Australia reveals new shipbuilding industry plan to bypass 'Valley of Death'

[Zarvan]

The future HMAS Hobart, lead ship of the Royal Australian Navy's new air warfare destroyers, prior to launch in 2015 at the Common User Facility in South Australia. Source: Australian Department of Defence
Key Points

• Australian government announces investments in shipbuilding industry, bringing forward two major procurement programmes
• The plan is part of a strategy to minimise disruption to the naval shipbuilding sector, caused by a lack of orders for domestically built vessels

The Australian government revealed plans on 4 August to invest more than AUD89 billion (USD64 billion) in the country's naval shipbuilding industry over a 20-year period.

As part of the investment, the government is bringing into action a "continuous build" strategy to allay a forecast tailing-off of shipbuilding, nicknamed the "Valley of Death" by local industry.

As part of the plan, the government will be bringing forward two major vessel construction programmes - the SEA 5000 Future Frigate programme and the SEA 1180 Offshore Patrol Vessel.

A competitive evaluation programme (CEP) for the Future Frigate programme, which is planned to replace the Royal Australian Navy's (RAN's) ANZAC-class frigates will begin in October, with a continuous onshore build programme to commence in 2020. According to the Australian government's 2012 Defence Capability Plan (DCP), the programme is to begin three years earlier than scheduled. The procurement is valued at between AUD10 and AUD11 billion and will see the RAN acquire eight frigates. Key to the government's announcement on 4 August was the news that construction of the new frigates would take place in the state of South Australia. Contenders for the programme are understood to include the FREMM Frigate and BAE Systems' Type 26 Global Combat Ship.

The SEA 1180 programme, which will involve the replacement of the RAN's Armidale-class patrol boats, is also being brought forward by two years, with onshore construction expected to begin in 2018. The programme will also be subject to a CEP. The estimated cost for the SEA 1180 programme, according to the 2012 DCP, is AUD7-8 billion.

A more fixed estimate of costs and build plans are expected with the release of Australia's 2015 defence white paper and an associated Defence Investment Plan (DIP), which has replaced the existing DCP process. In making the announcement on shipbuilding, Australian prime minister Tony Abbot indicated that the cost of the frigates was expected to be in the region of AUD40 billion, with further details being revealed in the DIP and White Paper.

The Australian government also committed to maintaining the country's shipbuilding centre in South Australia as part of the plan, with the government committing to undertake discussions with the South Australian government on the future of the Common User Facility - used for the construction of the Air Warfare Destroyer (AWD) programme.

While future shipbuilding has established South Australia as its core, Abbott said that subcontracts could be awarded to yards in West Australia or Victoria. Both Austal and BAE Systems, which have a respective presence in both states, welcomed the announcement in statements.

According to Abbott, in bringing forward the programmes the government will be able to sustain approximately 1,000 jobs in the short-term and 2,500 once they are in progress.

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Australia reveals new shipbuilding industry plan to bypass 'Valley of Death' - IHS Jane's 360