Analysis and Commentary

Marles would let Austal fall into overseas hands – I would not

Analysis and Commentary

By Peter Roberts

Defence Minister Richard Marles is comfortable with the possibility of Australia’s most successful locally owned defence manufacturer, Austal, falling to overseas ownership.

I, for one, am not.

In April Korean defence group Hanwha bid to buy Austal, emerging into the open after months of speculation that the company was a takeover target.

Given the relatively poor support for manufacturers on the local sharemarket Austal was valued at the time of the bid at $797 million on the ASX – chickenfeed for a major multi-national.

Quoted in Channel 9 media Marles said: “Ultimately, this is a matter for Austal, they are a private company.

“From the government’s perspective, we don’t have any concern about Hanwha moving in this direction.”

Marles did concede that there would need to be security arrangements put in place covering sensitive technologies and intellectual property.

However this, and Marles himself, have totally missed the point of why allowing Austal to be sold off is a very bad idea.

In fact it is one that goes against the whole idea of the government’s much vaunted Future Made in Australia push.

Sure, having foreign owned companies manufacturing locally is a good thing, but not nearly as good as nurturing our own mini multi nationals, ultimately growing them to be globally competitive.

Local control means the top jobs and likely underlying R&D and innovation stay in local hands, rather than whole functions being terminated in favour of overseas sites.

And Austal itself is a particularly important case, as one of the few Australian owned prime contractors in the defence space.

And it is one of the few with a multi-national footprint, building passenger ferries in the Philippines and Vietnam, ferries and patrol boats in Perth and deriving most of its profits from building naval ships for the US Navy and Coast Guard in the United States.

It should be an Australian ambition to grow our generally small defence contractors into large ones, moving up the scale from supplying components and systems to manufacturing final products sold directly to military customers – becoming prime contractors.

To give up on our most successful company at doing just that would be a national shame and a waste of the opportunities Austal has at its feet.

The government has recognised the importance of Austal, executing a Memorandum of Understanding (MoU) to negotiate a Strategic Shipbuilding Agreement (SSA), under which Austal would be appointed as the Commonwealth’s strategic partner for vessels to be constructed in Western Australia.

That this government guarantee should be handed to a foreign company is absurd.

Canberra has let other defence contractors slip into overseas hands including defence radio manufacturer Barrett Communications which was taken over by Motorola.

However in 2023 Canberra nationalised phased array radar manufacture CEA Technologies to keep its technology under Australian control.

It should knock back Hanwha’s opportunistic bid, and if necessary, take Austal too into government ownership.

Keeping it Australian owned, led and controlled is just that important.

Further reading:
Hanwha bids to take Austal into foreign ownership
Defence ensures future of Austal and its Henderson shipyard
Government nationalises defence tech firm CEA Technologies

Picture: Picture: Austal/Mobile, Alabama shipyard

Share this Story
Analysis and Commentary

Stay Informed

Go to Top