Austal closes Tasmania shipyard

Shipbuilder Austal will close its Tasmanian operations in a few months leaving most of the 121 employees out of work as the company amends operations in light of changed market demand for smaller vessels.

The company's apple isle service shipyard will close in September after it completes its current project.

The closure will result in about 116 employees being made redundant, with Austal director sales and Australian operations Andre Bellamy telling WA Business News that a handful will be redeployed to other operations.

Mr Bellamy said the decision to close the operation was a result of declining demand for smaller ferries and patrol boats, which the Tasmanian shipyard was predominately focused on.

"What's changed specifically is that we used to export large quantities of these small boats," he said.

"Those small boats are now being made domestically in the country of our customers, hence the market demand for small boats is less than what it used to be and that's why we're closing the Margate facility."

He said that Austal had concluded that Henderson was capable of servicing the smaller boats from Margate.

"These changes are part of our ongoing effort to improve the level of efficiency and effectiveness of Austal's operations," Mr Bellamy said.

Austal also has a small service base in Darwin, which is manned by eight people. The company also has service centres in Oman, Egypt, Trinidad, Hong Kong, the US and will soon establish a base in Gibraltar.

Mr Bellamy said Austal has no plans to close down any other service centres, saying the company has aspirations to grow the division, which is relatively untapped in the wider market.

He also indicated that employee numbers at Henderson will not be substantially boosted due to the recent natural decline in the workforce, which had not been replaced.

Mr Bellamy said the reason behind this was that the company was "creating a natural demand for the group".

At the peak of the global financial crisis in late 2008, Austal laid off 109 workers at its Henderson facility

The company is currently waiting on a decision from the US Navy over the award of a multi-billion dollar contract to build 10 Littoral Combat Ships.

Shares in Austal closed down one cent to $2.19 today.

Full announcement below:

RATIONALISATION OF AUSTRALIAN OPERATIONS

Austal announces a rationalisation of its Australian operations and workforce as a result of the impact of changed market demand for smaller sized vessels.

The rationalisation will unfortunately result in the closure of Austal's Tasmanian operations at Margate in September 2010.

Austal Director - Sales and Australian Operations Andrew Bellamy commented:

"Based on Austal's current assessment of the global market, the forecast demand for smaller passenger ferries and small patrol boats can be fully serviced out of the Henderson facilities in Western Australia.

"These changes are part of our ongoing effort to improve the level of efficiency and effectiveness of Austal's operations. We regret however that this will result in some reductions to our Australian workforce."

Austal's Tasmanian shipyard currently employs 121 people and will close upon completion of its current project.