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Austal Lands New Navy Ship Contract

Tuesday, July 5, 2011

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Corrosion problems on a brand-new Navy combat vessel have not kept Austal USA from signing a new $313 million shipbuilding deal with the service.

One week after Austal agreed to work with the Navy to resolve “aggressive corrosion” that has plagued its first Littoral Combat Ship, the company announced that the Navy had exercised a contract option to award it construction of two new Joint High Speed Vessels.

Contract: 10 Ships, $1.6B

The new vessels will be the sixth and seventh in the 10-ship JHSV series—a contract worth more than $1.6 billion overall to Austal USA, a subsidiary of Australian shipbuilding defense contractor Austal.

 Austal USA


Austal USA is building both Joint High Speed Vessels (left bay) and Littoral Combat Ships (right bay) for the U.S. Navy.

The current 10-ship LCS deal is worth $3.6 billion.

As prime contractor, Austal was awarded the construction contract for the first 103-meter JHSV in November 2008, with options for nine additional vessels between FY09 and FY13. The contract team includes General Dynamics, with whom Austal has been building the troubled LCS class.

With options remaining for the JHSV series’ last three vessels, Austal USA will reap $347.3 million annually from that program from 2012 to 2015, the company said.

Austal USA’s President and Chief Operating Officer Joe Rella credited the growth of the company’s Mobile, AL, shipyard for the new contract. Mobile’s largest employer, the shipyard now employs nearly 4,000 people.

“Without the support and vision of our Australian headquarters, this facility would not have been able to offer the modern fabrication facilities that give the Navy the confidence to let us build the JHSV, a key contributor to the fleet of tomorrow,” Rella said in a prepared statement.

Program Underway

The JHVS program is already well underway; the Spearhead, the first ship in the series, is to be launched in August and delivered in December. Construction on the Vigilant (JHVS 2) began in September.

 Construction on the JHSV series
Construction on the JHSV series has been underway since December 2009.

The Navy green-lighted construction on the Spearhead (JHSV 1) in December 2009 after Austal completed the design in a 12-month period.

LCS Problems

Austal is currently working with the Navy to devise a solution to aggressive galvanic corrosion that is damaging the propulsion areas of the first $432 million, aluminum Independence-variant vessel.

The corrosion was spotted before the ship was delivered to the Navy, but the problem was made public only recently.

Austal Chief Executive Andrew Bellamy initially said that the company was not responsible for the problem, which he dismissed as a “storm in a teapot.” Bellamy blamed the problem on poor maintenance or improper operation of the ship.

Just two days later, however, Austal released another statement, saying it would work with the Navy on the problem. “Doubler plates” will be installed in the damaged areas of the Independence LCS-1 as a short-term fix, then the vessel will be dry-docked next year to have a cathodic protection system installed.

The rest of the ships in the LCS class will also get cathodic protection systems, Austal now says.


Tagged categories: Aluminum; Cathodic protection; Corrosion; Corrosion protection; Marine; U.S. Navy

Comment from George McCormic, (7/6/2011, 6:55 AM)

It is good to see that the ship's are being built in the USA but hard to swallow being built by another country. Can not our shipbuilders be competitive.

Comment from Tom Schwerdt, (7/6/2011, 8:25 AM)

"poor maintenance" indeed - since they were corroding before delivery we can readily blame Austal for current corrosion issues. $432,000,000 for a ship and Austal can't be bothered to design it to last. The wonders of outsourcing design and "design-build" approaches.

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