Austal wins new construction contracts with the US Navy

Austal’s bold move to invest in steel shipbuilding at its Mobile, Alabama shipyard continues to pay off as the company has secured new construction contracts from the US Navy.

Austal has been awarded a $225.5 million contract option to build two additional Navajo-class Tow, Salvage and Salvage (T-ATS) vessels, adding to the two previous contract vessels.

Austal CEO Paddy Gregg said the contract came as the company began construction of the first ship in the class earlier this month.

Gregg said, “This is a great sign of confidence from the Navy in the ability of the Austal USA team to deliver steel and aluminum vessels simultaneously.”

Building the $100 million steel capacity at Mobile – aided with $50 million from the US Department of Defense – saw Austal announce a series of new contracts.

Earlier this month, Austal won a whopping $4.3 billion contract to build up to 11 offshore patrol boats (OPC, pictured) for the United States Coast Guard (USCG).

This added to a myriad of shipbuilding programs for the United States Navy and United States Coast Guard, with construction continuing on:

  • Aluminum Littoral Combat Ship (LCS) Independence
  • The Aluminum Spearhead Class Expeditionary Fast Transport (T-EPF)
  • Navajo-class steel-hulled salvage, salvage, and towing (T-ATS) vessels
  • And an Auxiliary Floating Drydock Medium under contract for the United States Navy.

The only downside to the additional contract is that it increases Austal’s reliance on a single customer – US orders now account for the majority of Austal’s profits.

As @AuManufacturing pointed out recently, this, coupled with Australian dollar weakness and market share, indicates that Austal is ripe for takeover by a US defense contractor.

As @AuManufacturing then argued: “The potential for a series of takeovers of our most promising businesses is a familiar story for Australia.

Stock markets go up and down and those with deep pockets just have to wait to acquire local technologies at low prices.

But if we are ever going to build the capacity of the sovereign defense industry, we simply cannot let these companies fall into the hands of foreign predators.

Image: Austal/Navajo-class tow, salvage and salvage vessel

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Melvin B. Baillie