Monday, 22 October 2012

Saudi Arabia contract to DCNS for the French

The French group DCNS shipbuilding could finalize a contract billion with Saudi Arabia to modernize its fleet. According to the daily La Tribune, the signature should be between Paris and Riyadh during the visit of François Hollande in November in Saudi Arabia. The contract, called LEX (Life Extension Sawari 1) door "on the modernization of four Al Medinah class frigates and two oil-tanker class Boraida commissioned in 1985-1986" in the contract Sawari I.

This major contract to DCNS will both lengthen a ten year life of the frigates and try to win new contracts (Sawari Sawari 2 and 3) with the sale of several FREMM multi-mission frigates with vertical launchers for MBDA ASTER 30 missiles. But the export contracts involve increasingly technology transfers, establishment of production capacities on the ground state client, and partnerships with local manufacturers. Saudi Arabia and other countries in the Middle East and North Africa as the United Arab Emirates and Algeria now require technology transfer, production and on-site training.

Abu Dhabi Future "hub" naval

Biennially held in Abu Dhabi, IDEX, the largest international exhibition of defense in the Middle East. From 17 to 21 February 2013 was held in conjunction with this exhibition the NAVDEX, the international naval defense. The capital Abu Dhabi has focused its activities outside oil like Dubai in strategic sectors such as renewable energy (Masdar), aeronautics (Mubadala), defense (Tawazun) and the naval sector with Abu Dhabi Mar. With the opening of its new deep-water port, Khalifa Port, Abu Dhabi intends to make the naval sector, one of the key industrial development.

In 2010 the Abu Dhabi Emirate naval group MAR (ADM) has signed a partnership with the German TKMS on the acquisition of the German company in the field of civilian vessels (construction, services, activities, components for industry). Already present in the construction activities of yachts and mega-yachts, this joint venture allows the Emirates group to expand its military operations in the construction of submarines and surface ships, frigates, corvettes and patrol vessels Offshore. Abu Dhabi in March will be in charge of contracts concluded in the Middle East and North Africa, and the first frigates and corvettes should leave the shipyard in Abu Dhabi and compete term European shipbuilders.

Abu Dhabi group already owns shipyards in France (Constructions Mécaniques de Normandie CMN) and the United Arab Emirates. Abu Dhabi March Group is a holding company controlled by Al Ain International Group (70%) and Privinvest (30%) and belongs to Sheik Hamdan bin Zayed Al Nahyan, who is part of the ruling family of the Emirate of Abu Dhabi. ADM has resumed activities shipyard Greek Hellenic Shipyards (Skaramangas).

Shipbuilders Gulf and Asian newcomers sector

This partnership German-Emirati TKMS / ADM may weaken eventually all European manufacturers including French DCNS including export to North Africa and the Middle East where ADM wants to establish itself as a significant player in the region and rake commands. Even if the defense minister Jean-Yves Le Drian, in the presence of Minister of Economy Pierre Moscovici, welcomed this week when setting afloat the frigate Normandy, the success of multi-mission frigates European FREMM (6000 tonnes) a partnership between France and Italy, it remains that the construction program FREMM as prime contractor DCNS has been downgraded with the building 11 frigates instead of the 17 planned to equip the Navy nationwide by 2022. In the midst of public spending cuts, the note is salt have nearly 642 million euros or 7.07 billion frigate TTC for 11 frigates.

The French naval industry faces fierce European and international competition. TKMS German, Spanish Navantia, Italian Fincantieri BVT Surface Fleet UK (BAE Systems), or the Dutch Damen Shipyards align each product offerings in the segment of surface ships. In addition to the European competitors, the French DCNS faces the U.S. ((Northrop Grumman, General Dynamics Marine Systems, Lockheed Martin, and Raytheon), but also to new entrants in particular South Korea and China with the most competitive prices.

In the midst of the euro crisis and budget cuts, the export market is vital to the French DCNS especially as the French government owns a 65% DCNS group. Maghreb and Middle East, DCNS has trouble selling its next-generation frigate, full of technology, but very expensive. Morocco, however, DCNS recorded its first export contract in 2013 with the delivery of the frigate FREMM Mohammed VI valued at 470 million euros.The French DCNS is counting on Saudi Arabia to fulfill its backlog. This is not counting on the German TKMS, the German giant of the shipbuilding industry that has sold two Meko frigates to Algeria for 2.5 billion euros and use the naval hub in Abu Dhabi to counter DCNS ambitions of Saudi Arabia and in the region with more competition in terms of cost.

The French will have to create a structure in Saudi Arabia for ad hoc industrial rehabilitation ships. The shipbuilding industry is located in Jeddah Saudi Arabia in the Red Sea and the Persian Gulf in Dammam and Jubail. The ODAS, founded by the French government and large groups which ensures contracts from state to state between France and Saudi Arabia, will have to offer a comprehensive industrial cooperation but growing wave of Saudization, Riyadh could also require technology transfer as well as on the plate electronics, training of Saudi engineers and other technical personnel and assembly term FREMM frigates in Saudi Arabia.

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