By Bernie Cahiles-Magkilat

Following the completion of its P1-billion expansion of its 7-year-old shipyard in Balamban, Cebu, the world’s largest aluminum shipbuilder Austal is already planning of further expanding the facility for the manufacture of military vessels.

Austal CEO Singleton revealed at the opening of the new John Rothwell Assembly Bay at its Cebu facilities that the planned investment would roughly be P1.5 billion ($30 million).

This as the company is moving closer to winning the contract with the Philippine government for the supply of military vessels.

Defense Secretary Delfin Lorenza said at the plant’s opening ceremonies that Austal was close to winning the P30- billion contract for the manufacture of 6 offshore patrol vessels (OPVs) for the Philippine Navy.

Singleton said that the planned third expansion is not only for the Philippines’ OPVs but also to serve other Asian countries.

“We can build coastguard vessels, interceptive vessels, small but fast medium-sized corvettes as well. So, all of those for coast guard for the navy,” he added.

“We are building more defense and military vessels,” he said adding that Asia countries such as Korea are building up its defense capability particularly the coastguard for security purposes. Around the world from Australia, UK and the US are strengthening their naval forces, he said.

Singleton further said that the planned third investment may be implemented next year at the earliest. It would easily create 2,000 jobs. At present, the Balamban employs roughly 1,000 people, who are producing small and medium size high-speed aluminum vessels. Another 500 jobs are expected to be generated once the assembly of the military ships starts.

The opening of the new John Rothwell Assembly Bay will enable the Cebu facility to produce bigger commercial ships.

The largest vessel, by volume, ever to be built by Austal in 30 years — Hull 419, a 109 meter vehicle passenger ferry for Fjord Line Norway — is currently under construction in the John Rothwell Assembly Bay in Balamban.

“I would prefer to expand here because we need a dedicated and best facility for military vessels here and for exports. We now have the facility for large commercial vessels so we need another facility for military vessels,” he explained. Military vessels cost between $15 million to the most expensive $500 million.

“We have enough space and enough capability to expand. I want to see the Philippines even bigger than what it is today,” he added.
The Cebu unit has strengthened its capability to build and design ships for the global market. It has delivered 17 ships to 10 operators in 9 countries since 2012. Austal Philippines has also a strong order book for the coming years.
It has also earned the valued position as a global centre of excellence for commercial vessel design and construction within the Austal Group.

Austal poured its first investment in the Philippines when it acquired the Cebu shipyard from the Aboitiz Group. Seven years after on Wednesday, the shipbuilder completed its second investment package valued at $20 million with the opening of the John Rothwell Assembly Bay designed for the production of large commercial ships.

The maker of the “Mercedes Benz and Ferraris” in the shipping industry has been spared from the downturn in the shipping industry as they have been concentrating on building only high-end, high speed aluminum vessels. The affected shipbuilders are those building large commercial steel ships.

At present, military vessels account for 75 percent of Austal’s ship production. The US, its biggest hub, contributes $1 contributes $1 billion to the company’s annual earnings while the rest of their global operation contributes another $1 billion.

Austal is the only foreign contractor licensed by the US government to build military vessels for the US Navy. They are building three-hulled combat ships for the US navy.

The Philippine shipyard, its second biggest facility outside of US, chips in $150 million annually with average production of 3 ships a year. Its Australia operation contributes $100 million.

The just completed $20 million expansion covered the reclamation of an additional 20,000 m2 of waterfront land and the development of new hardstand and mooring facilities that will allow a greater number of larger vessels to be designed, built, and maintained in the Philippines.