COLUMN | Shipbuilding in Australia: why would you do it? [The Boroscope]

COLUMN | Shipbuilding in Australia: why would you do it? [The Boroscope]

Incat's shipyard in Hobart (Photo: Incat)

As any shipowner knows, there is a huge advantage being close to the shipbuilder being entrusted with the construction of an asset that will last about 25 years. This intangible value cannot be readily calculated nor is it factored into the sale price of the ship.

The award of the replacement vessels by the Tasmanian Government-owned TT Line to Finnish company Rauma Marine cannot pass without comment. To award the contract to a company literally on the other side of the planet in preference to an established high-speed Ro-Pax builder almost on your doorstep almost beggars belief.

Incat, a proven Tasmanian shipbuilder, has built almost forty large high-speed catamarans, most of which would be eminently capable of operating the Bass Strait service vacated by the Spirit of Tasmania 1 and 2. Incat has just delivered the world’s fastest ship, HSC Francisco, a 58-knot, 111-metre high speed ferry that can accommodate almost 1,200 passengers and 595 lane metres of vehicles and freight. Incat’s credentials speak for themselves when it comes to delivering vessels of this type.

So why build ferries in Finland? One can only speculate that the price differential was massive, which I doubt. Consider other factors that influence a decision to build in northern Europe. I struggle to think of any. The benefits of local builds have so many advantages that impact the local economy.

The contract price of a newbuild is made up of four components:

  • Direct shipyard labour costs
  • Material and equipment costs (shipbuilding aluminium alloy and fit-out equipment)
  • Shipyard on-costs (insurance, depreciation, fixed overheads)
  • A profit margin

I’ll leave the reader to work out how many of these factors impact the local economy.

And let’s not forget that building ships locally produces more than just shipyard workers’ jobs. All Tasmanians benefit. Building in Finland means all this money is paid by the Tasmanian taxpayer with no local benefit. There are no returns to the local economy at all.

The warranty issues, of which there are many, can be quickly addressed by a local builder. A northern European builder will see the vessels as “over-the-horizon” and someone else’s problem once they are delivered.

Commissioning and staff familiarisation is an expensive expense for owners. Sending a superintendent, a master and an engineer half way around the world then accommodating them in a hotel for a long period doesn’t even enter in contention for a local build. Invariably, with even with proven high-speed craft designs, there will be teething problems better solved before the ship leaves the yard.

Then, of course, there is the delivery cost of two ships from the other side of the world to Tasmania, not an insignificant figure to be factored in.

I noticed that Incat’s chief, Bob Clifford, was “extremely disappointed” with the decision. A very measured and diplomatic response if ever there was one. I’d love to know his private thoughts on the matter.

“Why are we buying overseas when we have world-class builders on our doorstep?”

Incat’s credentials are well proven. It is a world class builder in a niche industry. Not only a survivor in Australian shipbuilding but an innovator and world leader. Australia once had a robust shipbuilding industry that started in earnest just after World War I. it grew on the strength of Australian-produced steel and of course much later, the very lucrative Ship Building Bounty.

But even before World War I, the Walkers shipyard in Maryborough in Queensland was building ships (the company still exists but doesn’t build ships anymore). The list of major shipyards from the 1920s onwards is impressive. Some fourteen yards building big ships (for the time). BHP’s Whyalla Shipyard and Newcastle State Dockyard were two yards that benefited by having steelworks literally just down the road.

There were others. Cockatoo Docks in Sydney, Williamstown in Victoria and Walkers in Queensland, all builders of naval vessels. Cairnscross in Brisbane, Adelaide Ship Construction, Carrington Slipways and Australian Shipbuilding Industries add to the list. Of the fourteen or so big shipyards, only two remain: Austal in Western Australia and Incat in Tasmania. They are builders of state-of-the-art high-speed Ro-Ros and Ro-Paxes – just what is needed for the Bass Strait run.

The rest have fallen by the wayside. Why? A combination of ship sizes outgrowing their building capacity, the loss of the Shipbuilding Bounty, plagued by industrial problems and an ongoing disinterest by successive governments. Australia has lost more than these shipyards. We’ve lost shipbuilding skills, technology and the support and repair facilities.

But Austal and Incat, both Australian companies, have flourished in spite of this. They lead the world in high-speed light craft design and construction.

