Developing Naval Platforms Individually Results in Expensive Procurement Costs

Monday 5 September 2011, Amsterdam

Despite the high fiscal deficits of North American countries, this region is expected to account for the largest share of the naval surface combatants market during the forecast period, with a share of 48.4%. Demand in Europe is expected to decrease marginally during the forecast period, accounting for 22.1% of the total market during this time. Asia will account for a share of 24.2% of the total naval surface combatants market during the forecast period.

The main markets, including the US and some countries in Europe and Latin America, are expected to modernize their naval fleets which were neglected during the Afghanistan and Iraq wars. Europe has borne the main brunt of the economic crisis, with countries currently facing deep fiscal deficits, and demand is, therefore, expected to decrease marginally during the forecast period. Strong economic growth, territorial disputes, domestic unrest and modernization programs will create significant demand for naval surface combatants in Asia.

Defense ministries across the world are giving increased importance to small and economical surface combatants such as frigates and corvettes, demand for which has increased due to their low cost, low displacement and multi-tasking capabilities. The advanced weapons and communication systems integrated on these small combatants facilitate the effective performance of multiple tasks such as search and rescue operations, destruction of enemy combat ships, search and destruction of enemy submarines, anti-air warfare and destruction of ground targets.

Maritime threats have evolved from conventional surface and air strikes to more advanced asymmetric threats such as mines and submarines. Modern maritime threats are more prevalent in shallow waters, and countries are investing more in ships which are fast and capable of operating in littoral waters. These ships are capable of countering asymmetric threats such as anti-submarine warfare and mine countermeasures.

The costs of naval surface combatants have increased substantially and are expected to increase further. Defense ministries around the world have realized that developing naval platforms individually results in expensive procurement costs. When a joint development project is undertaken, however, the research and development costs are shared by the countries in the consortium, with almost all member countries procuring the vessels, resulting in lower unit costs. Joint development projects also increase export opportunities as more than one country is involved.

The next generation of surface combatants are small in size, capable of operating in shallow waters, and generally have helicopters among their combat capabilities. The helicopters on these surface combatants are needed to land in potentially risky small areas, and to avoid these risks, most small surface combatants such as frigates and corvettes are installed with mobile deck handlers which are capable of maneuvering helicopters and fixed-wing aircraft from the landing deck to the hangar.