Could Replacement Icebreaker Resuscitate Australian Shipbuilding?

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August 23, 2013

observing a pair of penguins

By Chris McGuire

Speculation continues as to what new icebreaker will replace Australia’s long-serving Aurora Australis. After 24 years of service in the Antarctic she is headed for retirement. The challenge for the selected builder will be to provide a multi-tasking polar research and supply ship with an upgraded environmentally-sensitive modern design that is capable of handling the Southern Ocean in all weather conditions.

By all rights an Aussie ship should be built in Australia. Or should it? What level of risk is the Australian government willing to accept for a project so critical to the Australian Antarctic program?

Well, they could be hedging their bets based on past history. The Aurora Australis all but bankrupted the Carrington shipyard. Incredibly, she was one of the last ships built in the country. She was followed by the Searoad Tamar, built in 1991, which insurers had to step in and save to prevent her from being scrapped before she even floated.

Still, some members of the Australian Manufacturing Workers Union are calling for shipbuilding work to stay in Australia. Delegates who work for Forgacs shipyard (operator of the Carrington yard) in Newcastle urged Environment Minister Tony Burke back in May to support building the replacement vessel in Australia. But that would mean bearing higher costs, principally through wages, and taking on the big risk associated with using a yard with no recent commercial shipbuilding experience.

The bottom line is still a mighty persuasive deciding factor it seems. And who can argue it? Presently in Australia, a sheet metal worker earns $45,000 to $55,000 per year plus overtime and superannuation. Conversely, a Chinese yard worker earns approximately $US650-$800 a month. Sounds like a no-brainer.

Yet the government is financially supporting Australian shipyards with naval shipbuilding currently occurring in Williamstown, Victoria; Forgacs in Newcastle; and at the ASC facilities in Adelaide and Fremantle, Western Australia. Other than that, since the building of the Searoad Tamar more than two decades ago, Australia has been concentrating on high-speed aluminum craft like those built by Incat in Tasmania and Austal in Fremantle.

Even so, Australian shipyards aren’t even given the opportunity to deliver on all the naval projects currently underway. Spain has been building hulls for the Navy’s landing helicopter deck (LHD) projects, then transferring them to Australian yards for fitout and completion. You can’t blame them as the move was probably done as a risk-control measure used against Australia’s lack of experience in constructing large hulls. A similar risk will be present with the Aurora Australis replacement.

And in another shining example of non-protectionism, despite Teekay Holdings Australia Pty Ltd. securing the contract to build RV Investigator, the recently-launched Marine National Facility Research vessel (for the CSIRO) was built by Sembawang Shipyard Pte Ltd in Singapore.

What will be the outcome of the RFP that the Australian government sent out earlier this year for Aurora’s replacement? It’s anticipated a shortlist of suppliers will get their chance to engage in a selective tender process, the timing of which will be dependent on Federal government funding. That may take up to 12 months, should Australia see a change of government at the upcoming election on the 7th of September. What the political parties think on this issue right now has not been clearly defined by either side.

The new ship will have to balance deep-sea voyages between Tasmania and Antarctica with ice-breaking capability. Not an easy feat. With just a handful of yards around the globe that have multi-purpose icebreaker experience, expect this to be a hotly contested tender process.

Naturally, European yards, particularly Finnish ones, are probably going to rank high on the list. In fact, last spring, STX Finland delivered a similar vessel, the SA Agulhas II for the South African National Antarctic Programme. The Netherlands’ Damen Shipyards as well as Singapore’s Keppel Singmarine, among others, had also bid on the project.

Interestingly, in 2008, Keppel Singmarine made a huge splash in the icebreaking market, becoming the first Asian yard to build ice-breaking vessels, and with a small portfolio in this sector, they could also be sizing up this opportunity.

Meantime, Germany’s Nordic yards are busy with newbuild contracts for two rescue and salvage ice-breaking vessels to be built for the Russian Ministry of Transport that will operate in the Arctic’s northern polar sea.

Canada can’t be left out of the game either. Seaspan, located on the country’s West Coast, has a successful history of building icebreakers and is set to build the New Canadian icebreaker CCGS John Diefenbaker. On the other hand, Mitsubishi, who are sailing back into the passenger sector after a nine-year absence, may also throw their hat into the ring, too.

While Aurora Australis is part of the $200 million Hobart Antarctic program, she is owned by P&O Maritime and chartered by the Antarctic Division. However, the Australian government is looking to change the model to one where the government will own the ship, while having a ship manager operate it on their behalf. An Australian ship manager? That remains to be seen.

It is hoped the new replacement icebreaker will be ready to ply the Antarctic waters by 2017, but first it will need a yard that’s up to the task. Unfortunately, I highly doubt it will be built in one from down under.

_WAZ5804-Edit-2Chris McGuire is director of McGuire Consulting, an Australian based consultancy that provides operational, educational and compliance services. McGuire Consulting also provides a valuable local resource to foreign owners and managers in the greater Australasian region. For more information please visit or connect with him on linkedin

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