, AMI received information that Iraqi Prime Minister Nouri al-Maliki, accompanied by high-ranking Iraqi Navy (IN) officials, discussed with the Russians the possibility of procuring three missile boats (fast attack craft - FAC) from Moscow. This same report stated that the Russians have no intention of selling missile boats to Iraq as “they have other priorities regarding arms sales to Iraq.” AMI’s source believes that these priorities include medium-range air defense missile systems, helicopters, and fighter jets. Because of Russia's lack of desire to sell FAC to Iraq, source did indicate that al-Maliki intends to contact other ambassadors in Ambassador III Class - Candidate for Iraq Baghdad with the intent of making a similar request for FAC. AMI believes that top contenders for the FAC program will be the United States under a Foreign Military Sales (FMS) program (possibly the Ambassador III design currently under construction for Egypt), the United Kingdom, France and Italy. Fincantieri of Italy built four Assad class FAC for Iraq in the 1980s but were never delivered to the regime of Saddam Hussein and were subsequently sold to Malaysia and renamed the Laksamana class. If a supplier is able to be found in the near term, AMI anticipates a construction contract could be in place as early as 2015 with three units commissioning by 2019. 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 Iraq can be obtained by visiting the country report at: http://www.amiinter.com/wnpr/country/view-country.php?countryID=74. Naval Market Forecast Newsletter Page 3 Hot News August 2013 Considering a Submarine Capability In July 2013, AMI received information that the United Arab Emirates Navy (UAEN) was again considering the procurement of submarines. This follows information received in 2012 that suggested that the sea service was already considering the procurement of an undersea force. The UAE is now part of an emerging list of Middle Eastern and African countries that are now considering a submarine service. No doubt that the unrest in the Middle East (Arab Spring), the Iranian threat and terrorist threats in general are beginning affect the way these regional countries view their undersea territory. Although there are no firm details available concerning a UAEN submarine procurement timeline, sources have indicated that the sea service is considering German and Italian solutions, probably the Type 214 (1700 tons) and Type 212 (1500 tons) designs. For Italian designs, the UAEN may also want to consider the S1000 which was jointly developed by Russia and Italy and displaces around 1,000 tons.
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