Austal USA is expanding the capacity and capability of its Alabama shipyard, doubling down on investing in its future in a way reminiscent of 2009, just before it won the block buy of Littoral Combat Ships that secured the yard a spot in the U.S. shipbuilding industrial base.
The Mobile yard this month closed on the purchase of a ship repair facility formerly owned by World Marine of Alabama, an indirect subsidiary of Modern American Recycling and Repair Services of Alabama. It includes a 20,000-ton Panamax-class floating dry dock, 100,000 square feet of covered repair facilities and 15 acres of waterfront property along the Mobile River and Gulf of Mexico, according to a company statement.
Shipyard President Craig Perciavalle told USNI News this week that the expansion fits in with its desires to continue building aluminum ships and to expand into building steel ships – manned or unmanned – as well as a desire to take on more repair work for the Navy and other customers.
“We feel we’re putting ourselves, and we’ve put ourselves, in a very good place to continue to provide very capable but lower-cost ships to the Navy,” he said of the yard that today builds Independence-variant LCSs and Expeditionary Fast Transit (EPF) ships.
“I have had some discussions with [Defense Secretary Mark] Esper, we are encouraged by the plan for, the need and the requirement for 355 ships or more maybe. And I think there’s plenty of opportunities for us to help the Navy grow the fleet, and we’re putting ourselves in a very good position to help the Navy do that long-term.”
The yard expansion gives Austal ownership of a dry dock it was leasing to launch its ships into the Mobile River, eliminating any schedule problems the yard had to worry about in the past if its desired timeline didn’t match up with the dry dock’s availability to be leased.
“We’ll just have complete control over it, and then we can have the priority for the dry dock be supporting our business, first and foremost,” Perciavalle said.
He added that the rest of the facility, on the other side of the river and just south of Austal’s property, could be refurbished or upgraded in the future to support ship construction or repair activities as needed, giving Austal some flexibility as its future workload becomes clearer.
Many in the Navy and industry have expressed concern about Austal’s future, with the company’s LCS construction coming to an end in a couple years – four ships are in construction at Austal and four more are in pre-construction – and its future with the EPF program still uncertain, as the Navy and Congress haven’t made any firm decisions about continuing the hot production line to build an ambulance ship variant of the hull. Austal competed to build the Navy’s FFG(X) frigate program and lost, leaving many wondering what would happen to the yard, its workforce and its suppliers.
Perciavalle said he’s not worried about the yard’s future.
“It’s no secret that we’re focused on the unmanned side of the business, we think there’s obviously plenty of opportunities there and we’re going to, hopefully – our plan is to be a major player in that side of the market,” he said. Austal is one of six companies selected to conduct industry studies on the Navy’s Large Unmanned Surface Vessel, and Austal also participated in the LUSV precursor by converting a vessel to an unmanned ship through the Pentagon’s Overlord USV prototype effort.
“We are encouraged by discussions around additional EPFs going forward. EPF-15 has been in and out of the budget, and the latest discussions show that there might be some opportunities for that to get back in. I think it’s no secret that we’ve been looking at expeditionary medical ships that have been discussed, and we feel we’re in a pretty good place to support those needs to the Navy,” he continued, with the Congress this current fiscal year appropriating money to give EPF-14 a greater medical capability.
“And then from a steel shipbuilding perspective, there’s certainly opportunities from that medium-sized type vessel: [Light Amphibious Warship] is one that we’ve been participating in. We have participated in some of the industry studies on [the Coast Guard’s Offshore Patrol Cutter]. And without getting into much more detail beyond that, there’s opportunities that exist across the board that we’re going to continue to look at and to pursue. “
Asked by USNI News if the range of work – from unmanned vessels to amphibious ships to Military Sealift Command support ships to Coast Guard cutters – spurred Austal to take a leap of faith and expand the shipyard now, Perciavalle said, “this is something that Austal’s done in the past, so been there done that. We leaned into the facility that we have today, committing much of those funds before (LCS) block buys were even awarded back in the ‘09 and 2010 time period. We have seen where the Navy looks like they’re going, and we’re leaning into those requirements going forward. There seems to be opportunities both on the steel ship side of things as well as aluminum, and we’re going to leverage our strength and what we’ve been able to do from an aluminum perspective, and take those same strengths and transition adding the steel capabilities.”
“So yeah, it’s pretty interesting times, it’s pretty exciting. We’ve proven in the past that we’re pretty darn good at building lots of ships in a relatively short period of time. I think we’ve delivered 23 surface ships to the Navy over the last just over seven and a half years,” he continued.
“We believe there’s value in that for the Navy and trying to expand to 355 in a reasonable timeframe, and I think leveraging the industrial base that we have here in Mobile is going to be important to the Navy’s ability to do that.”
In addition to the physical expansion of the yard through the recent acquisition, Austal and the Defense Department are spending $100 million to bring a steel shipbuilding capability to the yard that today only builds aluminum ships. DoD offered its half under the Defense Production Act Title III (DPA) Agreement “to maintain, protect, and expand critical domestic shipbuilding and maintenance capacity,” according to a DoD announcement. The money, appropriated as part of the coronavirus pandemic relief bill passed by Congress in the spring, will not only help the Navy industrial base but will “accelerat[e] pandemic recovery efforts in the Gulf Coast region” by supporting the economy.
Perciavalle said the yard decided to match the contract with its own $50 million investment in the steel shipbuilding capability.
Perciavalle said another growth area for Austal is likely to be ship repair, though the Navy has not made its intentions public yet.
Austal is somewhat challenged in that every single LCS it has built is stationed in San Diego, which is a Panama Canal transit away. The San Diego ship repair industrial base is under pressure to keep up with the Navy’s growing surface ship maintenance and modernization needs, and although Austal has a support office in San Diego and can contribute to pier-side work at the naval base, it cannot take on maintenance availabilities on its own yet.
“The Navy’s aware of our interest in expanding our service business, and I think given the fact that they’re looking for increased capacity in that regard, I think it’s welcome,” he said.
“And then we’ll just see how things go both here in Mobile, obviously continuing to support efforts on the West Coast, and then in Singapore,” where Austal has an office to support forward-deployed LCSs operating in the Indo-Pacific region.
USNI News previously reported that Austal was trying to conduct some LCS work in Mobile after sea trials and ship delivery, but before the ships headed through the canal and onto San Diego. Perciavalle said that has continued, but that the ships are coming out of the yard with very little work waiting to be done during the post-shakedown availability. He said he hopes the Navy and the yard can find a way to bring more repair work to Mobile, to ease the strain in San Diego and to fully leverage the dry dock the yard now owns.
Additionally, while his focus is maintaining the ships that Austal built, Perciavalle said “the sky is the limit” in terms of the yard taking on repair and modernization work for Military Sealift Command ships, Coast Guard ships or commercial vessels.
“The facility has been in the past supporting various markets and will continue to do that going forward,” he said of the newly purchased property that also includes deep-water berthing space for in-water repairs in addition to the dry dock for out-of-water repairs.
He noted that the team operating out of Singapore had contributed to the success of overlapping USS Montgomery (LCS-8) and USS Gabrielle Giffords (LCS-10) deployments there and that Austal planned to maintain or grow its presence in Singapore.
“Our game plan is there will be at least two ships there going forward, we are fully prepared to support having two ships in Singapore or more,” as well as sending flyaway teams or setting up offices anywhere else the Navy chooses to hub the LCSs or EPFs around the globe.