Is America Building the Wrong Kind of Submarine?


USS Barbel (SS-580). Lead boat in the last class of US-built diesel-electric submarines. Photo: Wikimedia Commons

"We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive." --C.S. Lewis

When it comes to military technology -- and military naval technology in particular -- most people would probably agree that "the future is nuclear." The most advanced aircraft carriers in the world are American, and they're all nuclear-powered. The fastest, most powerful submarines are nuke boats built by American defense contractors General Dynamics (NYSE: GD  ) and Huntington Ingalls (NYSE: HII  ) as well.

Follow the leader
The U.S. Navy currently possesses 72 active submarines -- all nuclear-powered. Following America's example, navies from Russia to France to England to even China and India have opted to add nuclear-powered submarines to their fleets. And why wouldn't they? Doesn't nuclear offer "progress" over previous generations of diesel-electric powered submarines?

You'd think so. But as C.S. Lewis pointed out, sometimes to progress, you have to admit to having made a mistake, reverse course, and get back on the right track. More and more often these days, foreign navies are coming to the conclusion that nuclear-powered submarines were the wrong way to go -- and believe it or not, that diesel is actually "the future."


Nuclear fast-attack submarine USS Virginia (SSN 774) at sea. Photo: Wikimedia Commons

To get ahead, first go Down Under
Take Australia for instance. Earlier this month, Australia signed an agreement with Japan whereby the two nations will begin working together to develop a new class of stealth submarines -- powered by diesel-electric engines.

Using the same "air-independent propulsion" (AIP) diesel-electric systems developed by Japan for use in its Soryu-class submarines, Australia aims to replace its current fleet of six aging Collins-class subs with a round dozen based on a new design. Larger than the current Collins-class boats, Australia's new subs will be capable of carrying everything from cruise missiles to unmanned underwater vehicles to special operations troops. According to DefenseNews.com, this will permit "a major regional enhancement of Australia's capabilities" and deployment "into South China Sea and beyond."

Australia hopes to have the new boats in the water by 2030 and has budgeted up to $33 billion for the project, which it calls "Project Sea 1000."


Japanese Navy Soryu-class submarine JS Hakuryu (SS-503), visiting Pearl Harbor (of all places). Photo: Wikimedia Commons

$33 billion? That's a lot of money
Yes, it is. Luckily for Australia, Project Sea 1000 may end up costing only a fraction of the budgeted sum. You see, it costs American taxpayers about $2.7 billion to have General Dynamics or Huntington Ingalls build us a Virginia-class nuclear fast-attack submarine. Building a dozen of them would yield a price tag of $32.4 billion -- about what Australia had braced itself to pay.

But Japan's Soryu-class subs, upon which Australia may base its new boats, cost only $540 million apiece to produce -- just 20% the cost of a new nuke boat. At 3,000 tons displacement, the Soryus are about half the size of a Virginia-class sub -- so pound-for-pound, Australia's still getting a good deal.

A good deal for U.S., too?
Is this something the U.S. should try to get in on? Over at the Pentagon, this is a question that's being asked more and more often.

As budgets come under pressure, the prospect of replacing a few of our older nuke boats with modern diesel-electrics that cost five times less has some appeal. This is especially true among Navy strategists who argue diesel-electric boats aren't just cheaper than nukes. When equipped with an AIP engine, diesel-electrics can outperform their nuclear cousins in stealthy movement, are particularly hard to detect (and kill) in shallow coastal waters (such as you'll find off the coasts of Korea, China, and Iran for example), and with improvements in range, can now travel silently and underwater for weeks at a time.

The upshot for investors
Arguments like these make a lot of sense to Navy tacticians. They make a lot of sense for taxpayers concerned over the burgeoning size of the U.S. defense budget -- and they should make sense for investors as well.

America hasn't built a new diesel-electric submarine for its fleet in 55 years -- and a lot of things can change over a half century. Over that time, America's Nuclear Navy has become wedded to the idea that "nuclear is better," but globally, defense market analysts at AMI International say there's a market for about 300 new diesel-electric submarines waiting to be built over the next 20 years -- 100 of them in the Asian and Pacific markets alone. At $540 million a pop, that's a $162 billion opportunity.

That's a lot of money for U.S. submakers General Dynamics and Huntington Ingalls to be leaving on the table -- waiting to be scooped up by companies like ThyssenKrupp, DCNS, and Mitsubishi Heavy, which do build diesel-electrics. And that's not even counting the billions that could be earned building diesel-electrics for the U.S. Navy, should it decide to walk back its commitment to nuclear.

Once upon a time, America was pretty good at building diesel-electric boats. For the sake of the taxpayers, and for the sake of the shareholders of these companies, maybe we should think about getting good at it again.

