Full steam ahead: Austal call to up export finance

David Singleton, the outgoing chief executive of shipbuilder Austal, has called on the federal government to broaden and deepen Export Finance Australia.

Austal chief executive Patrick Gregg with predecessor David Singleton in Perth on Wednesday. Picture: Colin Murty

David Singleton, the outgoing chief executive of shipbuilder Austal, has called on the federal government to broaden and deepen Export Finance Australia, saying the agency has the power to turbocharge local manufacturing and be a “real weapon in the export war”.

Austal, which supplies 15 per cent of the US Navy’s entire fleet, has flown largely under the radar despite doubling its business in the past three years and opening shipbuilding yards in Vietnam and The Philippines.

Mr Singleton — who will step down at the start of next year, handing over to Austal’s chief operating officer Patrick Gregg — said the company had kept a relative low profile because it had largely achieved its success “far away” in the US.

While he said research and development tax incentives were an important part of retaining local manufacturing, Export Finance Australia could help further propel the sector.

“If you think about Australia as a country, we are a high intellectual property-style of country. We are not a low-wage economy. And what will fire up industry and technology-based industries in this country is continuing to assist through the R&D tax credits,” Mr Singleton told The Australian.

“But the other area I’d focus on is the use of Export Finance Australia, who are a real weapon in the export war. They are a tremendously capable group able to assist in the finance associated with exporting and can help take some of the risk.

“When they get into action, they can do a lot of good. One of the things to look at is how can they expand, broaden and deepen their involvement in export industries in this country.”

Export Finance Australia is the commonwealth’s export credit agency, supporting businesses and governments in international trade through loans, guarantees, bonds and insurance options. Last year it completed 147 transactions with $377.6m of facilities, supporting $2.29bn of export contracts.

Despite Austal missing out on the opportunity to build the new American frigate and a potential $US5.5bn pipeline of business, Mr Singleton said the company still had plenty of work with the US Navy and local defence force, including winning a $324m Australian government contract to build six new Cape Class patrol vessels.

He said Austal’s local operations in Henderson, about an hour south of Perth, were becoming more important amid heightened geopolitical tensions in the South China Sea.

“Back in the Obama period he talked about the pivot of the US forces into Asia. Now because of budget constraints he didn’t do a great deal about it but a lot of planning was put in place.

“And what we are now seeing with the US is that pivot. First of all there is a very significant increase in the US Navy — around about 20 per cent — and there is a change in the operational make-up of the US Navy as it goes towards more unmanned surface vessels. Both of those factors are extremely important and positive for Austal.

“For the first time, Austal home base in Australia is in the centre of what is now arguably the most important strategic region in the world. The opportunities for the business remain really strong going forward.” Mr Singleton said that three and a half years ago he handpicked Mr Gregg to succeed him.

Both men have a similar pedigree, coming from British defence giant BAE Systems, although Mr Singleton said they didn’t know each other during their time at the company.

He said Mr Gregg had been crucial in shaping Austal’s success over the past three years. Mr Gregg said Austal’s future wasn’t solely tied to defence and highlighted the company’s trimaran ferry business as another key area of growth.

“We have demonstrated over the last couple of years that we will move right across the market,” he said.

“David talked about the pinnacle in high-speed ferries in trimarans and we will continue to progress with what we believe is a far superior product and how we tailor them to specific customers and routes.”

Austal has built more than 300 of these ferries for more than 50 countries, recently finishing construction of one to go between Japan and Korea.

Mr Singleton said most people thought ferries were the small vessels shuttling commuters around Sydney Harbour. But he said Austal’s ferries were more sophisticated.

“If the ferries around Sydney are Hyundai i20, what we build is a high-speed Ferrari. They are remarkably different vessels.”

Mr Gregg will start his new role on January 1 next year.