Australian shipbuilder finds opportunity in rising sea tensions

Australian shipbuilder Austal is planning to spend up to $30 million (over P1.5 billion) to set up a facility in Cebu dedicated for building military ships for Asia, as territorial tensions increase the demand for beefed up national defenses.

Austal chief executive David Singleton told reporters last week this would mark another expansion for the company since it set up operations in the Philippines in 2012.

Singleton said the facility, which could increase its workforce to 2,000 from 900 currently, would be building military ships both for the Philippines and for exports to other parts of Asia. Construction could start next year at the earliest.

He said this could cost the company $20 to $30 million, and noted how current facilities in Cebu were already being used to build commercial vessels mainly for the export market, leaving no more space to make military ships.

“If you look at our history in Australia, we build military ships for the Australian Navy, and then we export those ships as well. We build more and we export them to other countries. What I’d like to do here in the Philippines is to build [military] ships for the Philippines and export [others] into Asia,” he said.

He said other nations, such as Great Britain and the United States, already have their largest shipbuilding programs in place for several decades.

“So all around the world, naval shipbuilding is expanding and this is true in Asia as well, for reasons that you all know and understand,” he said, stopping short of citing the territorial disputes over the West Philippine Sea that concern a number of Southeast Asian countries, including the Philippines.

He said the need of the international community to protect their respective islands presents a market opportunity for Austal, which he said had around 75 percent of its current total production dedicated to building military vessels mainly for the US.

“I think you’ve seen most Asian countries talking about expanding their navies, particularly the coast guard for protection of islands,” he said, noting how “all of the countries in Asia want military vessels.”

Austal just last week inaugurated in Cebu the John Rothwell Assembly Bay, a key part of its expansion plan.

The shipyard in Cebu already makes the Philippines Austal’s largest facility after the US. Austal Philippines, he said, could make $150 million worth of ships in a year, while its US operations could make $1 billion worth of vessels annually.