US submarine build contracts should end talk of selling off Austal

By Peter Roberts

The award of a second contract in the United States for shipbuilder Austal to build facilities for constructing modules for US nuclear powered submarines should put paid to talk of allowing the Perth shipbuilder to be taken over by Korean interests.

Austal USA has been awarded a $220 million (US$152 million) contract by the U.S. Navy to invest in infrastructure at its Mobile, Alabama shipyard to make parts for Columbia-class (CLB) and Virginia-class (VCS) submarines.

This follows a $670 million contract signed with General Dynamics Electric Boat earlier this month for it to expand capacity for nuclear submarine module construction also at Mobile.

So an Australian owned and controlled manufacturer with its own intellectual property has now been awarded two contracts worth $890 million by US companies and the US government to invest in new shipbuilding facilities to produce submarine components and modules.

I should point this includes Virginia class submarines which the US will supply to Australia under the AUKUS agreement. Wouldn’t it be great of those imported submarines were at least partly built by an Australian company?

However at the same time a takeover threat hangs over Austal from Korean shipbuilder Hanwha, which naturally wants to get into the US submarine construction supply chain itself.

This is especially so as Austal is valued this morning on the ASX at a mere $1.08 billion – chickenfeed for a company of Hanwha’s size.

Yet federal Labor ministers have expressed satisfaction with the Hanwha bid – they see no difference between an Australian owned defence company operating here and a foreign owned one – as long as the business is providing local jobs.

The government has a suite of policies that are encouraging the development of Australian indigenous defence manufacturers, as well as their incorporation into global supply chains.

Yet at the same time, they would allow the most successful Australian owned and controlled defence exporter to be taken over by a foreign company?

History tells us that that would lead to a hollowing out of Australian operations as decision making and technology development is increasingly emanating from Seoul.

This makes no sense at all.

Australia should immediately make it clear that Austal is to remain under Australian ownership and control, not sold off for peanuts to a foreign bidder.

Further reading:
Austal wins second US submarine build contract
Hanwha bids to take Austal into foreign ownership

Picture: Austal/Mobile, Alabama shipyard