East/West divide grows in the international navy shipbuilding business.

• Author: Magnuson, Stew
• Position: Shipbuilding

The United Arab Emirates' new corvette-class ship sat along the dock at a recent trade show. Its manufacturer, Abu Dhabi Shipbuilding, wanted to show off its indigenously built vessel and it was the main attraction at the first ever NAVDEX exhibition, a new section to the Middle East's largest arms show, IDEX, in Abu Dhabi, United Arab Emirates.

But little of what the company featured came from the UAE. The design of the planned fleet of six Baynunah-class ships originated at Constructions Mecaniques de Normandie of Cherbourg, France. The fire control and command and control for the weapon systems came from Italy. The Exocet and SeaSparrow missiles were built in France and the United States, respectively. South Africa's SAAB Avitronics supplied the laser warning system. German companies provided the decoy system, the sonar, the underwater communications and the engines.

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And the list of international suppliers went on.

Despite the current economic slump, the worldwide market for navy ships is expected to grow, market analysts said. Visiongain, a London-based firm, predicts global expenditures to rise 5.2 percent annually, doubling from $75.5 billion in 2011 to $124.6 billion in 2021.

"In spite of the declining defense spending in the West, the procurement of major naval vessels is likely to continue," the firm's Warships and Naval Vessels Market, 2011-2021 report predicted.

The shipbuilders that came to IDEX are gearing up for the global competition. And as the UAE navy's new ship illustrated, it's not all about hulls. While there has been a lot written about the decline in the U.S. shipbuilding industry, with many yards closing up or consolidating over the past few decades, the demand remains for high-tech subsystems that turn a steel shell into a warship.

"The drive towards standardization and modularization of systems is likely to offer considerable opportunities for companies that can supply such solutions," the report continued.

Daniel Harrison, industry analyst manager at Visiongain, told National Defense that there is a clear EastAVest divide when it comes to the naval market. Lower cost labor and materials required to build hulls is found in non-U. S. and European countries.

"In contrast, the advanced western technologies that transform any hull into a formidable war fighting vessel are still predominantly supplied by western contractors. The retraction in defense budgets globally--which has had the effect of slowing the procurement of new platforms and shifting to lower cost retrofitting and upgrading or even converting existing platforms--has clearly created stronger market opportunities in this area," he wrote in an email.

Patrick N. Bright, chief analytical officer at the Seattle-based firm AMI International, said, "Indonesia can build a hull. Turkey can build a hull. They haven't taken that next step to build a radar or a missile.

About 60 percent of the cost of a new naval ship is found in these subsystems, he noted.

While some countries may prefer to buy an "all French" or "all U.S." vessel to make purchasing simpler, increasingly the world is becoming "flat," when it comes to navy or coast guard ships, analysts said. Nations like the UAE are choosing components from a virtual United Nations of suppliers.

Harrison said a good analogy can be found in the...