Austal progresses in LCS project

Austal is one step from a construction contract for the United States Navy?s Littoral Combat Ship (LCS) project after the US Department of Defence announced today that it has awarded a $78.8 million final design contract to prime contractor Bath Iron Works, a General Dynamics company which is teamed with Austal. The US Navy has nominated the LCS project as its number one priority and has identified a need for 60 vessels, with a total value of around $14 billion, over a 15 year period.

Austal is the vessel designer and builder for the General Dynamics team which is one of two consortiums selected for the final design phase. The contracts include options to complete detail design and construction of a lead ship of this new high-speed surface ship class and it is anticipated that both teams will have contract options exercised to build two vessels each.

Austal?s Executive Chairman Mr John Rothwell said that the announcement was a very positive indication that the company would soon be building its first ship for the US Navy. “The team is now in the final stage before the first construction contracts are awarded, and we expect this to lead to a shipbuilding contract, probably in the second half of next year,” he said.

Austal would build the lead and follow-up ships at its shipyard in Mobile, Alabama and expects that it may begin constructing its first vessel in late 2005 or early 2006, a time frame that suits the company?s plans for staged development of its US facilities and workforce to the level required for efficient manufacture of vessels of this size. Orders for the next series of operational ships are expected to be placed while the initial vessels are being evaluated. Commenting on the development of Austal?s defence business Mr Rothwell said recent successes pointed to the possibility for continued growth in this market.

“LCS alone has the potential to expand our US operations to be larger than our current Australian shipbuilding activities, and there is another significant US military project for high-speed theatre support vessels in the offing,” he said.

Although the ships will be built in the United States, there has already been a substantial benefit flow back to Australia where all ship design is carried out. Austal has already assembled a dedicated team of over 50 naval architects, engineers and other designers for the final design phase, creating local employment in the process.

“The company?s important role in the LCS program substantially raises our international profile in military circles and we are also examining other opportunities for further development of our defence business,” Mr Rothwell added. In the longer term this could include the design and construction of larger naval ships in Australia, including LCS type vessels for international navies which may follow the lead of the US. Other navies are already examining the use of high speed ships for both combat and support operations and in this regard the selection of the General Dynamics team for the final design stage is an important endorsement of Austal?s innovative aluminium ship technology.