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GERMANY: TKMS’ FUTURE IS NOW ON THE LINE…

OIDA Strategic Intelligence – Commentary

• Everyone is keen to push for the sale of TKMS activities (from politicians to shareholders) and ThyssenKrupp CEO Heinrich Hiesinger appears to be attentive to the market about TKMS activities;
• Without the Naval Surface Vessel division, the submarine activity is not profitable;
• If TKMS is sold, the buyer will benefit from synergies, from cutting-edge knowledge and from a non-competitive German market. The buyer will also collaborate with important naval equipment suppliers such as Atlas Elektronik GmbH and its main subsidiary AEUK.
• Losing the MKS 180 contract means that TKMS has lost potential sales abroad and credibility regarding the fact that it has not been chosen by the German Navy.

OIDA Strategic Intelligence – Our Offer

• Understanding and identification of potential industrial synergies (product portfolio), value chain tracking (with subcontractors and suppliers)
• Identification of past/present/future business opportunities and monitoring of order intake • Key figures on actors (company profiling on Abeking& Rasmussen, Atlas Elektronik GmbH, Fassmer, German Naval Yards, Lürssen, Meyer Werft, TKMS but also Damen, Fincantieri, Naval Group, Navantia, Saab, Thales Underwater Systems and Ultra Electronics) AND markets (submarine, surface vessels, etc)
• Key figures on partnerships and monitoring of export customers
• Monitoring interest of TKMS’ sales offshoots.

What is going on?

ThyssenKrupp is stepping away from the shipyard business after having lost the MKS 180 contract (3.5bn€ /£3.07bn). This decision comes from the German Federal Government, as it loses out on constructing the MKS 180 ship to its rivals German Naval Yards and the Dutch Damen (DSNS). The German Federal Government plans to spend 3.5 billion Euros on four units and then an additional 1.5 billion Euros (£1.32bn) for two more units later on. This ship will likely receive interest from other foreign navies. TKMS’ other contracts are now on the line such as Egypt’s order of frigates.

The MKS 180 frigate is the most expensive and prestigious construction in the history of the German Navy. This loss can be perceived as a first foot in the door for foreign constructers into the German ship making industry. This could be the beginning of the end for national German ship making. However, it is conceivable that TKMS might build parts, and deliver components for the MKS 180.

TKMS is a leading company in terms of military ship and submarine making for the German navy. Until today it has had a near monopolistic position fostered by the German government. However, this contract was advertised Europe-wide instead of being nationally awarded. Indeed, government members are now pushing for a European consolidation and seem to be ready to let TKMS go. Shareholders are putting pressure on CEO Hiesinger to dispose of the TKMS holding which weighs on ThyssenKrupp results.

Concerning the MKS 180 bid, TKMS presented the highest price and doubts had arisen about if the ship maker could build such a large ship at all due to recent logistical and financial set-backs (late delivery of the K130 Corvettes, massive defects on the F125 Frigate).

Following this commercial failure several scenarios are under discussion: collaborating with competitors, selling off the branch, or, if no agreement is reached, giving up completely the company. Discussions with Naval Group and Lürssen Group are being considered as well. However for experts, if the Naval Surface Vessel division is sold, the Submarine business will most likely be on the line. The ship market is small, and the two intertwine on an engineering and purchasing level. Negotiations with Rheinmetall failed some years ago due to elevated prices.

Damen (DSNS), German Naval Yards and Lürssen have shown signs of teaming up, not only for the construction of the MKS 180, but to also to work as a consortium for other future projects.

Written by Benjamin Voisin (Finance Analyst) & Alexandra Stafferton (Junior Analyst) for OIDA Strategic Intelligence

Turkey’s most extensive contract: T129 ATAK helicopter with Pakistan

On May 30th 2018, Turkey and Pakistan went a step further in their deep armament collaboration following the signing of their biggest contract to date about the sale of 30 multi-role combat helicopters T-129 ATAK, produced by the Turkish Aerospace Industries (TAI).

