Japan Inc. has been taking a hammering recently and my bet they are having to eat their pride. Several large Japanese corporations including Mitsubishi, had a contract to build submarines for Australia, but because of something related to labor issues and Japan negotiators unable make clear what exactly they wanted to accomplish, lost this huge contract to the French. This contract to build submarines was worth US$40 billion. That has to be painful. Based on my experience in Qatar with Japan’s corporations and how they operate, it couldn’t have happened to a better group of corporations. Earlier this year, Japan Inc. also lost out on a contract to China to build a high speed train in Indonesia.
Seems as though Japan Inc. is getting gate crashed with these lost contracts. Japan Inc. really does need some corporate governance reform in a bad way and some creative inspirational ideas for the future. And it doesn’t end either with all this bad news for Japan Inc. Japan Inc. just lost a their Hitomi satellite. The satellite was launched on February 17, 2016 to observe X-rays coming from black holes and disappeared. Scratch US$273 million when the satellite on March 26 disappeared. Its disappearance sparked a scramble by Japanese scientists to find out what had happened to it. And by the way, black holes don’t exist, so scratch that supposition as well.
How France sank Japan’s $40 billion Australian submarine dream
By Tim Kelly, Cyril Altmeyer and Colin Packham
TOKYO/PARIS/SYDNEY (Reuters) – In 2014, a blossoming friendship between Australian Prime Minister Tony Abbott and his Japanese counterpart Shinzo Abe looked to have all but sewn up a $40 billion submarine deal. Then French naval contractor DCNS hatched a bold and seemingly hopeless plan to gatecrash the party.
Almost 18 months later, France this week secured a remarkable come-from-behind victory on one of the world’s most lucrative defense deals. The result: Tokyo’s dream of fast-tracking a revival of its arms export industry is left in disarray.
Interviews with more than a dozen Japanese, French, Australian and German government and industry officials show how a series of missteps by a disparate Japanese group of ministry officials, corporate executives and diplomats badly undermined their bid.
In particular, Japan misread the changing political landscape in Australia as Abbott fell from favor. The Japanese group, which included Mitsubishi Heavy Industries (MHI) (7011.T) and Kawasaki Heavy Industries (KHI), (7012.T) also failed to clearly commit to providing skilled shipbuilding jobs in Australia. And Tokyo realized far too late its bid was being outflanked by the Germans and particularly the French, the sources involved in the bid said.
France, on the other hand, mobilized its vast and experienced military-industrial complex and hired a powerful Australian submarine industry insider, Sean Costello, who led it to an unexpected victory.
Japan’s loss represents a major setback for Abe’s push to develop an arms export industry as part of a more muscular security agenda after decades of pacifism.
“We put our utmost effort into the bid,” the head of the Ministry of Defense’s procurement agency Hideaki Watanabe said after the result was announced on Tuesday. “We will do a thorough analysis of what impact the result will have on our defense industry.”
By the end of 2014, Japan was still comfortably in the driving seat thanks to the relationship between Abe and Abbott, which had begun soon after Abbott’s 2013 election and strengthened quickly.
Japan and Australia – key allies of the United States – had wanted to cement security ties to counter to China’s growing assertiveness in the South China Sea and beyond.
Still, France saw an opportunity to get into the game. In November 2014, DCNS CEO Herve Guillou prevailed on French Defence Minister Jean-Yves Le Drian to visit Australia and start the pitch for France.
Le Drian traveled to Albany in the country’s remote southwest, where officials had gathered to commemorate the 100 year anniversary of the first sailing of Australian soldiers to fight on France’s Western Front during World War One.
The poignant shared history opened the door to discussions about the submarine contract, a source close to the French Ministry of Defense told Reuters.
“The French minister wished to be there for this important event. There, he held talks with his Australian counterpart David Johnston and with … Abbott,” said the source, who along with other officials asked not to be identified because he was not authorized to speak to the media.
FIGHTING FOR JOBS
Soon after, however, Australia’s political instability would erode Japan’s advantage with the old guard.
In December 2014, Johnston, the Australian defense minister, was forced to resign after disparaging the skills of Australian shipbuilders.