Italy Submarine Import and Export Behavior

Imports

Italy has traditionally constructed its own submarines. However, in 1996 the German and Italian defense ministries concluded a Memorandum of Understanding initiating cooperation in the construction of a new generation of submarines. [1] Italy's Fincantieri Shipyard is currently manufacturing Type 212A submarines based on designs from Germany's Howaldtswerke-Deutsche Werft (HDW). While the boats' equipment is similar to that of the German Type 212, they use different torpedoes and electro-optic masts. In addition, the submarines had to be adapted to operate for longer patrols in the warmer, more saline waters of the Mediterranean, which cannot be used as coolant without refrigeration.

Exports

The Italian shipbuilder Fincantieri-Cantieri Navali Italiani SpA carries out the bulk of its naval constructions at the Muggiano and Riva Trigoso shipyards in Italy. [2] The company also acquired the Manitowoc Marine Group to form the Fincantieri Marine Group, adding four additional U.S.-based shipyards to its existing infrastructure. [3] Furthermore, cooperation with Howaldtswerke-Deutsche Werft (HDW) has allowed Fincantieri to offer submarines with air-independent propulsion (AIP) technology.

The Italian Navy (IN) is Fincantieri's primary customer, and most diesel-electric submarine designs have been based on the IN's needs, including the S 1300 Sauro-class, S 1600 concept vessel, and Longobardo-class (improved Sauro-class). Fincantieri also carries out licensed production of the Type 212A submarine, designed by HDW, for the Italian Navy. [4] The IN has received two of the Type 212A vessels, and is due to receive two more between 2015-2016. [5]

The Italian shipyard Fincantieri offers two vessels for export:

  • U212A: diesel-electric submarine constructed in partnership with Germany's HDW; and
  • S 1000 concept vessel: diesel-electric submarine using AIP technology under development in cooperation with Russian's Rubin Naval Design Bureau. [6]

Italy's decision to join Germany's Type 212A program in 1995, instead of further developing a domestic design, indicates the impact of rising development costs on a country when domestic demand is low and the country cannot resort to export sales to realize economies of scale. Similar to the Viking submarine concept, which was jointly developed by Sweden, Denmark, and Norway, Italy opted for cooperation with Germany, enabling a timely procurement that corresponded to the fiscal priorities of the Italian Navy. [7] However, Type 212A submarines have not yet been exported successfully to countries other than Germany and Italy, and Fincantieri did not reach an agreement with HDW to independently export derivatives of the submarines. [8]

Fincantieri has not succeeded in its efforts to independently increase submarine exports, despite having entered numerous bids. It entered a bid based on the Sauro-class to replace Australia's Oberon-class vessels, but later withdrew its offer. [9] Similarly, the shipyard was an unsuccessful contender for the South African and Portuguese Agosta and Daphne-class replacement programs. [10] Reportedly, eight Italian submarines were offered to the Taiwanese Navy, which may have been a combination of decommissioned and about to be decommissioned Sauro and older Toti-class units, but ultimately Taiwan preferred to purchase new submarines. [11]

In 2005 Fincantieri entered a joint venture with Russia's Rubin Naval Design Bureau to develop a new diesel-electric submarine, the S1000, which is based on the Russian Amur SSK and features Italian AIP technology. [12] With a displacement of 1,000 tons, the S1000 was designed as a smaller and relatively inexpensive submarine that could accommodate special forces as well as torpedoes and mines. [13] India was the first country to receive a briefing on the new submarine, and while the country reportedly considered an Italian offer to build six boats for $3.5 billion, there was no subsequent purchase agreement. [14] In July 2013, Rubin and Fincantieri announced plans to upgrade the design of the S-1000 to improve its appeal for international naval customers, primarily those in the Middle East and Southeast Asia. Although the exterior will remain unaltered, considerable enhancements will be made to internal equipment. The upgraded design will feature a new fuel cell-powered AIP system developed by Fincantieri and an improved weapons system, including Italian heavyweight Black Shark torpedoes or Russian Club-S cruise missiles capable of striking underwater, surface, and land targets. The vessel will have a crew size of 16 and will be able to transport an additional 12 special operations troops. [15]

Although Fincantieri's future as an independent submarine producer looked in doubt when it operated at a loss between 1998 and 2001, the company appears to have weathered the financial storm. [16] Fincantieri is mostly government-owned, with over 99% of its shares held by Fintecna S.p.A. [17] In 2002-2003, efforts were made to increase the share of private ownership, and in early 2004 the Italian government proposed combining Fincantieri with Italian defense conglomerate Finmeccanica. The deal was later abandoned in February 2005. Again in April 2005, Fincantieri Managing Director Giuseppe Bono suggested that the company was considering a public offering, which was later approved by the Italian government in July 2007. [18] But the 2008 economic crisis delayed the company's first IPO, and Fincantieri remains a state-owned entity under Fintecna. [19]

The shipbuilder has embarked on some substantial acquisition programs. In 2008, Fincantieri signed a definitive acquisition agreement to purchase the United States-based Manitowoc Marine Group from its parent company, the Manitowoc Company, Inc. [20] Completed in 2009, the newly formed Fincantieri Marine Group now includes Bay Shipbuilding, ACE Marine, and Cleveland Ship Repair, and has the participation of Lockheed Martin Corporation as a minority investor. [21] This will allow the Italian company to enter the U.S. mid-tier shipbuilding market and focus on naval programs.

