Austal to go ahead with expansion

Austal USA plans to go ahead with a $200 million-plus expansion of its Mobile River shipbuilding facility, whether it wins major new military work or not, company officials said. The shipbuilder expects to learn sometime in January whether it wins a preliminary, $3 million design contract for a high-speed troop transport ship.

The U.S. Navy is leading the purchasing process for the Joint High Speed Vessel programme that could eventually involve at least eight ships, five for the Army and three for the Navy and Marine Corps. Austal is one of five teams vying for the work.

The first vessel is set for delivery to the Army in 2011. Congress appropriated $210 million in fiscal 2008 for the first ship. The vessels would be used for quickly ferrying military personnel and equipment within theaters, much as the Army already uses a fast ferry it leases from Austal USA’s parent company, Austal Ltd. of Australia.

Austal USA has spent the last three years ramping up facilities and employment, largely on the promise of building a new breed of warship for the Navy. In 2004, Austal received $10 million from state and local governments to expand its Mobile River shipyard with the multibillion-dollar Littoral Combat Ship program in mind. The Navy had said it wanted up to 55 of those ships, but cost overruns on the first two prototypes, one built by a Lockheed Martin Corp. team in a Wisconsin shipyard and the second about 70% finished at Austal in Mobile, has put the future of the program in doubt. Congress earlier this year gutted the budget for the LCS, and the Navy has canceled contracts for vessels given to Austal and its partner, General Dynamics Corp., and the Lockheed team.

As recently as September, Austal USA said that could put its expansion on hold. But Tuesday, Bob Browning, Austal USA’s chief executive, said the company will break ground on its 700,000-square-foot modular shipbuilding facility, covering 16 acres near its current shipyard, in the third quarter of 2008. “The thing is, we see that sort of infrastructure improvement as an enabler to business that is able to support our Navy and commercial shipbuilding programs, as opposed to going out and building that facility as a consequence of winning the work,” Browning said.

Bill Pfister, Austal’s vice president of government programs, said Austal now has about 1,176 employees. The expansion, Browning said, could add nearly 1,200 more jobs.

Browning and Pfister said the company is striving to diversify its order book, hoping to add contracts for crew boats and offshore support vessels for the oil and gas industry to its military and fast ferry work.