French Naval company DCNS banking on Asia-Pacific Navies

By SP's Team
Bernard Buisson, Managing Director of DCNS India

Frost & Sullivan estimates Asia’s overall defence budget will account for 32% of global military spending by 2016, or 480 Billion US$, up from 24% in 2007. The growth is here and 12 navies in the Asia-Pacific region have submarines and according to reports about 60 billion US$ are likely to be spent over the next five years in the navies here. The projection for India is 39.35 billion US$ in new ships and systems.

In this encouraging background, French leader in Naval defence — DCNS has chalked out strategies to consolidate its position in the region. Here the Managing Director of DCNS India, Bernard Buisson outlines the programme in an interview with R. Chandrakanth, Assistant Group Editor, SP Guide Publications.

SP Guide Publications (SP’s): What is DCNS’ forecast on the naval ship market for the Asian region?

Bernard Buisson: The countries in the region are developing very fast and they need to adapt their naval means to the growth. In terms of products, navies are going for full capabilities, for littoral to blue waters mission, from Offshore Patrol Vessel (OPV) to amphibious ships together with underwater capabilities. The compelling reasons for nations to modernize their naval defence systems are resources supply security, alongside environmental protection and civilian safety. The objective has been to address asymmetric threats.

DCNS believes that navies here will continue to modernize and upgrade their defence capabilities to protect their maritime resources and the international trading that largely goes by sea. We see international modernization of naval forces motivated mostly by the need for greater economic protection and regional stability.

SP’s: Can you brief us on the cooperation with the Indian industry in regards to their Scorpene submarine programme?

Buisson: The production of six SSK Scorpene submarines by MDL under a DCNS transfer of technology (ToT) is on-going (P75 programme).We are conducting here genuine transfers of technologies and of know-how at an unprecedented level for such sophisticated naval platforms and are providing our Indian partners with technical assistance to manufacture equipment's through indigenization programmes.

The shipyard modernisation programme launched by MDL with the support of DCNS progressed fast and will allow MDL to deliver more than one submarine per year. MDL has today absorbed the demanding technologies associated to the hull fabrication. At the end of the programme, MDL will have the capability to manufacture more Scorpenes by itself.

These significant ToT achievements are indeed paving the way for the current P75 and future programmes. MDL and DCNS teams work well together.

Today, the outfitting works are on-going and we will complete this year the delivery of combat system equipment for the first submarine, the following ones will be delivered one every year. For the upcoming stages of the building (outfittings together systems integration and running of trials...), an adapted organisation from the shipyard is needed. Together with MDL, we created a common ‘task force’ aiming at quality and at the greatest efficiency.

Beside its support to MDL, DCNS is working at the selection and qualification of Indian companies as partners for local production on the Scorpene and other programmes (complete systems, subsystems and components). This is made through our Indian subsidiary, DCNS India.

DCNS India is in the process of investing and consolidating. Our foundations, - understand our teams and partnerships - need to be strong. We are on track in our development, on the trainings and qualifications of our local staffs, vendors and solutions. We are already producing results in detailed designs and procurement.

SP’s: How much of indigenous content goes into the SSK Scorpene?

Buisson: First of all, the ship on its all it locally produced and assembled. The major part, the pressure hull is made and assembled by MDL. This is a complex manufacturing process acquired by MDL under the DCNS ToT.

Indigenous elements that are fitted onboard are part of the MPM (Mazagon Purchase Materials). Their indigenization — manufacture by Indian companies with Transfer of Technology and of Know-How - is on its way. At the end of the P75 programme, most of the ship will have been locally sourced, allowing local competences for maintenance and industrial independence.

The important point relating to ToT and the indigenization process on the P75 programme is for India to acquire understanding of the systems concerned. We are genuinely transferring technologies and know-how on conception and manufacturing to MDL. Together with the industrial upgrades made by MDL, these provide capacities to maintain the submarine, to understand potential obsolescence on the systems, to be able to upgrade, adapt - with indigenous systems — the submarine during its lifetime (generally around 30 years).

SP’s: Could you tell us about Mazagaon Purchased Materials or MPM?

Buisson: Mazagaon Purchased Materials; are the equipments and systems that are fitted in the submarine (engines, pumps, valves but also the management and control systems, AC and safety equipments, the accommodations...). Ten of thousands of articles are grouped by families.