The helicopter’s configuration is based on the AW129 and its predecessor, the A129 Mangusta, produced by the Italian company Leonardo Helicopters, formerly known as AgustaWestland.

Indeed, the T-129 ATAK has been developed jointly by AgustaWestland and Turkish Aerospace Industries for the Turkish Armed Forces under the Attack and Tactical Reconnaissance program. There has been a strong collaboration between Italy and Turkey since the 1970’s. The two companies signed a contract in 2007 for a total amount of US$1.2 billion. This contract initially allowed TAI to assemble 51 helicopters with an additional 40 optional helicopters, and to share intellectual property rights regarding the configurations of the helicopter. Since then, 59 helicopters have been ordered with 32 options for Turkish Land Forces and further 9 T129 ATAK Helicopters for the Ministry of Interior.

The T-129 ATAK development debuted in 2008, and it was first put in service in 2012. Until then, it was only used by the Turkish Military and Gendarmerie (Jandarma Genel Komutanlığı). Therefore, this sale to Pakistan is the first helicopter export contract even though a few years ago TAI called for a more extensive contract with Azerbaijan.

Pakistan’s helicopters will be equipped with specific technological weapons as described in the table below.

UMTAS, renamed Mizrak-U, is a new type of missile developed by Roketsan for 13 years. This weapon is an anti-armor missile with a maximum range of 8km able to operate day and night, whatever the weather. Its particularity is that it is effective against tanks and reinforced structures. It is aimed to arm T-129 ATAK helicopters and Anka UAVs. It can also be fitted on land vehicles or naval vessels. According to sources this weapon is said to be the Turkish equivalent of the US-made AGM-114 Hellfire from Lockheed Martin.

Moreover, Turkey decided to engage in national production of an armed aerial vehicle: the Bayraktar TB2, a joint venture with two Turkish developers: Bakar and Kale Kalip. It can be used with missiles like the Mizrak-U. The tests realized in 2015 were successful, and is now able to be used by professionals. Turkey has become one of the few countries to have armed UAVs.

Roketsan also signed a Memorandum of Understanding (MOU) with the European firm Airbus Defence and Space in July 2016, to arm the Airbus C-295 gunship with laser-guided Cirit missiles, and the long-range laser-guided UMTAS anti-tank missiles, as well as the Teber laser-guided bombs.

Turkish officials have added that they are selling the T-129 to a number of countries but refuse to name. However, TAI officials have said that among potential buyers, there is Azerbaijan.

 

Written by Alix Van Den Bogaerde (Junior Analyst) for OIDA Strategic Intelligence

MBDA UK AND ITS COMMON ANTI-AIR MODULAR MISSILE (CAMM)

OVERVIEW

 

May 24th 2018, the United Kingdom’s Secretary of State for Defence Gavin Williamson announced at the RUSI Sea Power Conference in London, that the Sea Ceptor Missile System (cost: £850m) has become an active part of the Royal Navy.

What is the Sea Ceptor? It is a world-class missile system made by MBDA UK that protects the Royal Navy’s new aircraft carriers.

MBDA, CAMM manufacturer, is a multi-national company with offices in France, Germany, Italy, Spain, the U.K., Australia, and the U.S. It is truly an European company as it is a joint-venture between the aerospace giants, Airbus (France) (37.5%), BAE Systems (United Kingdom) (37.5%), and Leonardo (Italy) (25%).

MBDA designs and manufactures missiles and missile systems for a range of operational needs for land, sea, and air. They offer 45 operational missile systems and countermeasure products as well as more than 15 devices which are still being developed.

The Sea Ceptor is the naval variant in the Common Anti-Air Modular Missile (CAMM) programme, designed to provide the next generation of anti-air guided weapons for land, sea and airborne operations. Furthermore, it is fully compatible with existing command and control (C2) and sensors (radars etc) facilities.

Developed and manufactured by MBDA UK under the umbrella of the company’s Portfolio Management Agreement with the Ministry of Defence (MoD), the missile will be the core component of the Future Local Area Air Defence System (FLAADS), a requirement for both land and naval environments, replacing Rapier FSC and Seawolf.

