AUSTAL USA: Rolling Strong into 2013

Austal USA today finds itself plowing into 2013 with the proverbial bone in its teeth, powered by an enviably hefty U.S. government backorder book, possibly the most modern and efficient manufacturing infrastructure in U.S. shipbuilding and the leadership of a new President who, over the past five years, helped to make it all happen. Nevertheless, domestic shipbuilders all know that DoD and DHS belt tightening is a the new reality.

Determining the depth of government cuts and positioning accordingly is the tricky part, yet hardly new to companies operating in defense circles. In fact Austal may be as well positioned to ride out the storm as anyone, as it has already made the successful transition from a small, conventional commercial shipyard to an efficient, modular manufacturer of the Littoral Combat Ship and Joint High Speed Vessel. And, it is the “modular manufacturing” part that may eventually lead Austal right back to their original roots.

Best of a Diverse Conglomerate
Best known as America’s largest aluminum shipbuilder, Austal USA also benefits from its position as a provider of design, construction and support of customized, high-performance aluminum vessels for the commercial high-speed ferry market. Overseas, Austal’s facilities include a shipyard in Western Australia and a dedicated commercial shipyard in the Philippines, as well as vessel support services from Asia, Europe, the Caribbean, and the Middle East.
Closer to home, Austal USA is the quintessential definition of a full-service shipyard. During a November visit to its Mobile, Ala., facilities, Maritime Reporter enjoyed a full tour of the meticulously clean facilities, its impressive assembly line infrastructure and a walk-through of vessels rapidly approaching completion at its berths. Under contract to build ten 103-m JHSVs under a $1.6B contract and five 127-m Independence-variant LCS class ships, part of a 10-ship, $3.5B contract, that backorder book would seem to preclude any need to plunge into the commercial waters any time soon. Nevertheless, Austal USA continually looks to expand its repair capabilities, and boasts engineering, test and trials capabilities at a new waterfront facility on the Mobile Bay waterfront. Eventually, the two contracts could eventually require a workforce of as many as 4,000 employees. 

Busy & Efficient, too …
2012 was an exceptionally busy year for Austal. The shipyard continued to generate new work, finish existing contracts and commence work on still others. In late December, Austal was awarded a $166M modification to previous award for Joint High Speed Vessel (JHSV) 10. Originally, the JHSV series was planned to be a 21-vessel program, but just ten have been ordered to date. Two weeks prior to that, the Military Sealift Command accepted delivery of the first JHSV (pictured below). Three more of these vessels are already under construction.
As the 12th ship delivered by Austal USA in 11 years, JHSV 1 is part of an enviable benchmark that could easily lend itself to a commercial, series-build capability in the future.
In October, the keel laying ceremony of the third Littoral Combat Ship (LCS) was held. Jackson (LCS 6), one of five Austal-designed 127-m Navy vessels, was the first constructed utilizing Phase 2 of Austal’s Module Manufacturing Facility and the first ship assembled in their new Assembly Bay 5. Austal’s modular approach to ship manufacturing already has 35 of the 37 modules used to form the 127-m aluminum trimaran being assembled.
And just prior to that, in September, the USNS Choctow became the second Joint High Speed Vessel christened at Austal in less than a year.
 

Perciavalle Takes the Helm
The recently announced promotion of Craig Perciavalle to President, Austal USA in December was a logical one. At Austal since 2007, he moves up after serving as Senior Vice President of Operations. Significantly, he oversaw Austal’s transition from a conventional commercial shipyard to an efficient, modular manufacturer that has improved its metrics and economy of scale with each new hull. Hinting towards what might come next, Andrew Bellamy, Austal’s Chief Executive Officer said, “Perciavalle is uniquely prepared to transition this shipyard into serial production and manufacture ships at a pace unmatched in the United States today.” Eventually, that could mean commercial, series build contracts – something Austal USA has already proven it can do.
For the New Year, there are few certainties on the domestic waterfront. Only time will tell which markets Austal USA will in the future focus its considerable capabilities. In a worst case scenario, government induced cuts would force the issue sooner rather than later. That said; a trip to Mobile and a few hours spent watching what happens there tells us that, when it comes to shipbuilding – any kind – Austal will be successful with any project of their choosing. That’s a lock.

(As published in the January 2013 edition of Maritime Reporter - www.marinelink.com)