Austal gets boost from Navy

The U.S. Navy plans to contribute up to $33 million to an Austal USA modular shipbuilding facility whose price tag could reach $200 million, Austal Ltd. said in a news release issued in Australia.

Austal said the money would be paid in a series of reimbursements as it reaches specific construction milestones on its planned 700,000-square-foot manufacturing facility just southeast of its existing Mobile River shipyard. A Navy spokeswoman said that she could not comment on the reported agreement. The Navy earlier this year said it would make available $140 million for improvements to Gulf Coast shipyards, money designed to boost recovery from hurricane Katrina.

Austal USA has for three years been adding employees and facilities in Mobile, 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 shipyard with the multibillion-dollar Littoral Combat Ship program in mind. The modular facility had been a key part of the planned expansion because it would allow workers to build entire sections of a vessel before final assembly in a riverside shed.

“When complete, the … facility will be capable of construction of six large aluminum vessels … per year,” Austal Ltd., the Australian parent of the Mobile shipbuilder, said.

The Navy had said it wanted up to 55 LCS, but cost overruns on the first two prototypes, i.e. one built by a Lockheed Martin Corp. team in a Wisconsin shipyard and the second about 70% finished at Austal in Mobil, has put the future of the program in doubt.

But Austal said last week that it would proceed with its expansion plans, with or without a Navy contract in hand.

In addition to the LCS program, Austal is also among five teams vying for the military’s Joint High Speed Vessel program, which could eventually consist of at least eight ships — five for the Army and three for the Navy and Marine Corps. Austal hopes to learn next month whether or not it will be awarded a $3 million preliminary design contract for the Joint High Speed Vessel. The first of the ships is projected to cost about $210 million, the Navy has said.