Similarity with other MBDA missiles

 

CAMM missiles will take over existing subsystems from MBDA’s portfolio:

  • Datalink (radar data sharing), C2 (Command and Control) concept and the propulsion from the ASRAAM (Advanced Short-Range Air-to-Air Missile);
  • C2 (Command and Control) from Sea Viper (featuring more than 75% re-use of Sea Viper C2 software, the British variant of PAAMS system that equips advanced British, French and Italian anti-aircraft destroyers.)

 

HISTORY

 

For over a decade, MBDA UK has been developing its own surface-to-air missiles by using common elements from other systems in its portfolio.

The CAMM project began in 2004 when the UK’s MoD awarded a £10 million Technology Development programme (TDP) to MBDA through the Joint Sensor and Engagement Networks Integrated Project Team. This first phase included carry-on studies related to the Soft Vertical Launch system, a dual band two-way datalink, an active RF Seeker, and open systems architecture to ensure compatibility with a wide range of search and acquisition radars and command and control systems.

The second phase (2008) costing £15 million , was committed to maturing the RF Seeker with trials completed on a QinetiQ test aircraft (a Hawker Siddeley HS-780 Andover C1) at Boscombe Down (United Kingdom). This stage helped out to fulfil the FLAADS’ “business case”.

In 2008, the Complex Weapons Portfolio approach was announced, with FLAADS being one of the pillars of the portfolio to be completed.

In 2009, MBDA UK presented its first prototype to its clients. In order to reduce the development costs, the CAMM system is based on a modular architecture with common subsystems (self-steering, data link, actuator, proximity fuse…). The demonstrator took over existing subsystems, such as the Datalink (radar data sharing) and the C2 (Command and Control) concept and the propulsion of the ASRAAM (Advanced Short-Range Air-to-Air Missile) developed by MBDA.

In 2011, MBDA announced the Sea Ceptor Missile System, the navy variant of the FLAADS. Tests were carried out in 2011 from a truck to get exploitable data for the FLAADS-Land programme.

 

ANALYSIS

CAMM – Sea Ceptor

 

With minimal logistical support and maintenance required, MBDA’s Sea Ceptor Air Defence Weapons System is an appealing choice to navies.

In 2017, Sea Ceptor successfully completed its firing trials from HMS Argyll. It will eventually replace the VL Sea Wolf on the U.K. Royal Navy’s Type 23s. In 2016, the United Kingdom’s Ministry of Defence (MoD) awarded MBDA a £100 million contract for Sea Ceptor to be integrated into the Royal Navy’s new class of frigate, the Type 26 Global Combat Ship. Sea Ceptor differs from its predecessor Sea Wolf thanks to its added capability of protecting not only the warship, but also nearby vessels. Former U.K. Minister for Defence Procurement, Harriett Baldwin, stated that Sea Ceptor would protect British interests against known and unknown threats. She went on to further state that Sea Ceptor will be used by the Royal Navy’s new Type 26 frigates, that are tasked to keep their nuclear deterrent submarines and two new aircraft carriers safe during operations.

Sea Ceptor is an all-weather, active RF seeker, and air defence weapons system, that can be retrofitted on a range of platforms such as 50m OPVs, frigates, and destroyers. The system can fire simultaneously multiple targets with a missile called the Common Anti-air Modular Missile (CAMM). CAMM has a powerful rocket motor allowing to propel missiles double the range of that of Sea Wolf, and has an active radar seeker to engage targets, thus eliminating the need for target illuminators.

The system is first of all fitted with a compact launch system with soft vertical launch technology, enabling a 360-degree coverage. This achieves a minimum launch signature, and a two-way datalink between the missile and launcher. Secondly, it is equipped with a gas generator which ejects the missile from its canister. This device has many effects: it conserves the rocket motor’s energy to power the intercept, reduces the minimum intercept range, limites stress on the launch platform, reduces maintenance and costs, and eliminates management of the hot gas efflux on-board. Sea Ceptor operates on the SYLVER and Mk41 launchers using a quad-pack configuration (various flexible canister configurations are available). Over the past five years, MBDA has worked with Lockheed Martin to develop a lightweight version of the MK41 launcher for CAMM. A certificate was signed for a lightweight launcher called ExLS, which is intended for smaller vessels. The launcher allows a soft launch by using compressed air, and capable to fire the main missile motor not on board.

