From tradition to innovation

Australia’s shipbuilding industry has undergone a remarkable metamorphosis over the past two decades.

The high-speed aluminium fast ferry sector now dominates an industry, which once comprised a handful of major steel builders and several dozen smaller builders specialising in steel construction.

Steel construction is still active, particularly among yards like NQEA and Tenix Shipbuilding which have defence contracts, however it is the high-speed aluminium sector which has made the greatest impact on the international scene.

Growing from virtual obscurity 15 years ago, this sector now boasts collective annual earnings of $1.5 billion ($980 million), with it providing employment for over 6,000 people.

Industry players are confident this figure will grow rapidly over the next few years. Their optimism is fuelled by rising demand for fast ferries throughout the world, the likelihood of high-speed technology gaining wider application, such as, for defence and fast freight purposes, and an eventual turnaround of the economies of their Asian neighbours.

Many of these builders, Austal and companies under its umbrella, Image Marine and Oceanfast, Incat, and Wavemaster, continue to beat long established and heavily subsidised European builders for contracts in Asia, Europe, the Middle East and the French Caribbean.

In fact, Austal Ships has sold two 42m high-speed passenger catamarans to Norway, the home of aluminium fast ferry technology.

The contract for leading Norwegian ferry operator, Hardanger Sunnhordlandske Dampskipsselskap (HSD) signalled that Australia’s fast ferry industry had well and truly come of age.

Builders have overcome geographic isolation by ensuring they remain at the forefront of new technological developments and being at least A$1 million ($640,000) smarter on production costs to compensate for subsidies enjoyed by their competitors, and for the cost of transporting their vessels to market.

Their competitiveness was also enhanced in mid-1998 when the Australian dollar was devalued, enabling yards like Austal and Incat to further attract European buyers.

They look forward to the phasing out of subsidies sought by the OECD, saying that the “playing field will be truly level for the first time,” and point to the potential of other policy moves such as the dismantling of Cabotage in Greece, by 2004, for widening their customer base.

Craig Banks, national marine manager of Austrade, the Commonwealth Government trade development body, says that while these developments augured well for the industry they would also bring more competitors into the market.

This would place the onus on Australian builders to attain continuous improvement for their design and marketing skills.

“As the size of the fast ferry market increases, so too will the competition,” Mr Banks says. “Australian builders will have to keep their pencils fairly sharp.”

Mr Banks emphasises that builders would need to widen their customer base by pursuing “non-traditional” customers such as public transit authorities and commercial transport companies.

Austal Ships’ managing director John Rothwell predicts his company would double in size within the next few years. This would be achieved once plans to broaden its product base to service the market for fast freighters and the region’s booming oil and gas industry came to fruition.

New opportunities were opening up across the Baltic for a fast freight service and he is confident of finding a client base for the Cargo Express vessel in Asia following economic recovery.

Austals’ plan

Austal Ships is proposing to develop a concentrated manufacturing facility modelled on similar lines to that of Boeing Aircraft in Seattle, Washington, USA.

The facility, which will employ thousands of people, is proposed in Austal’s five-year business strategy.

Austal is striving to diversify its product range outside the traditional domain of high-speed ferries to build cruise vessels, tug boats, smaller high-speed ferries, luxury motor yachts, and adapt its high speed technology for defence and fast freight purposes.

The purchase last year of small boat builder, Image Marine and acquisition last month of luxury motor yacht and commercial builder, Oceanfast Marine Pty Ltd are seen as important tools to do this.

The latest development has seen Austal surpassing Tasmania’s Incat to become the nation’s largest builder, employing 1,500 people over three yards.

Austal will earn around A$240 million ($153.6 million) this year and projections estimate this will climb to A$400 million ($256 million).

In December 1998 Austal sold off 16.6 per cent of its business to the public, raising A$26.8 million ($16.5 million).

Austal Ships managing director John Rothwell says that the go ahead for the Boeing-style mega manufacturing facility depends on negotiations to purchase state-government owned land and a ready supply of trained labour.

The neighbouring land that came with Oceanfast’s acquisition would prove useful, but an additional 10 hectares was needed.

He says that Western Australia’s small population base could also present difficulties in sourcing a skilled labour force of the size needed – possibly 5,000 workers – for such a manufacturing facility.

Another option for a series of satellite manufacturing clones at various locations around the world would also be considered. He is currently exploring opportunities with United States builders for joint ventures in that country.

Also, the State Governments of Queensland and Victoria indicated they would provide incentives to manufacture in their states, as had the City of Newcastle.

“We have a good skilled labour force here, but we may find it very difficult to source one of this size,” says Mr Rothwell. “I would be a lot happier to have everything in one site which will be easier to oversee, however if that is not possible we will have to look at other options.”

Mr Rothwell says that he believes Australia would maintain its leading position in the international marketplace provided it continued to focus on ongoing technological development.

It has a good manufacturing base with facilities that are dedicated and purpose-built for building high-speed aluminium fast ferries.

“In contrast a lot of our European competitors have non-dedicated facilities, not necessarily suited for aluminium building and they are hampered by inefficient work practices.” he adds.

Expanding customer base

Australian Shipbuilding Association chairman and Incat managing director Robert Clifford predicts the industry’s customer base would expand over the next decade.

Incat’s signing of a defence contract with the Royal Australian Navy and the sale of a 96m wavepiercer, passenger/freighter, Bonanza Expres

to Canary Island’s operator Lineas Fred Olsen pointed to wider acceptance of fast ferry technology.