Manufacturers and unions have criticised a state government decision to build a $62 million floating dock in Vietnam, saying the move is short-sighted and will make it harder for local industry to win work on big resource and defence projects.
Manufacturers and unions have criticised a state government decision to build a $62 million floating dock in Vietnam, saying the move is short-sighted and will make it harder for local industry to win work on big resource and defence projects.
The government’s decision coincided with last week’s official go-ahead for Woodside Petroleum Ltd’s $12 billion Pluto project, which highlighted both the buoyant state of the resources sector and the challenges facing manufacturers.
Big resource projects are increasingly buying their plant and equipment from overseas manufacturers, and local industry is frustrated that the state government appears to be doing the same.
Ausclad Group managing director Stuart Kenny, whose company wanted to build the floating dock in Kwinana, labelled the government decision “a stab in the heart of the manufacturing industry”.
He saw the floating dock project as a rare opportunity for local manufacturers to demonstrate their capabilities, and suspected that defence contractors and resources companies such as Woodside would be more inclined to use interstate and overseas suppliers.
“The government has just given them a big tick and told them that it’s okay to go offshore,” Mr Kenny said.
“It’s very short sighted and shows a lack of commitment to WA industry.”
Henderson shipbuilder Strategic Marine Ltd, formerly known as Geraldton Boat Builders, was named last week as the preferred tenderer to build the floating dock.
Most of the steel fabrication, comprising about 40 per cent of the contract, will be undertaken at Strategic’s shipyard in Vietnam.
Mr Kenny acknowledged the cost of building the floating dock in Australia would be substantially higher but believed this would have been a good long-term investment.
Australian Manufacturing Workers’ Union state secretary Jock Ferguson also criticised the decision, describing it as a lost opportunity.
“Its nonsense that the government would put money into a facility to attract industry [to WA] and then get part of the infrastructure built offshore,” Mr Ferguson said.
“How dopey is that?”
The floating dock is part of a $174 million upgrade of the Australian Marine Complex at Henderson, and is designed to help WA industry bid for maintenance and construction projects for the defence, shipbuilding and offshore oil and gas sectors.
The government initially called tenders for the floating dock in 2006, but baulked at the high cost of Australian construction.
When it called a second round of tenders this year, bidders were encouraged to include offshore fabrication in their package.
Despite this, Planning and Infrastructure Minister Alannah MacTiernan claimed that local content was an important consideration in determining the successful tender.
“Strategic Marine has committed to constructing more than 60 per cent of the floating dock in WA,” Ms MacTiernan said.
This includes the assembly of the floating dock and integration of components, which almost by definition have to occur in Australia.
Mr Kenny said his criticism was not motivated by Ausclad’s failure to win the contract.
“I’m pretty disappointed, not because it’s gone to Strategic Marine or anyone else,” he said.
“It’s a stab in the heart of the manufacturing industry in WA that the government even contemplated doing this work offshore.”
Mr Kenny said Ausclad’s involvement in the tender process had precluded him from commenting publicly.
“Because we were tenderers, I couldn’t lobby.”
He said a big project like the floating dock could have helped local fabricators modernise their facilities to become more competitive.
“Now we have no hope of going to Woodside and demonstrating our capability to do their work,” he said.
Ms MacTiernan told WA Business News the high cost of Australian fabrication made it unviable to build the floating dock locally.
She added that the floating dock and other infrastructure at the AMC would create many job opportunities for local industry.
Ironically, the same argument was used two years ago by Woodside after it was criticised by the state government for its local content policies.
The level of local content on big gas projects has fallen from a peak of 65 per cent on the North West Shelf venture’s train 4 expansion, completed in 2004, to about 50 per cent on current projects.
Woodside has responded to rising construction costs and skills shortages by awarding contracts to overseas manufacturers and engineers.
The floating dock decision followed last month’s closure of Thiess’ Kwinana workshop because of a lack of orders and warnings by the Australian Steel Institute that the industry is operating well below capacity.
