Future Frigates: Italian bidder Fincantieri would help Australia build and export own ships

THE Italian bidder for the $35 billion Future Frigates program has a “precise industry plan” that would make Australia capable of designing and exporting its own ships, above and beyond the military shipbuilding program, it says.

• Plan to increase Australia’s defence exports by billions of dollar
• Future frigates workforce may train at Fincantieri’s shipyards
• Documents show half of Future Frigates could be built overseas
• Australian shipbuilders locked out of frigates bid
• Defence stopped ASC from talking up shipbuilding capabilities

THE Italian bidder for the $35 billion Future Frigates program has a “precise industry plan” that would make Australia capable of designing and exporting its own ships, above and beyond the military shipbuilding program, it says.

Fincantieri has also revealed in briefings in Italy it expects to announce a winning bidder, or bidders, to build three cruise ship “blocks” in South Australia around the end of this month.

The company announced the cruise ship block build last year, and selected four SA companies — ASC Shipbuilding, Adelaide Ship Construction International, MG Engineering and Whyalla-based Ottoway Engineering — to bid to build the three, 50-100 tonne blocks, each about the size of a tennis court, which will be incorporated into a new cruise ship.

The block build is expected to create 40-50 jobs and is scheduled to begin in the second quarter of this year.

Fincantieri is one of three global defence companies, including British company BAE Systems and Spanish company Navantia, which are bidding for the SEA 5000 Future Frigates contract, which the Federal Government is expected to award by mid-year.

The program to build nine frigates is part of the overall $89 billion national shipbuilding program, which includes the Future Submarines program, which will start in Adelaide in the mid 2020s and the offshore patrol vessel build. The first two OPVs will be built in Adelaide starting this year before that program moves to Western Australia.

The Italian FREMM frigate Antonio Marceglia at its launch at the weekend.

Fincantieri Australia chairman Dario Deste said it was possible that steel from the Liberty OneSteel’s Whyalla steelworks could be used for the Future Frigate build.

If the Italian company were to win the bid, there would be an immediate rapid recruitment drive, with Mr Deste saying the ramp up of engineering was going to be “massive”.

“More than 150 Australians are intended to join the Italian Fremm project from 2018 in Italy, to train with Fincantieri, before returning to Australia to lead the project,’’ briefing documents say.

“More than a single shipbuilding project, Fincantieri plans to transfer the knowledge and technology to enable Australia to design and build naval vessels as a sovereign nation.

“From day one of the project, engineers and technicians will be trained, new factories and equipment built, and shipbuilding knowledge passed to Australian institutions and companies.

“The development of this new industry, will enable Australia to move beyond ship-assembly and maintenance, to design and build the internal equipment and components of naval vessels, ultimately developing and designing new naval vessels.

“Over the next 10 years Australia can double its advanced manufacturing capability for naval vessels and have the design and integration know-how to go with it.”

The company envisages also building non-naval vessels such as ferries, offshore oil and gas vessels and cruise ships for the export market also.

The Fincantieri plan to focus on exports as well as the domestic naval build ties in with the new Defence Export Strategy announced by Prime Minister Malcolm Turnbull recently, which aims to “grow Australia’s defence industry to become a top ten global defence exporter” by 2028.

A Fremm frigate at the Riva Trigoso shipyard.

A key element of the Italian pitch is that they have already delivered six Fremm frigates to the Italian navy, with a seventh — Marceglia — launched at the Riva Trigoso Shipyard over the weekend.

As such, it is expected that the production issues which affected the early Air Warfare Destroyers built at the Osborne shipyards by ASC, using a Navantia design would be avoided.

But Mr Deste was adamant that military vessels were just the start for Fincantieri in Australia, with the company aiming to make Adelaide a shipbuilding and mechanical equipment hub for the region.

While the company had 20 shipyards worldwide, including five in Norway and two in the US above and beyond its Italian presence, it did not have a large presence in Asia.

Fincantieri executive vice president naval vessels business unit Angelo Fusco said military shipbuilding was a great base to build exports, but “we see this program as a ramp for other activities”.

Mr Deste said the block build was a sign that Fincantieri, which already has an Adelaide office, was “very serious’’.

“There is a precise industry plan behind it.

“And when we talk about transfer of technology we are not talking about only being able to build the Fremm. We want a transfer of technology where Australia will be able to design their ship, any kind of ship … that’s our commitment.’’

Mr Deste said the plan to build a machinery factory, which could build products such as gearboxes, fin stabilisers and turbines, alongside the shipbuilding program, was also a key pillar of the company’s bid.

“It’s a great opportunity for us and for Australia to create a hub for these kinds of products.’’

If it wins the bid for the Future Frigates build, Fincantieri plans to list the local operations on the Australian Securities Exchange, by way on an initial public offer, giving Australians an opportunity to own part of the company.

That listing would be likely to take place once the business was “stable”, Mr Deste said. Fincantieri plans to start cutting steel in 2020 should it win the bid. Fincantieri would retain a controlling stake in the company.

The author travelled to Italy as a guest of Fincantieri

Italian-designed and made in Adelaide

WHAT ARE THEY USED FOR?

The Italian navy has two frigate types, general purpose and anti-submarine warfare.

THEIR DIMENSIONS?

144m long, 19.7m wide. Displacement 6700 tonnes, draft 8.4m.

CREW SIZE? 168

WHO IS FINCANTIERI?

Operator of 20 shipyards globally. Building the FREMM Frigates (the base design for the Australian bid) for Italy’s navy.

WHO’S BIDDING FOR OURS?

Fincantieri, BAE Systems and Navantia are short-listed. A final selection will be made this year.