Theresa May, Boris Johnson welcome $35bn warship contr act

Theresa May and Boris Johnson welcome the decision to award Australia’s $35bn warship contract to Britain.

BAE Systems’ Type 26 Global Combat Ship. Photo: Supplied

British Prime Minister Theresa May has hailed the decision to award BAE Systems with the $35 billion contract to build nine state-of-the-art warships for Australia as the biggest naval defence contract for a decade.

BAE was chosen to build nine British-designed warships in Adelaide, the first export of a British design for new-build frigates since the 1970s, over bids from Italy and Spain.

“While this is an enormous boost for the UK economy, it will also cement our strategic partnership with one of our oldest and closest friends for decades to come,’’ Ms May said.

“The agreement will secure more than 4000 jobs in Australia and also boost Britain’s export economy for generations to come, with huge opportunities set to arise which the Government believes the specialist knowledge and capability of British firms will be best placed to fulfil.’’

British Foreign Secretary Boris Johnson said the contract was “proof the UK-Australia relationship is stronger than ever’’.

Fantastic news that #Australia has chosen @BAESystemsplc Type 26 frigate for its new warship contract, worth up to £20bn. Even further proof the UK-Australia relationship is stronger than ever! https://t.co/GVRkdJqpnm

— Boris Johnson (@BorisJohnson) June 28, 2018

British International Trade Secretary Dr Liam Fox said: “The UK and Australia already enjoy a strong trading relationship worth more than £13 billion a year. Today’s announcement is a further boost to this relationship which will create significant opportunities for companies in both countries to deepen their trading ties.’’

The $35 billion contract to build nine of the world’s most cutting-edge warships in South Australia will see an “ecosystem based on engineering and advanced technology” spring up in the southern state, Malcolm Turnbull says.

The Prime Minister appeared to stumble on precisely how many jobs would be created directly in South Australia when questioned on ABC Radio Adelaide this morning, but corrected himself to say the figure is about 4000.

Mr Turnbull said the first steel will be cut for the frigates in 2020 but some of those workers will begin by building the OPVs (offshore patrol vessels) before the project escalates.

“This city (Osborne) will be one of the great naval shipbuilding cities in the world and it is my determination to build a sovereign shipbuilding industry in this country,” Mr Turnbull said.

“I don’t want to sour a great announcement with a partisan note but we have got to be truthful about this, during six years in power Labor did not commission a single vessel. We are still playing catch-up to an extent.

“The reality is we need to protect our maritime interests and the Labor Party did nothing for six years but the good news is this will become a centre of naval shipbuilding and the benefits for this, for South Australia, are immense and it’s not just counted in the jobs that will be directly involved in the construction at Osborne.

“You will see an ecosystem based on engineering and advanced technology will start to grow here in South Australia, this will be a dynamic game-changer.”

Mr Turnbull said the federal government believes having the UK giant BAE Systems both design and build the frigates is the responsible option and that, during the course of the build into the 2030s, it would have control of the Australian government-owned ASC Shipbuilding.

“It’s a requirement we made and would have applied to any successful tenderer,” Mr Turnbull said.

“The commonwealth will then resume ownership of ASC and by that stage you will have a much larger shipbuilding company with all of the intellectual property and all of the expertise and know-how associated with it.”