Sources:
[1] "Naval Vessel: U212A," Fincantieri, www.fincantieri.it.
[2] "Company Profile," Fincantieri, www.fincantieri.com.
[3] Fincantieri Marine Group, www.fincantierimarinegroup.com.
[4] "Vertäge 1981-2008 [Contracts, 1981-2008]" Howaldtswerke-Deutsche Werft, www.hdw.de.
[5] "Italy Purchases Two Additional U212A Class Submarines," Deagel, 13 November 2008, www.deagel.com.
[6] "Naval Vessel: U212A," Fincantieri, www.fincantieri.it; "Naval Vessel: S1000," Fincantieri, www.fincantieri.it;
[7] Interview with Captain Ermengildo Ugazzi, Commander Submarine Flotilla, "Submarines today: flotilla commanders comment," Naval Forces, 1999, Vol. 20, No. 6, pp. 40-46; in ProQuest Information and Learning Company, https://proquest.umi.com; Interview with Dirk Rathjens, HDW Board of Directors Member, by Manfred Sadlowski, "HDW -- a shipyard armed for the future," Naval Forces, 1999, Vol. 20, No. 1, pp. 60-66; in ProQuest Information and Learning Company, https://proquest.umi.com.
[8] Andy Nativi, "Made to Order; New Sub Design Boasts Italian and Russian Tech," Aviation Week & Space Technology, 27 March 2006, www.lexisnexis.com.
[9] Derek Wollner, "Procuring change: how Kockums was selected for the Collins class submarine," Research paper No. 3, 2001-2002, Information and Research Services, Department of the Parliamentary Library, www.aph.gov.au, pp. 6-8.
[10] Norman Chandler, The Star, 12 August 1998; in "Country considers purchase of German submarines," FBIS Document FTS19980812000867; "Government has five tenders for the purchase of submarines," Diario de Noticias, 3 June 1998; in "Portuguese Defense Ministry opens five submarine tenders," FBIS Document FTS19980603000306.
[11] J. Michael Cole, "Taiwan Giving Up on U.S. Subs, Eyeing Local Plan: Analyst," Taipei Times, 15 December 2011, www.taipeitimes.com; Tiffany Wu, "Taiwan eyes submarines, anti-missile system," Reuters, www.reuters.com, 30 August 2003.
[12] "Russia, Italy Developing Joint Conventional Submarine," ITAR-TASS, 16 December 2005; FBIS Document CEP20051216027020.
[13] Andy Nativi, "Made to Order; New Sub Design Boasts Italian and Russian Tech," Aviation Week & Space Technology, 27 March 2006, www.lexisnexis.com; Michael Dumiak, "Lurking in the Littorals," Defense Technology International, 1 May 2007, www.lexisnexis.com.
[14] Vivek Raghuvanshi, "India Considers New Italian-Russian Submarine," DefenseNews.com, 20 February 2006; Shiv Kumar, "Navy pitches in for Russian Amur submarine," The Tribune, 24 January 2007, www.tribuneindia.com.
[15] "Russia and Italy to upgrade the S-1000 submarine," Rostec, 16 July 2013, www.rostec.ru.; "Italy, Russia to modernize diesel submarine project," RIA Novosti, 5 July 2013, en.ria.ru; Tamir Eshel, "Compact sub design revive Russian-Italian Cooperation," Defense Update, 6 July 2013, defense-update.com.
[16] "Fincantieri – Q3 2012," Italy Defence & Security Report, 1 July 2012, www.lexisnexis.com.
[17] "Annual Report 2011," Fincantieri, www.fincantieri.it
[18] John McLaughlin, "Bullish Fincantieri mulls public listing," Lloyd's List, 12 April 2005; in Lexis-Nexis Academic Universe, www.lexis-nexis.com; John McLaughlin, "Fincantieri listing gets government go ahead," Lloyd's List, 17 July 2007, www.lloydslist.com.
[19] "Fincantieri – Q3 2012," Italy Defence & Security Report, 1 July 2012, www.lexisnexis.com; Jennifer Clark, "Fincantieri New Cruise Shop Order Sign Of Recovery-CEO," Dow Jones, 14 December 2009, www.nasdaq.com.
[20] Fincantieri Marine Group, www.fincantierimarinegroup.com; "Fincantieri to Acquire the Manitowoc Marine Group, Mergers & Acquisitions Week, 18 August 2008.
[21] "Fincantieri to Acquire the Manitowoc Marine Group, Mergers & Acquisitions Week, 18 August 2008.

August 7, 2015
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The submarine proliferation resource collection is designed to highlight global trends in the sale and acquisition of diesel- and nuclear-powered submarines. It is structured on a country-by-country basis, with each country profile consisting of information on capabilities, imports and exports.

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This material is produced independently for NTI by the James Martin Center for Nonproliferation Studies at the Middlebury Institute of International Studies at Monterey and does not necessarily reflect the opinions of and has not been independently verified by NTI or its directors, officers, employees, or agents. Copyright 2018.