Thyssen promises Australian jobs as bids for submarine contract

By Tom Käckenhoff and Georgina Prodhan

DUESSELDORF/VIENNA (Reuters) - Germany's Thyssenkrupp (TKAG.DE) held out the prospect of thousands of new Australian jobs as it submitted a bid for a $36 billion (£24 billion) submarine project on Monday.

Australia is replacing its ageing submarine fleet in a move seen in part as an effort to counter Chinese assertiveness in the Asia-Pacific region, and its politicians are keen to use the chance to create jobs and stimulate local industry.

Thyssenkrupp is competing with French state-controlled naval contractor DCNS and a state-backed Japanese consortium led by Mitsubishi Heavy Industries and Kawasaki Heavy Industries .

The German and French bidders have said they would build the submarines in Australian shipyards, prompting Japan to promise the same.

"We would probably create 2,000 to 3,000 jobs in Australia," Hans Christoph Atzpodien, the board member of Thyssenkrupp's Industrial Solutions division with responsibility for naval operations, told Reuters in an interview.

He said the German steel and industrial group also had about 400 local suppliers in mind - some of which it was already talking to - and that these might create the same number of jobs again in connection with the project.

Thyssenkrupp's bid is supported by the German government, but unlike its rivals the Essen-based company has no explicit state involvement in its proposal.

Asked whether this put it at a disadvantage, Atzpodien countered: "As a private company, one has to think much harder about efficiency." He said the German government had also made it clear that submarine building was a key technology.

Japan had been the front-runner in the contest before then Australian Prime Minister Tony Abbott - who has described Japan as his country's "closest friend in Asia" - opened up the bidding in February under pressure from lawmakers.

Atzpodien said Thyssenkrupp would put in a fixed-price offer if selected for the next phase of the process. It expects one of the bidders to be picked for exclusive talks in the first half of 2016.

Those talks might take until the end of the decade, Atzpodien said, with the first submarine rolling off the production line in the late 2020s.

Atzpodien said Thyssenkrupp could make Australia a regional base for its Asia-Pacific operations, including the design of frigates, which could potentially be built elsewhere.

"There will be great demand for armaments in the Pacific region in the next years. China will upgrade its navy. That will strengthen demand in the region," he said.

Thyssenkrupp has built submarines for South Korea. Atzpodien said it had another nation in the region as a client, which it could not name.

(Editing by Kirsti Knolle and Mark Potter)