Germany and Greece are having words over the decision early this week by Howaldtswerke Deutsche Werft (HDW) GmbH, the ThyssenKrupp (TKMS) unit that makes Germany's non-nuclear submarines, to cancel two submarine contracts with the Greek Defense Ministry because it has not been paid €524 million euros ($765 million dollars) ... even though the submarines are ready for delivery.
U-214 submarine. Photo credit: ThyssenKrupp
Hellenic Shipyards SA, TKMS' Greek subsidiary, is claiming €300 million of the sum from Athens, the other €224 being million owed to HDW.
The first of the contracts, awarded in February 2000, was code-named the "Archimedes Project", and it was for the supply of four U-214 submarines. TKMS says that HDW and Hellenic Shipyards tried to deliver the first 214-class boat to Greece in 2006, but Greece refused to accept it on grounds that “it listed” although TKMS claims "the vessel met and in some cases clearly exceeded all specified performance requirements."
The second contract, Neptune II, was awarded in 2002 to retro-fit three 209-class submarines with fuel-cell propulsion.
The work on both the new-builds and the upgrades was being carried out by HDW's shipyard in Kiel, and Hellenic Shipyards in Skaramangas near Athens.
TKMS says the Greek Defense Ministry is now “in default of its contractual obligations,” and now wants the dispute to be put into arbitration. But a Greek defense ministry official insists that the Class U214 submarine was faulty, and said Greece would "defend the public interest" in the arbitration process. The official, speaking anonymously, said the German company "has already received more than €2 billion ($2.96 billion) - about 80 percent of the contract - and we could not continue paying for something we have not received."
What HDW thinks it can do with four brand-new submarines is anybody's guess. Sell them on e-Bay? But then Greece apparently already owns 80% of them. This looks like it could get rather messy...
As I reported in a previous post, a friend from Greece reported in an italian forum that the U214 (at least in Greek version) has serious stability problems with high seas.
On one side I find incredible that HDW made such a big mistake, on the other I couldn't understand why else Greece would hold back if not for very serious reasons.
BTW, on wikipedia the ships are already listed as "cancelled". http://en.wikipedia.org/wiki/Type_214_submarine Any news from Sunho about the Korean U214 even if I understand the 2 series have different displacements?
Poor AIP performance, problems with the ISUS combat system, surface seakeeping, hydralic system issues... Ouch.
Looks like the 'plug in' AIP option isn't so successfull afterall when outsourced to the (subsidiary) Greek/Hellenic shipyards. This was one of those offsets agreed in the contract, but outsourcing gets messy when the (sub)contractor doesn't posses the required skill level.
This isn't necessarily the shipyard's fault; submarines require very specialized welders and engineering skills which are unique in the shipbuilding industry, and as such can't be simply moved or borrowed from established (civil) shipyards.
The ROKN 'KSS2' U-214 are build and commissioned. Admiral Sohn Won-il in Dec 2007, Yung Yi in Dec 2008 and Ahn Jung-geun was launched June 2008 and will be commissioned in Nov 2009. A further batch of six is ordered, so I think the ROKN is a satisfied customer (and a promptly paying one as well).
Good questions, ghemago... and very fair, hard-hitting commentary and analysis, Marcase.
I hope they can find some solutions and rectify the balance of a satisfied transaction.
On paper it seems like such an incredible defensive system for the price. Maybe TKMS and Greek govt could release two subs or so as a compromise, to be sold on open market?
Greece could get cheap AIP subs from Kremlin, yet at a long-term cost, such as major Industrial/engergy sector asset trad-off or long-term bank credit deal costing massive long-term interest.
Maybe Greece will postpone current submarine requirement policy during economic crisis and re-submit orders for future fleet expansion in more stable economic times?
Oh my. Perhaps we should just not try to unravel this whole story by ourselves. It's just too messed up, smells way too fishy and is immediately related to Greek internal politics. Let's just wait for the courts to dig through the mess and not jump to conclusions.
On one side I find incredible that HDW made such a big mistake, on the other I couldn't understand why else Greece would hold back if not for very serious reasons.
http://en.wikipedia.org/wiki/Type_214_submarine
Any news from Sunho about the Korean U214 even if I understand the 2 series have different displacements?
Looks like the 'plug in' AIP option isn't so successfull afterall when outsourced to the (subsidiary) Greek/Hellenic shipyards. This was one of those offsets agreed in the contract, but outsourcing gets messy when the (sub)contractor doesn't posses the required skill level.
This isn't necessarily the shipyard's fault; submarines require very specialized welders and engineering skills which are unique in the shipbuilding industry, and as such can't be simply moved or borrowed from established (civil) shipyards.
The ROKN 'KSS2' U-214 are build and commissioned. Admiral Sohn Won-il in Dec 2007, Yung Yi in Dec 2008 and Ahn Jung-geun was launched June 2008 and will be commissioned in Nov 2009. A further batch of six is ordered, so I think the ROKN is a satisfied customer (and a promptly paying one as well).
I hope they can find some solutions and rectify the balance of a satisfied transaction.
On paper it seems like such an incredible defensive system for the price. Maybe TKMS and Greek govt could release two subs or so as a compromise, to be sold on open market?
Greece could get cheap AIP subs from Kremlin, yet at a long-term cost, such as major Industrial/engergy sector asset trad-off or long-term bank credit deal costing massive long-term interest.
Maybe Greece will postpone current submarine requirement policy during economic crisis and re-submit orders for future fleet expansion in more stable economic times?
Perhaps we should just not try to unravel this whole story by ourselves. It's just too messed up, smells way too fishy and is immediately related to Greek internal politics. Let's just wait for the courts to dig through the mess and not jump to conclusions.