The Tasmanian Government should be called to account for their decision to award the contract for the replacement ferries. Not least of which is the loss of Tasmanian jobs. In a world in which Australia is increasingly becoming isolated, we are dependent on almost everything from overseas. Why have these contracts been awarded to a foreign shipyard? We should be building our own ships, retaining the skills and expertise, generating jobs and stimulating the local economy. Why are we buying overseas when we have world-class builders on our doorstep?

“I don’t know the statistics for Bass Strait but I’m sure they measure the weather in the number of fine days rather than the rough ones.”

There’s a strong belief that Bass Strait is consistently the wildest sea in the world. Ask any seafarer who’s had the misfortune to ply those waters. Or any Tasmanian who’s made the crossing. It’s just the right latitude to funnel the storm-driven weather of the roaring forties and combine it with the southerly storms up the east coast of Australia to form one of the most consistently hostile stretches of water in the world.

Some would argue that the infamous North Sea, the Bay of Biscay or the North Atlantic can challenge for this honour but can they keep up the rage? Bass Strait is a user-unfriendly stretch of water all year round. From personal experience I can attest to Bass Strait’s contempt for seafarers. One small ship I was on would submerge to periscope depth crossing Bass Strait, sometimes taking days to push across the 240 miles of short-pitched seas.

On really rough days we would hide in Bell Bay until we a had enough courage (and horsepower) to venture out into the Strait. It was the only place where I experienced the heart-stopping sensation of broaching in a following sea. Our little ship virtually surfed down a swell and slewed side-on to the sea before we completed a turn into the weather. To be fair, I had two swings on different ships and I did experience calm weather, once! It didn’t last long.

And what a place to discover oil. We could only sympathise with the crews of the offshore supply vessels running out from Barry Beach to the awaiting sea. There’s a story of a Carrington Slipways boy who won the Apprentice of the Year award. Amongst the prizes he received was a week on a Bass Strait supply boat. The standing joke was that the boy who came second got two weeks!

I don’t know the statistics for Bass Strait but I’m sure they measure the weather in the number of fine days rather than the rough ones. Mates on this run have complained of continual seasickness and exhaustion from the battering on what is a relatively short sea voyage.

Some will remember the belting that Spirit of Tasmania 1 took in 2005. Twenty-metre waves stove in cabin windows just below the bridge and forced the captain to turn back to Melbourne. Spirit of Tasmania 1 is owned by TT Line, one of three operators that have a regular service across these hostile waters, and the only company that carries passengers.

During times when their ships have been to drydock or out of service, they have used the high-speed wave piercing catamarans. Tascat and Devilcat (both built by Incat in Hobart) are wave-piercers. These older cats did incur some slamming damage but the designer has developed a hull shape that alleviates this problem.

The TT Line ships operate with the benefit of the “Freight Equalisation Scheme”, a government freight subsidiary scheme that reduces shipper’s costs and eventually flows down to shipping companies. Almost a form of cabotage but not quite. But in reality, who would attempt such a hazardous service without some sort of assistance.

“Ultimately, Tasmanians will be the ones that have to pay for this folly of having ships built on the other side of the world.”

The aging sister ships, the 28-knot displacement monohulls Spirit of Tasmania 1 and Spirit of Tasmania 2, both have capacity for 1,400 passengers and over 1,400 lane metres of vehicle space, but at high speed they just devour fuel.

Rauma Marine Constructions of Finland have been chosen as the successful bidder for the new ships. Again, large displacement high speed monohulls have been chosen. A controversial decision given there is a proven high-speed wave-piercing ship builder just down the road (so to speak)..

Can we build them in Australia? These days we don’t have any shipbuilders who can deliver large fast monohulls. The two remaining Australian yards, Austal and Incat, are recognised worldwide for their reputation and success with high-speed aluminium alloy wave piercing multihulls. Their wave piercers have been so successful that they have clients from all over the world.

The Tasmanian government and the TT Line will pay a huge premium having ships built on the other side of the world. And ultimately, Tasmanians will be the ones that have to pay for this folly.

Kent Stewart

Founder of Maritime Engineers, a multi-region maritime consultancy with clients in the oil and gas industry, navy, commercial shipping and marine insurance, Kent Stewart is our resident expert on commercial shipping and the offshore industries.