Sea Ceptor can target any surveillance sensor system. With its supersonic speed and range in excess of 25 km, it has broad target settings (high-speed, manoeuvring, or low signature targets), and also  the ability to engage small naval vessels, combat aircrafts, UAVs, and future threats from new generation supersonic anti-ship missiles. In terms of command and control, the system can be integrated with new and existing naval combat systems, and configured to operate as an independent air defence capability, or as an integrated capability within a command and control architecture hosted on the vessel’s combat management system.

Sea Ceptor is capable of defending an area of 500 square miles with the ability to protect the host and nearby vessels from varied sources of attack. Former MBDA U.K. Managing Director, Dave Armstrong, succinctly said that: “Naval air defence is more critical than ever given the growing capability of airborne threats. CAMM’s operational flexibility and ease of integration, both as retrofit or on a new build, combine to offer unrivalled product advantages.”

Recently, the United Kingdom’s Ministry of Defence announced Sea Ceptor had been developed and manufactured through contracts worth around £850 million. This announcement is a severe failure for the Portfolio Management Agreement, through which the U.K. MoD and MBDA continue to operate.

The CAMM programme is today estimated at £1.573 billion only taking into account recent contracts between 2012 and 2018, and not between 2005 and 2012. This leads to think the programme has been through cost overruns due to a lack of competent workforce within the British missile industry.

Sea Ceptor’s Prospective Customers

 

International customers are choosing CAMM for their future air defence capabilities. 2014 was a successful year for Sea Ceptor with two navies selecting the Air Defence Weapons System for their vessels. In May 2014, the New Zealand Ministry of Defence and MBDA signed a contract for Sea Ceptor to be integrated into the New Zealand Navy’s ANZAC Frigate Systems Upgrade (FSU) project. In November 2014, MBDA announced that Brazil selected Sea Ceptor for its next generation Tamandaré class corvettes. Finally, the Republic of Chile has recently selected Sea Ceptor for its Type-23 frigate.

Sea Ceptor’s popularity has grown since then, with the Spanish Directorate of Armament and Material approving in December 2017 to conduct a technological risk reduction study (worth €9.5 million) to analyse the feasibility of integrating Sea Ceptor onto future F-110 frigates.

Sea Ceptor may also be an option for Finland and its four Squadron 2020 corvettes. Another competitor for this market is Raytheon’s RIM-162 ESSM (Evolved Sea Sparrow Missile). Raytheon has expanded its missile’s capability from sea-based to a ground-based air defence environment.

Italy’s position is interesting. Officially, CAMM-ER will replace only the Spada system for the Italian Air-Force and the Skyguard system for the Italian Army. However, it is understood that CAMM-ER may also replace some time soon the Albatross system for the Italian Navy in order to maintain a standardisation in procurement already there.

CAMM – FLAADS/Sky Sabre

 

The UK Royal Artillery equivalent is Land Ceptor or Sky Sabre. CAMM will soon replace the British Army’s Rapier ground-based air defence system. The benefits for the U.K. of operating a common missile are multiple, such as significant cost benefits throughout the lifecycle of the systems, development, procurement, support costs, and sharing a common stockpile.

Compared to Rapier, Land Ceptor has over triple the range (25 km+) and is able to intercept the most challenging targets in any weather conditions, including cruise missiles and precision guided munitions.

Land Ceptor made its debut at DSEI 2017 and has been undergoing trials for the British Army. The system has a substantially revised design to initial development prototypes and incorporates numerous new features. It was decided to use the in-service HX-77 as the base vehicle for Land Ceptor, enabling the capabilities of the system to be expanded, whilst minimising the overall fleet size.

