Austal tied to Fed grant

Peter WilliamsSound Telegraph

Henderson based Austal is counting on Federal Government funding to expand shipbuilding facilities under its bid to win the $3 billion offshore patrol vessel project.

Chief executive David Singleton said Austal’s joint tender with German designer Fassmer to build the 12 vessels relied on getting a portion of a $100 million Government commitment.

“The basis of our tender is that the Federal Government will fund new facilities at Henderson,” Mr Singleton said.

The Government in February said the money would be invested in shipbuilding production lines and facilities, including wharves, jetties and cranes, at Henderson and Garden Island.

Henderson rival Civmec, which is part of bids with Government shipbuilder ASC and designers Luerssen and Damen, has begun building an $80 million shipbuilding facility of its own.

“We haven’t put anything in our bid that allows for us to get any money off anybody as far as Civmec and ASC are concerned,” Civmec chief executive Pat Tallon said. “It’s easy to be $50 million or $80 million cheaper if you know you’re going to be getting $50 or $80 million for free.”

Mr Singleton said the three bids could be rationalised in the next two or three months, with the contract determined by the end of the year.

The Austal boss said a lack of space in Henderson was behind a decision to build in the Philippines a $110 million ferry contracted last week for a Norwegian operator. Another ferry of a similar size is being constructed at the WA facility.

The company is spending up to $38 million to expand its Philippines shipyard.

A strong performance in the US put Austal back in the black with a $15 million annual net profit.

Mr Singleton said the US business’ $76 million earnings before interest and tax reflected increased confidence about the cost of building littoral combat ships for the US Navy.

A $2.1 million EBIT loss in the Australian business was blamed on contract timing and an “annoying” blowout in the cost of servicing Australian Border Force patrol boats.

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