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Read/Post Comments (20) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 28, 2014, at 9:26 PM, MBelcher wrote:

    These types of subs are not an option for replacing the role of nuclear subs in America's fleet. Nuclear subs are designed to stay underwater for as long as they have food to feed sailors, and this allows them to project force at great distances, which is where the US Navy would rather be strategically. Electric boats are great for protecting shores, and certain special operations, but at this time they absolutely cannot be utilized to do what America does with it's nuclear boats because they are severely limited on how long they can stay underwater, and therefore highly vulnerable when operating any distance from our nation or a carrier group.

  • Report this Comment On June 28, 2014, at 9:31 PM, Gunny1952 wrote:

    In order to project overwhelming power one must first have overwhelming power.Note overwhelming power, Not just adequate for now.

  • Report this Comment On June 28, 2014, at 9:34 PM, stockingshorts wrote:

    It's easy to "cheapen up" on anything but comparing apples to oranges, in this case, may not be the best weapon system for a major world power...us.

    The submarine is becoming more vulnerable through advances in listening technologies; new types of anti-submarine weapons such as ultra high speed torpedoes and other advancements. Advantages to both types is obvious in some respects and not so obvious in others. A U.S. nuclear Fast Attack submarine is just that....Fast as compared to an air breathing "Quiet" diesel. It was reported that one of these air breathing Chinese subs 'popped up' within a U.S. Naval Exercise somewhere a while back completely undetected. I am absolutely sure that American Naval architects and engineers are working through major improvements in every aspect of our submarine warfare capabilities including a lot of things which happen Outside the walls of the sub for stealth; self protection and advanced attack capabilities. For my money, I'd take an American Nuclear Sub and its crew any day....

  • Report this Comment On June 28, 2014, at 9:37 PM, Spiritedreason wrote:

    if you are looking for cheaper cleaner as fast or faster ... definately stealthier consider Thorium powered subs ... the profile is smaller and the output is greater. Thorium is as plentiful as lead.

  • Report this Comment On June 28, 2014, at 9:46 PM, SLTom992 wrote:

    Thorium is a much larger and heavier reactor with rather limited output.

  • Report this Comment On June 28, 2014, at 9:55 PM, Scarecrow wrote:

    That Diesel Electric subs are quieter than nuclear powered boats is not news, they have been for decades.

    Where the nuclear subs excelled was operating under the ice during the Cold War.... obviously this is not as important now so why have an large inventory of high priced weapons when they aren't needed or suited to the job at hand and build cheaper better suited boats like the Australians & Japanese?

    I guess when your only tool is a hammer everything looks like a nail...... even a $2.7 billion hammer

  • Report this Comment On June 28, 2014, at 10:20 PM, chris30338 wrote:

    First of all, the AIP system used in the Japanese Soryu class submarines was developed by Sweden and is only licensed to Japan. Sweden has been using the AIP system very successfully for decades in their submarines. These subs can stay submerged for weeks at a time due to the AIP system. One of their subs, the Gotland was leased by the US Navy with its Swedish crew for 2 years in 2005-06. The Gotland "sank" the aircraft carrier Ronald Reagan several times in exercises and also "sank" one of our nuclear attack submarines, the USS Houston in other exercises. Submarine warfare is about stealth and nuclear attack subs don't cut it anymore. We need a mix of BOTH nuclear attack AND AIP equipped submarines.

  • Report this Comment On June 28, 2014, at 10:38 PM, tony11 wrote:

    diesel and nuclear should be worked out of the navel system ( and not just subs).

    diesel requires carrying an abundant volatile fuel which also limits range and out to sea operational duration without having external support. electric of the diesel/electric also has limited below depths operational time due to less emphasis on creating better more reliable battery storage systems ( its a problem with ALL battery technology today). Non stop rising fuel costs also make diesel impractical as operational budget will continue to increase yearly.

    Nuclear limitations is requires bigger boats to accommodate reactors, the dwindling supply and cost to produce reactor grade isotopes. Disposal of nuclear waste and add in the overall ever present danger of nuclear leaks and contamination.

    Navy should be on the for front edge of developing more abundant, safer and reliable navel propulsion systems. Such as a hydrogen based electric drive. By extracting hydrogen from sea water to generate electricity to drive their ships

  • Report this Comment On June 29, 2014, at 12:12 AM, cabslach wrote:

    Diesel subs would make sense for coastal protection while the nukes are good for global conflicts. There should be a mix of both types. I've been saying this for years. After 32 years working for the USN on nuclear boats, with some time spent on the last of our diesels before they were retired, it was evident to me that a quieter diesel boat would be deadly for a nuke enemy sub. Lots of other countries have them; the US should too.