The purchase of the MPM has not been signed together with the main contract for the building of the submarines in 2005. The MPM have now been contracted. This is managed by MDL and we support them catching up in the delays. Also, we are maintaining the price of the MPM within the initial estimation of the overall programme, obviously with the cost actualization. Everything is now running.

Again, we work with MDL above our contractual obligations for the programme to be a success. There is a willingness on the part of France to be a forthcoming partner of India.

SP’s: What critical equipment are you sourcing locally for the Scorpene and for you other global programmes?

Buisson: Beside the hulls (light and pressure hulls), all the main mechanical and electrico—mechanical systems, the navigations systems and equipments of the combat system will be sourced and made locally.

The most important is to realize that, at completion of the P75 programme, we will have conducted an extensive ToT programme of the submarine together with the transmission of the know—how to upgrade the submarine during its lifecycle (analysis and management of information related to the obsolescence of certain parts/systems, adaptation of indigenous new components through upgrades..).

SP’s: That must have helped you bring down costs considerably, if yes, by what percentage?

Buisson: The aim of indigenisation is not only to obtain lower costs but to develop a network of local industrial capacities with competent suppliers. This is an investment — both in time and money — for the future, for the developments of new competencies.

The local sourcing and indigenisation must comply with rules that are not only economic:

  1. Safety requirements: after identification of an Indian supplier, we have to run a qualification process to give surety that the built elements will follow quality and performance standards that will allow the required performance. This is to ensure the safety of the submarine and its crew, there is no derogation to this.
  2. Schedule: the supply of the elements shall be compatible and in accordance with the schedule constraints of the programme. The operational availability of the Indian Navy is a key element for the Defence Forces.
  3. The industrial and strategic interest: all suppliers shall comply with the same constraints regarding cost effectiveness and the management of their risk. An Indian supplier, especially if he is qualified to participate in a high level submarine programme, will consider its investments and risks versus its industrial and financial returns. We have to give a perspective on the long term and not only for ‘one—shot’ actions.

As a long term development, indigenization is successful when:

  • ToT and of know—how are fully absorbed, meaning processes are running smoothly and with a high level of autonomy;
  • A continuous workload is bringing down costs and maintains capacities.

Participating providers to our ToT will give India sovereignty on its long term support of the ships. For DCNS, the P75 programme is part of our long—term commitment to India, and hopefully for future programmes to come.

SP’s: How is it working with MDL which may have legacy systems or systems from different countries?

Buisson: MDL is the only Indian naval shipyard to have produced submarines in the past. However, the competencies developed have seen a ‘breach’ for the last 15 years. Considering submarines technologies, this is a huge gap to fill. Human competences — when not maintained — disappear slowly but surely. Industrial means become obsolete or not adapted to the needs. Yet again, you therefore have to consider investments and learning stages that cost both time and money. It’s is crucial to keep competences and industrial means up to date to perpetuate the investments made.

The State takes into account this strategic dimension, to allow its national industry (public or private but under control for the last) to regularly maintain capacities through a smooth and regular workload. Considering submarines, sales to export markets may add business and activity but it remains uncertain revenues.

We had to learn to work with MDL, that’s a fact. DCNS strength is to be able to organize complex ToTs with partners that might not be from the same industrial and IT backgrounds. We are able to adapt our tools and methods to MDL’ features and needs. That said, the key element is the ability of people to work together. On this point, we are at a high level of understanding and cooperation with MDL.

SP’s: Scorpene is a totally different technology for MDL, how are you helping them to understand this?

Buisson: There is no fundamental obstacle to share the technology; MDL is a naval shipyard and therefore possess competences and industrial experience to acquire the know—how on our technologies and processes.

SP's: Can you give the training plans for engineers/technicians from MDL, is it on course?

Buisson: We cannot provide you with detailed training plans, but it is easy to arrange and work with MDL’ technicians and engineers as their inherent level is good.

SP's: How many hulls are prepared?

Buisson: As of to date, MDL is done with the hulls of the first and second submarines. Third and fourth hulls are in progress while the frame to receive the hull of the fifth submarine is under manufacture.It’s important to notice that we are working concurrently on the different submarines of the series.

SP's: When are the first and last deliveries expected?

Buisson: As you know, the launch of the first submarine has been delayed. We are constantly working with MDL and Delhi authorities to achieve the earliest possible date of launch.

Moreover, our aim with MDL and the Indian Navy is to work on fulfilling as much as possible the requirements of the overall delivery plan for the six Scorpene. Our common objective is to link up faster on the upcoming stages.