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Starring role ahead for manufacturing

AUSTAL Ships chairman John Rothwell is surprisingly self effacing when asked to comment on his role in steering the Henderson-shipbuilding company to global prominence

“What we’ve done is not so bloody marvellous that no-one else can do it,” Mr Rothwell says.

“I believe our story can be repeated over and over again. WA has been very reliant on the resource sector, but if we’re going to grow we need to do much more than that.

“There are many more opportunities for manufacturing success in WA.”

Aside from Mr Rothwell’s assertions, most observers of Austal Ships will tell you that its story is remarkable.

In many ways, Austal’s success is reminiscent of the high speeds for which its vessels, which travel in excess of 40 knots, have become renowned for around the world.

Born in the late 80s when many corporate empires, like those of Alan Bond’s and Christopher Skase’s, were failing, it has grown many times over since being set up with $200,000 by Rothwell and four of his former employees from leisure and fishing boat building company Star Boats.

Today Austal is one of the world’s largest manufacturers of high-speed vessels, it turns over in excess of $350 million annually and provides employment for 1655 people over the three companies under its umbrella in WA: Austal, Oceanfast and Image Marine.

It continues to beat long-establ-ished and heavily subsidised builders in Europe for contracts and has delivered 75 vessels to buyers in Asia, Europe, the Middle East, Ireland, Venezuela and the Caribbean.

Mr Rothwell says his company has worked on the principle of being several million dollars smarter on production techniques to compens-ate for subsidies enjoyed by foreign competitors and the cost of transporting its vessels to market.

This is based on comprehensive scheduling, meticulous cost control, just-in-time manufacturing and precise delivery dates.

“I’d say that by the time you add up the cost of transport and the subsidies enjoyed by our competitors, we are probably disadvantaged to the tune of around $5.5 million right now,” he said.

“However, our order book continues to be okay and diversification into building smaller vessels through Image Marine and luxury yachts, such as the expedition series Oceanfast is building for Greg Norman, will serve us well.”

Mr Rothwell, who in September won the International Business Council of Western Australia (IBCWA), International Business Award for 2000, speaks with similar confidence when referring to the wealth of local manufacturing talent that is ripe for the world stage.

Mr Rothwell, who joins former IBCWA recipients, Michael Kailis, Janet Holmes A’Court, Harold Clough and Simon Lee, says there is a lot of “untapped brilliance” in WA.

“We are very good at finding innovative ways of going about things, just look at some of the things our technology companies have done.

“I’m saying look at your business and think about how far you can make it go.”

Last December, Austal ventured into offshore production with the formation of Austal USA – where Austal holds a 70 per cent stake in a partnership with Alabama’s Bender Shipbuilding & Repair Co.

The partnership will enable Austal to manufacture and sell vessels in the highly protected US market, provide a strategic base for sales into Europe and South America and give some protection from the vagaries of currency fluctuations.

In its short history Austal has faced its fair share of obstacles.

It’s entry to the Asian market – where it has sold 29 vessels – was abruptly challenged when a Chinese buyer demanded a 100 per cent bank guarantee while progress payments were made on a US$4 million vessel.

In 1988 bankers considered the practice of building ferries for overseas markets to be too risky, thrusting Mr Rothwell into a tortuous search for a guarantee before he eventually found assistance at Standard Chartered.

Another hair raising learning curve came in 1995 with the sale of Austal’s first car ferry to Bermuda-based company Sea Containers.

Contractual differences saw both parties pull out of the deal with Austal nursing a $50 million ferry outside its Henderson yard for almost six months until an alternative buyer was found in Danish ferry operator DSB Rederi.

With all this behind him Mr Rothwell is planning bigger manu-facturing challenges for the company which has been 24 per cent public-owned since December, 1998.

There are proposals to turn the Henderson area into a world manufacturing hub for a billion-dollar shipbuilding industry. Within a decade it is expected to produce hundreds of vessels and generate thousands of jobs.

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