On Augst 5^th the Australian Government chose Japan to manufacture its new fleet of frigates. This is a monumental decision for the Australia-Japan relationship, establishing a new industrial strategic partnership with flow on effects in security cooperation, numerous value chains and cross border skills development.

In 2016 there were expectations of this type of development with the submarine project, but regretfully the decision did not go to Japan. Then in 2021 the submarine project went in a new direction with the establishment of AUKUS, which will in fact provide important synergies to the frigate project.

The lead company in the Mogami project is Mitsubishi Heavy Industries, the main manufacturer of the frigate. MHI will deliver the first of the upgraded Mogami in 2029. This is guaranteed as MHI will deliver one of the ships being built for Japan. This decision is a clear indicator of the commitment from Japan to make this strategic partnership a long-term relationship. Subsequently, MHI will deliver two more frigates made in Japan and then the production of eight more is due to occur at Henderson, Western Australia.

MHI is joined by Hitachi, Mitsubishi Electric and NEC to make up the four main consortium members and potentially many other providers of the numerous components, software and other parts of the complex frigate. Japanese companies such as IHI Engineering, Fujitsu, NTT Data, Kawasaki Heavy Industries, Oki Electric, Homura Heavy Industries, Tokyo Keiki, Japan Marine United and others provide various components, including laser, sonar, robotic boats, navigation, gyrocompasses, cybersecurity, communications, etc.

It is important to stress that the frigates will be serious upgrades on the existing Mogami class: significantly larger, better anti-air and anti-submarine capabilities, stealth design, new sonar for mine detection and other aspects which we do not need to detail here. Suffice it to say it will be a state of the art boat. Apart from its value as a military asset, the potential of the Mogami project is enormous in terms of technology transfer in both directions for Japanese and Australian companies.

Two other key aspects of the project make this decision momentous: 1) the Mogami is fully compatible with the US Navy systems; 2) the Mogami has open systems architecture which make it easy to install new technology and components over the 40 year life of the boat.

I call this project an inflection point because of the potential it has to move the Australia-Japan relationship to a whole new level, as strategic partners and members of the US alliance system, but also as the foundation of a resilient value chain that encompasses missiles, ships, sensors, engines, digital platforms, AI, logistics, air conditioning, navigation systems, maintenance, etc, etc.

Author: Manuel Panagiotopoulos

Managing Director, Australian and Japanese Economic Intelligence