Shipbuilders combine for a homegrown defence industry
The Australian12:00AM June 8, 2017
Australian-based shipbuilders Austal and ASC will today announce a special partnership to win the contract for the $35 billion Future Frigates Program — a move aimed at securing the future of the industry while reaping export opportunities in a growing multi-billion-dollar market.
The “teaming agreement” will see the WA-based Austal and the South Australian headquartered ASC pool resources to provide a low-risk Australian shipbuilding solution for the nine frigates, due to begin in 2020 and create more than 2000 jobs.
The three shortlisted foreign designers for the project include BAE, Fincantieri and Navantia, with Defence Industry Minister Christopher Pyne saying the designs would be considered later this year with a final decision to be made in 2018.
Austal chief executive David Singleton saidthatin every industry there was a “seminal moment”, framing the partnership with ASC as an opportunity to realise the government vision of developing a “sovereign, export-capable national shipbuilder”.
Austal is already a key supplier to the US Navy, has produced 260 commercial and defence vessels for more than 50 countries and has facilities in Australia, the US as well as The Philippines.
“If you look at our defence industry in Australia, it is dominated by local offshoots of foreign companies,” Mr Singleton said yesterday. “This is probably the one opportunity we have to create a world-class industry in Australia which matches the size and complexity of our defence budget.”
The teaming agreement will see Austal shifting its focus from innovative aluminium vessels into the construction of advanced steel warships for which it will leverage the experience of ASC — one of the three alliance partners in the build for the Air Warfare Destroyer program.
ASC chief executive Mark Lamarre said experience gained from the AWD program positioned it well to handle the build for the frigates, noting it was a “very important learning curve”.
Mr Lamarre said the second AWD was 90 per cent complete and 40 per cent less expensive than the first ship, while the third AWD was less expensive again — representing an accumulative productivity improvement of about 60 per cent. He used an independent productivity analysis, by consultants Booz Allen Hamilton, to argue there would be “no foundation” for claims of a 40 per cent cost premium to build ships in Australia by the delivery of the third ship. “We feel (the teaming agreement) is a low risk solution for the designers because we’re coming off the back of already established skills,” Mr Lamarre said. “We are looking to build a sovereign capability here in Australia and we see these two companies — as we combine our skills — being well down the curve as to where the government is heading. Australia needs an industry that designs, builds, upgrades, maintains and exports naval vessels in Australia, by Australians working for Australian companies.”
Production on the frigates is scheduled to being from 2020 at the government-owned shipyard in Osborne, South Australia, with the teaming agreement likely to see both companies working in partnership for about two decades with the first vessels due to enter service between 2027 and 2030.
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