BAE Systems concerned about naval sector future

For the second time in two decades Australian naval shipbuilding is facing a substantial hiatus. Having engaged in a major ramp-up to build three Air Warfare Destroyers (AWDs), complete two Landing Helicopter Docks (LHDs) - whose hulls are being constructed in Spain - and upgrade eight ANZAC frigates, industry has to face the prospect of activity coming to an abrupt halt about three years from now.

6th Jul 2012

 Naval shipbuilding

BAE Systems concerned about naval sector future

Byline: Kym Bergmann / Melbourne

For the second time in two decades Australian naval shipbuilding is facing a substantial hiatus. Having engaged in a major ramp-up to build three Air Warfare Destroyers (AWDs), complete two Landing Helicopter Docks (LHDs) - whose hulls are being constructed in Spain - and upgrade eight ANZAC frigates, industry has to face the prospect of activity coming to an abrupt halt about three years from now. This could have profound consequences for the ability of the nation to undertake future larger projects, most importantly the construction of a replacement submarine fleet.

This is a repeat of circumstances with a previous batch of naval projects. During the 1990s, industry was fully loaded with building Collins submarines, ANZAC frigates, Huon minehunters and Leeuwin hydrographic ships. These contracts were splashed across four different prime contractors: the Australian Submarine Corporation; AMECON/Tenix (now BAE Systems); Australian Defence Industries (now Thales); and NQEA (no longer active). The upgrade of four FFG frigates – undertaken by Thales was also part of the mix.

But these projects came to an end within a three-year period: Hydrographic ships (2000); submarines and minehunters (2003); and ANZAC frigates (2006). The situation with the FFGs was slightly more complex because of lengthy problems sorting out electronic system issues, but work on hardware concluded in 2008.

Industry went from feast to famine, with a consequent significant loss of skills – especially to the mining industry.

BAE Systems is becoming increasing concerned that once again Australia will do the same thing to itself because of an absence of forward thinking. The company definitely knows what it is talking about because of problems it experienced in ramping up for module work for the Air Warfare Destroyers.

In a frank briefing during a media tour of Williamstown Naval Dockyard, the company explained that poor quality work on some early AWD modules – which led to a reallocation of future sections – was directly attributable to a lack of a sufficiently skilled workforce. Or more precisely, many of the workers were highly skilled – but it had been several years since they had been able to exercise talents such as welding.

BAE Systems Australia Head of Business Development, Strategy and Communications, Brent Clarke, described the situation succinctly, saying that because of the lengthy gap following the end of the ANZAC contract, many employees were doing non-core tasks. He used the analogy that if someone hasn’t driven a car for several years, it takes a bit of readjustment when one finally gets back behind the wheel. He says this is even more so in the case of some very specialized trades.

The company has two yards in Australia: Henderson in the West and Williamstown in Melbourne. Both have reasonably healthy workloads at the moment with a combination of Air Warfare Destroyer modules; the superstructures for the two LHDs and work on the ANZAC Anti-Ship Missile Defence contract. However, the writing is already on the wall. In one of the Williamstown fabrication sheds, work is already well under way on the keel blocks of the third – and final – AWD. In addition, the superstructure for the first LHD sits almost ready for the arrival of the hull from Spain’s Navantia later this year. The keel laying for the second LHD took place on June 30. The work at Henderson is similarly finite: the Royal Australian Navy wants the remaining seven ANZACs to be upgraded and back in operation by 2016.

Preparations are well underway at Williamstown for the fit out of the massive LHDs. An additional large concrete mooring point known as a dolphin is being constructed in Port Phillip Bay and an eight-story tower to allow easy access to all levels of the ship is already in place on the dock. The superstructure weighs a total of 850 tonnes – not at all the 3,000 tonnes often referred to in the media – and each in turn is made of four major subsections. These will be lifted onto the deck by a crane presently being constructed, allowed to settle overnight, and then repositioned – if necessary – before finally being welded into place.

