Patrick Durrant | Canberra
One of the big crowd pleasers of the ADM 2016 Congress was the disarmingly frank and largely positive panel discussion on the future of naval shipbuilding in Australia.
The panellists were Greg Hodge, formerly managing director Forgacs; Andrew Bellamy, CEO of Austal (David Singleton of Poseidon Nickel takes over later this year); Dr John White, Chairman TKMS Australia; Glynn Philips, CEO BAE Systems Australia; Mark Lamarre, CEO ASC Shipbuilding; and Francisco Barón managing director Navantia Australia.
With the panellists all having plenty of skin in the game with the touted $89 billion worth of programs (OPVs, future frigates and submarines) for Navy coming down the line, the Q&A covered everything from hopes for the White Paper, capability, consolidation and export. The highly experienced representatives offered plenty of good reasons why Australia can and should build locally and indeed export to the international market.
One of the points often touched on was the dire need from Government in the forthcoming White Paper to cement a logical foundation for a continuous shipbuilding industry, where planning is done in concert with industrial resources and capability.
“The plan needs to be an integrated one covering design, production and sustainment – it’s got to be a holistic enterprise plan,” Hodge said.
Bellamy, a strong advocate for the free market, hoped it wouldn’t be “too much of a political process” and said clarity was critical.
“We need vision – something that lays out what industry looks like 25 years from now rather than five years from now.”
“Newcastle is in the Valley of Death, Williamstown is at the bottom of it and Adelaide is heading down into it – the skills that will be needed for the OPVs in 2018 will be already gone.”
Rowan Moffitt of EY (notably a former RAN Rear Admiral and head of the future submarine program) pitched an interesting question to the panel – what did they think about Chris Burn’s (CEO Defence Teaming Centre) suggestion of bridging the looming ‘Valley of Death’ in Adelaide by using several of the OPV acquisitions before building the future frigates?
Lamarre said the idea could offer the opportunity to “distil our key skilled workforce down to a number of specialists” that could be then grown for future programs.
“Australia has invested an incredible amount of money in capability and workforce and it would be a shame to see that decline and suffer the start-up issues that could be avoided.”
However both Bellamy and Hodge were dismissive, with the former saying he was “fundamentally opposed to anything that sounded like a subsidy or a job creation scheme”.
“Newcastle is in the Valley of Death, Williamstown is at the bottom of it and Adelaide is heading down into it – the skills that will be needed for the OPVs in 2018 will be already gone,” Hodge said.
BAE’s Glynn Philips re-iterated Chief of Navy’s earlier plea – a plan had to be about availability of the fleet at the wharf and a national enterprise and “no matter how painful it may be it can’t be undermined by near-term expediency”.
“We can also match if not do better than productivity in equivalent societies.”
As to the capability of Australian industry to step up to the challenge of a continuous build, the panellists were very positive, particularly John White who had seen success firsthand during the build of the last two FFGs and the 10 ANZACs. He fundamentally disagreed that it was more expensive to build in Australia saying when TKMS had submitted “a certain proposal” on November 30 last year, “the cost of the entire enterprise for building the vessels was somewhat less than it was in Germany at the time with the exchange rate that prevailed.”
“We can also match if not do better than productivity in equivalent societies,” White said.
For White it was also about giving the right tools to the workforce – and TKMS has certainly been an ardent champion of digital shipbuilding.
“Part of that infrastructure of the 21st century is the digital shipyard system – the IPDSE (integrated product development sustainment environment). It is moving onto a fully digital basis for everything we do in the full lifecycle of our naval vessels. With that we can neutralise the traditional tyranny of geography, because you can beam the 3D model to wherever the work will be done.”
This in some way answered a later question on whether shipbuilding in multiple locations around the country would work. The panellists generally agreed that this was true and while it was a bonus to have the shipbuilding hub close to the fleet’s area of operations, it was more critical to have the sustainment activities in close proximity.
They also agreed export was not a hurdle, with Austal’s Bellamy unsurprisingly providing the example of his own company’s success. On the final point of the day – the inevitable consolidation of the industry, ASC was singled out as being an impediment.
“The private sector can't compete against the government for government contracts – it's not a level playing field. So if you're a free market person then the first thing you have to do is move the ASC out of government control,” Bellamy said.