A heads of agreement anointing Henderson-based Austal as the nation’s strategic shipbuilder of choice in WA will guarantee the industry’s local future, according to the federal government.
A heads of agreement (HoA) anointing Henderson-based Austal as the nation’s strategic shipbuilder of choice in Western Australia will guarantee the industry’s local future, according to the federal government.
Under the mooted deal, Austal will secure a consistent platform of work, including the delivery of medium landing craft for the Australian Army, facilitating the growth of its capabilities on water.
A heavy landing craft is also proposed, pending Austal’s performance on the first vessel, with both based on a design by NSW firm Birdon.
The federal government hopes the medium landing craft will be delivered by the end of 2026, with the heavy landing craft scheduled for delivery in 2028.
The timelines represent a significant shift of priority for the two vessels, which were recommended for delivery in 2027 and the mid 2030s, respectively, by the nationally significant Defence Strategic Review.
The HoA paves the path for a firm strategic shipbuilding agreement between Austal and the Commonwealth, which is expected to be negotiated over the coming year.
In the interim, Austal will build two evolved Cape-class patrol boats at a cost of $157 million, additional to 18 vessels already ordered by the Commonwealth.
Defence Industry Minister Pat Conroy was at Austal’s Henderson shipyard this morning to announce the news, which comes off the back of uncertainty around the future of the sector.
He said the agreement would put an end to the boom-bust work cycle in the Henderson defence industry strip.
“This will deliver 10 years of certainty as a start for Austal shipbuilding and its supply chain, subject to performance requirements being met,” Mr Conroy said.
WA Defence Industry Minister Paul Papalia said it was a red-letter day for the industry in WA, the result of seven years’ worth of campaigning by the current state government.
“The landing craft projects are worth billions, but continuous shipbuilding in WA is absolutely priceless,” he said.
“That way a young kid sitting in a school today in WA can look at the shipbuilding industry, the defence industry, and consider that their entire working lives can be in this one sector if they so desire.
“It’s a massive step, and a massive commitment.”
Mr Papalia said he had unsuccessfully campaigned for similar outcomes with previous governments and singled out former defence and defence industry ministers Marise Payne, Christopher Pyne, Linda Reynolds and Peter Dutton.
The initial deal to construct Cape-class vessels will allow Austal to secure the 400 jobs on its books currently, with the company estimating the proposed future work will add up to 800 additional jobs.
Speaking to Business News following the announcement, Austal chief executive Paddy Gregg said the HoA represented a significant milestone for the company.
“It’s absolutely tremendous that they’ve chosen Austal for continuous shipbuilding in the west,” he said.
“It puts some real longevity into our pipeline, which should allow us to attract, retain and train the best people for the industry.”
Work will begin on recruitment imminently. Mr Gregg said while the job market was tight in WA, he expected the career certainty that came with a long work pipeline to be a benefit in hiring against more cyclical sectors and fly-in, fly-out work.
“We really focus on work life balance,” he said.
“The longevity the partnership brings will give people the opportunity to come to Austal for a career, rather than just projects.”
Austal has completed and delivered 24 vessels to the Australian government and Navy over the past five years, as well as a variety of other vessels for navies around the world.
Austal shares were trading up 3.75 per cent at 1pm AWST.