  • Report this Comment On June 29, 2014, at 12:15 AM, cabslach wrote:

    A footnote: build these in the public shipyards, not the private ones. Since public yards have only been allowed to repair ships for many years now, they are losing the skills needed if we ever, god forbid, have another global war.

  • Report this Comment On June 29, 2014, at 1:03 AM, rrich wrote:

    It is real simple.

    Yes a fleet of diesel electric submarines may be cost effect. These DE submarines might get the job done but incurring a high casualty rate.

    Nuclear submarines would incur a substantially lower casualty rate.

    I would rather spend the dollars than sailors lives.

  • Report this Comment On June 29, 2014, at 1:27 AM, okiedodge wrote:

    Next project will be installing a rowing floor in all of the destroyers. A couple of thousand men could row that boat.

    Think of how green this is.

    The idea of a diesel electric sub is great, but just for coastal defense.

  • Report this Comment On June 29, 2014, at 5:10 AM, boeingopport wrote:

    And how long can a nuclear submarine stay under the water? As long as it wants.

  • Report this Comment On June 29, 2014, at 7:12 AM, soontharee wrote:

    May I humbly suggest that future submarines, nuclear or DE, incorporate / carry some drone submarines in their arsenal as an extension of their ranges in any given situation, coast defense or long distance missions. These drone submarines can perform some Recee roles as well as carry guided missiles to disrupt enemy subs / surface ships and even act as decoys to confuse the enemy.

  • Report this Comment On June 29, 2014, at 10:07 AM, macleod77 wrote:

    This is NOT an article that considers the needs of our Military; it is a shameless pile of garbage put together by greedy investors who simply want to see Nuclear in ALL its forms disappear. SHAMEFUL.

    Nuclear Subs can operate continuously for 30 YEARS without refueling..They use the waste heat generated by the reactor to create drinking water and fresh Oxygen. the ONLY reason a Nuclear Sub has to return to port every 4-6 months is to stock up on food.

    Diesel's have to continuously refuel, and shipping that Fuel to where the ship is requires a large costly supply chain.

    Nuclear is 1 MILLION TIMES more energy dense than Fossil Fuels. We should be converting ALL of our Naval ships to Nuclear, and all of our Civilian power to it as well.

    We won't of course because ignorant greedy investors would rather create short-term prosperity for the lucky few and are willing to sacrifice our energy-rich Nuclear Future for an energy scarce poverty ridden Fossil Fuel one...

  • Report this Comment On June 29, 2014, at 11:14 AM, peterwolf wrote:

    Who writes this drivel?? American and European nuclear boats are the safest in the world, and have been for more than 50 years. This is a total no-brainer. Now, if the Russians can't keep theirs safe, that's no reason to discard ours. And as for the 'expense'?? Nuclear subs cost a fraction of the cost to operate over their lifetimes than do conventional powered subs. This has been proven so many times that it's ridiculous to debate in any longer. It's the same argument for maintaining nuclear powered carriers. Case closed.

  • Report this Comment On June 29, 2014, at 11:16 AM, jfelano wrote:

    diesel electric is great, but you have to refuel, which compromises your position.

  • Report this Comment On June 29, 2014, at 11:34 AM, MrKD wrote:

    macleod77 - There are several things that need correcting. Only the Virginia-class is designed to run 30 yrs w/o refueling. Previous classes have to be refueled at their half-life. Secondly, and this is true for any naval craft, they require extensive maintenance. For the US Navy this can range from a simple SRA to almost 2 yrs for a EOH avail. True this is only on a Depot level, but even at an IMF level a sub can spend weeks undergoing maint. Lastly, the Navy use to operate nuclear powered destroyers and cruisers, but decided their benefits weren't worth the cost. My experience with nuc reactors is limlted to naval subs, but from what I see and know, it wouldn't be prudent to have all manner of vessels equipped with reactors.

  • Report this Comment On June 29, 2014, at 12:22 PM, jimlamb2 wrote:

    When it comes to our needs, "the biggest stick of all" is what we have and should keep until a larger one is available.

    The first issue I disagree with is "quieter", anything that turns makes noise, which can be heard within a 1 mile radius with moderate listening devices. There are extreme listening devices in use. Diesels have many dis-advantages speed, agility and having to snorkel, to name a few. Anti-submarine warfare is much better than what most people are aware of, the only real issue is whether the sub can out run a nuclear strike, roughly a 2 mile window.

  • Report this Comment On June 29, 2014, at 12:33 PM, Rotomoley wrote:

    I agree with the comments made. There just is no substitute for nuclear submarines in a blue water navy. Making the argument for diesel electrics is the accountants approach. That would be like having your banker do your appendectomy because it would be cheaper. Fact is, you banker you probably find a way to do the operation. But not to me at any price! The US must use nuclear for submarines. This is really quite obvious.

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