Defence ensures future of Austal and its Henderson shipyard

By Peter Roberts

The federal government has moved to secure the future of Austal’s Perth shipbuilding operation and its Henderson yard (pictured) in Western Australia.

Defence has entered into a new strategic partnership with Austal which will see 18 of the Army’s new Landing Craft Medium built at Henderson.

Austal will also deliver two new Evolved Cape-Class Patrol Boats for the Royal Australian Navy at an acquisition cost of $157.1 million.

Port Macquarie maritime engineer Birdon Group has been tapped to design the Landing Craft Medium which will be built by Austal.

Birdon has more than $700 million worth of security-related contracts in the United States, with this new deal a breakthrough into defence in Australia for the small company.

The contracts with the promise of more are a response to the Defence Strategic Review which found there was not enough work to sustain the number of shipbuilders located at Henderson, and recommended industry consolidation was a priority.

Austal’s shares are in a trading halt pending the announcement, with shares last trading at $1.86, valuing the company at $676 million.

There has also been speculation that Austal could be a takeover target, given the company’s low valuation and the attractiveness of its US shipbuilding operation which has extensive contracts with the US Navy.

Deputy Prime Minister Richard Marles said: “This significant reform will see Henderson become one of Australia’s biggest and most efficient naval shipbuilding complexes that has the capacity and capability to meet the evolving needs of our Defence Force.

“By securing the future of continuous naval shipbuilding at Henderson, industry will have the certainty it needs to invest in the local workforce and contribute to the West Australian economy for decades to come.”

The government said that as one of two major shipbuilding hubs in Australia – the other is at Osborne Naval Shipyard in South Australia – Henderson was an asset of national importance and pivotal to the build and sustainment of naval vessels.

“This significant reform will secure Henderson’s future as a vital naval shipbuilding complex with the capacity and capability to meet the evolving needs of our Defence Force.

“This initiative will deliver a secure pipeline of work at Henderson, providing industry with greater certainty and helping to secure long-term skilled jobs, infrastructure investment and productivity in the local economy.”

Under the strategic shipbuilder pilot, Army’s Landing Craft Medium and Heavy (Littoral Manoeuvre Vessels) will be built at Henderson by Austal, subject to successful commercial negotiations and ongoing performance.

Subject to the Landing Craft Medium project’s performance, the government also intends to build the Landing Craft Heavy capability through the strategic partnership.

Further reading:
Port Macquarie’s Birdon wins big in US defence market
Browse @AuManufacturing’s coverage of Birdon Group here.
Nothing going on here – Austal shares surge

Picture: Austal/Henderson