Austal awarded $145m navy contract

Austal shares received a boost after the Australian shipbuilder announced that it was awarded its first steel vessel construction contract by the United States Navy, a US$145 million build of two Towing, Salvage, and Rescue ships.

The contract also establishes options for up to three additional T-ATS ships, which, if exercised, will bring the total cumulative value of the contract to US$385 million.

Austal was initially awarded a US$3.6 million contract by the United States Navy for the functional design of the Navajo-class T-ATS vessels.

The T-ATS contract is the first steel ship construction program awarded by the United States Navy to Austal USA and will be the first program to be delivered in the new steel shipbuilding facilities nearing completion at the company’s shipyard in Mobile, Alabama.

The Navajo-class T-ATS has ocean-going tug, salvage, and rescue capabilities, with a multimission common hull platform, capable of towing heavy ships. These ships will be able to support USN fleet operations and a variety of missions, including oil spill response, humanitarian assistance, and wide area search and surveillance.

Austal will utilise its proven ship manufacturing processes and innovative methods that incorporate lean manufacturing principles, modular construction and moving assembly lines; using the company’s new state-of-the-art enclosed steel production facility which is set to open in April 2022. Austal broke ground on its USD$100 million steel manufacturing facility in March 2020.

The T-ATS award is one of several steel shipbuilding programs Austal is pursuing as it diversifies its capabilities. The shipyard previously announced it had submitted a bid to build the United States Coast Guard’s Offshore Patrol Cutter and continues to execute a Light Amphibious Warship concept studies and preliminary design contract for the United States Navy and United States Marine Corps. Austal’s new steel line and facility expansion also positions it well to be a follow-on Frigate yard for the U.S. Navy.

Austal Chief Executive Officer Paddy Gregg said the contract was an exciting milestone in the history of the company and a great demonstration of the company’s new steel shipbuilding capabilities in the United States, following on from the successful addition of steel shipbuilding in Australia. “This is great news for Austal USA as they enter a new era of steel shipbuilding in the United States, supporting the Navy’s requirements for steel ships.”