According to MBDA UK, a key new feature of the new design is the modular launcher. It features a palletised loading module enabling rapid munition reload of the magazine, and a self-mounting/dismounting capability allowing for a wider range of air/sea/rail transport options and for dismounted operations in fixed/semi-fixed locations. A common interface module means the launcher can be easily integrated onto a wide range of vehicles.

Systems provide flexibility for the launcher to act as an independent fire unit, as well as in a networked battery configuration.

With the engagement of Beyond Visual Range (BVR) targets possible through the use of mid-course guidance and radar updates, it heralds a step-change to the current GBAD system.

This new GBAD system Sky Sabre will be constituted by:

  • The Modular, Integrated C4I Air & Missile Defense System (MIC4AD), Israeli Rafael;
  • The Giraffe AMB radar, Swedish Saab:
  • The Land Ceptor missile, MBDA UK;
  • The RMMV/MAN HX77 Heavy Utility Truck.

The GBAD system Sky Sabre is also benefiting from already used equipment. The 16th Regiment Royal Artillery (RA) is already using Giraffe AMB radar from the Swedish maker Saab, which may help the future transition from Rapier.

Sea Ceptor costs may have been underestimated. Indeed, recent announcements estimate Land Ceptor to cost £723 million. Fourteen systems are to be acquired by the U.K.’s Royal Army.

FLAADS/CAMM-ER Prospective Customers

 

Land Ceptor is MBDA’s launch configuration of the Enhanced Modular Air Defence Solutions (EMADS) stable.

This increased payload could also be used to further the extended range CAMM-ER interceptor and provide air defence out to 40km+ for customers who require greater range.

EMADS brings together best-of-breed systems and technologies from across MBDA’s European base to save time, development costs and provide a flexible system for air defence provision.

Italy’s current in-service SPADA should be replaced by the CAMM-ER based system.

Focus on Team Complex Weapons (Team CW)

 

The Team Complex Weapon Framework Agreement (TCW) defines an approach to delivering the UK’s Complex Weapons (CW) requirements in an affordable manner. This value for money proposition also ensures a viable industrial capacity between MBDA UK, Thales UK, QinetiQ and Roxel.

Pressure on defence spending has driven innovation in cost reduction and TCW might be a solution to conduct defence programmes until the end while safely funding them.

The MoD stated within the framework of the Defence Industrial Strategy published at the end of 2005, the establishment of a long-term partnership in the British missile industry in order to maintain industrial skills.

With annual funding of £700 million per year, the programme includes investment of around £7 billion in the complex weapons sector. The TCW is expected to generate £1.2bn in savings over 10 years from 2010 and avoid dispersion of MoD budgets.

An innovative approach to the MOD’s Complex Weapons pipeline has been based on a Partnered Portfolio Management Agreement with MBDA UK Ltd, which focuses on the development of families of weapons utilising the principles of commonality, modularity and re-use. Linkages between weapons in a portfolio should reduce overall costs.

Complex weapons are considered tactical weapons that rely on guidance from systems to achieve precision effects. They fall into five categories:

  • air-to-air,
  • air defence,
  • air-to-surface,
  • anti-ship,
  • surface-to-surface.

It should be noted that the Complex Weapons Programme does not include torpedoes, non-U.K. sourced missile systems or some legacy systems.

According to the 2017 Defence Equipment Plan, only £0.68 billion has been saved to date, however a further £0.67bn is anticipated from contracts already in place that are yet to be announced. The estimated savings (£1.2bn-1.3bn) come from netting off the notional additional costs of single-source procurement from the benefits of the extant procurement strategy.

However as previously said, CAMM’s programmes costs may have been underestimated. Recent announcements do not prove the complete effectiveness in cost saving.

Download our Case Study #03 (21 pages) with tables and figures available in pdf format here :

2018_OIDASI_CS3-MBDA-CAMM

Written by Julien Brugnetti (Senior Analyst)  for OIDA Strategic Intelligence

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