The steel of the superstructure is in different thicknesses, with a substantial ‘belt’ at the height of the blades of helicopters. This is to protect the ship in the unlikely – but not impossible – eventuality that a rotating blade breaks free. BAE Systems Australia are the prime contractor for the ships and as well as their Williamstown workforce they have a team of 12 engineers in the parent yard of Ferrol. Similarly Navantia have staff in Australia and many more will come out with the first hull.

This will be placed on the maritime equivalent of a low loader and will sail to Australia via the Cape of Good Hope, rather than the shorter route through the Suez Canal. This decision has been taken for two main reasons. Firstly, the expense of using the Canal is substantial. Secondly, the ship and the LHD hull would have to travel through waters in which pirates are active. Consideration was given by the RAN to provide an escort ship, but there is always a possibility that it would have to be called away for more urgent duties at short notice. Stationing on-board security guards – code for mercenaries – was also discussed, but the transport ship is registered in the Netherlands and Dutch law prohibits the use of such contractors.

BAE Systems Australia describes their relationship with Navantia on the LHD project as excellent – with a seamless flow of data between the two companies. The relationship is simple and direct: BAE Systems are the prime contractor, and Navantia are subcontractors and designers.

The situation regarding the Air Warfare Destroyer work has been more complicated and less happy. For this project, BAE Systems is under contract to the AWD Alliance, which is made of the Defence Materiel Organisation, ASC Shipbuilding and Raytheon Australia - of which Navantia is not a part. This means that if any issues come up regarding Navantia’s design drawings – and they frequently do – the query first of all goes to the Alliance (in effect ASC), where it is considered and prioritized before being sent to Spain. This means that resolving issues often takes several days – and sometimes substantially longer. In the case of the LHDs, most design issues can be sorted out overnight.

While BAE Systems remains focused on completing the work it already has, there is a growing sense of concern about what happens after 2016, when all major Australian naval shipbuilding comes to a halt. SEA 1000 still seems to be a long way off, with the current Government only now starting to move with $200 million to be spent on a plethora of study contracts. The ANZAC replacement – SEA 5000 – is similarly years away. The other major project SEA 1180, which has the ambitious aim of merging four existing classes of smaller ships (patrol boats, minehunters, hydrographic ships and motor survey launches) into a single new type faces an uncertain future and might not survive the 2013 Defence White Paper in anything like its present form.

The big issue, not just for Navy but for the nation as a whole is: will we be able to undertake these future major projects if naval shipbuilding skills have again been allowed to decline in the meantime? Just the build of 12 submarines will be a huge undertaking and when at least two other types of surface combatants are added, the task looks even more daunting.

As Mr Clark put it, the shipbuilding skills once again present in Australia are important only if the Government thinks they are important. A decision could be taken to give up on Australian defence industry and buy everything from overseas – a move that would have the most profound consequences for issues of self-reliance in a major conflict. Such a development might also lead to soaring support costs as major repair and upgrade work would most probably be done in an overseas parent yard.

To retain a core level of skills for several years after 2016, BAE Systems has a solution: bring forward the replacement of HMAS Success and HMAS Sirius. There is no doubt that both ships are at the very end of their service lives – especially so for Sirius. It would not be necessary for the replacements to be built in their entirety in Australia, with BAES pointing out that the LHD model has worked well – so far. The argument goes: build the large hulls in a parent yard but do the outfitting and a number of modules in Australia.

On June 30, the following Ministerial media release was issued:

“The Minister for Defence, Stephen Smith, today announced that the Royal Australian Navy (RAN) would participate in a unique deployment to Australia of the Spanish Armada Ship, SPS Cantabria, with a series of training exercises in Australia from mid-February until November 2013.
The Cantabria deployment will strengthen the bilateral relationship between Spain and Australia, as well as providing important training and capability assessment outcomes for both the Spanish Armada and the RAN.
The Cantabria is a modern Auxiliary Oil Replenishment ship, similar to HMAS Success, which is capable of supplying fuel, food, stores and ammunition to ships underway.”

Without saying so in so many words, BAE Systems would like the opportunity to team with Navantia to offer this class of ship to the RAN – and solve their work continuity problem at the same time.



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