Fed: Government considers shipbuilding shakeout
By Max Blenkin, Defence Correspondent
CANBERRA, Aug 29 AAP - The government is considering a plan to sell the AustralianSubmarine Corporation (ASC) below market value to force a shakeout of naval shipbuilding.
That rationalisation would leave defence doing business with a single large shipbuilderformed out of one or more existing players.
A strategic plan for naval shipbuilding, prepared by the Defence Department, was releasedtoday by Defence Minister Robert Hill.
It found future work would not be sufficient to sustain more than one shipbuilder.
The alternative, it said, was for defence to use its power as sole customer to directthe shape of the industry.
"This is the approach favoured in the plan," it said.
The report said projected defence workload for government-owned ASC was not enoughto keep its workforce intact but it remained vital for future support of the Collins submarines.
It said it might not be in the national interest for the government to seek maximumreturn when it eventually sold ASC.
"Ideally the proposed privatisation of ASC would be catalyst and focal point for restructuringthe naval shipbuilding and repair sector," it said.
Currently, the industry comprises three big players - ASC, Tenix and ADI - and smallerplayers including Forgacs, NQEA and Austal.
The strategic plan indicates government is heading in a direction opposite that suggestedby the Australian Strategic Policy Institute in its recent discussion paper.
ASPI said there was plenty of work and rationalisation should be left to the industrywithout government intervention.
It suggested a number of rationalisation possibilities such as selling ASC to Tenixor ADI, or encouraging Tenix and ADI to amalgamate naval operations then negotiating along-term deal with the ensuing mega-shipbuilder.
Senator Hill said he had not decided what option to take to cabinet.
He said the industry was at the crossroads with major projects ending and their skilledworkforces being lost.
"Part of the strategy here is to ensure that there is an industry in the future thatcan not only build the ships we want but just as importantly continually upgrade and maintainthem," he told reporters.
Senator Hill said he was keen to get ASC back on the market as soon as possible.
"Whether the sale will be linked to this rationalisation plan is still to be decidedas well," he said.
AAP mb/daw/jnb
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