Philippines - the 4th biggest shipbuilder in the World - AUSTAL

Austal to set up shipyard in Balamban Cebu –

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Austal hopes to begin producing vessels from a third shipyard early next year after sealing a $12 million deal to open a new regional beachhead in the Philippines.

Under an agreement flagged last month but closed on the weekend, Austal has bought a small shipyard in the West Cebu Industrial Park at Balamban on the island of Cebu for $7 million and plans to invest a further $5 million to ensure it is ready to begin operations in the March quarter, subject to orders.

The investment is a linchpin in Austal's bid to revive its business in small commercial vessels, including ferries and work boats, which have been seriously diminished by the high Australian dollar.

It says cheaper costs, particularly for skilled labor, will enable the Philippines yard to better compete for such work.

Identifying the yard for the first time - it was previously operated by Philippines company FBMA Marine - Austal said it hoped to quickly increase its workforce from about 30 at start-up, adding that the 60,000sqm site could be easily expanded to meet improved demand.

FBMA closed the yard in 2009 after orders tanked in the wake of the global financial crisis. It turned out 22 vessels over 12 years for clients in Australia, Europe, the US and Asia, making its last delivery - a catamaran for New Caledonia - in September 2008.

Austal believes the site is readymade to produce its flagship aluminum designs and says its experience from developing its large shipyard in Alabama in the US from scratch will stand it in good stead. The Mobile yard has more than 1500 employees on long-term, multi-billion-dollar contracts producing new generation warships for the US Navy.

With that US defense work accounting for about 80 per cent of Austal's $1.8 billion order book, the group is keen to ensure its Henderson shipyard remains relevant while establishing regional manufacturing hubs, such as Balamban Cebu.

The Philippines is the fourth- biggest shipbuilder in the world after Korea, China and Japan.

Under a strategic review completed by chief executive Andrew Bellamy this year, Austal has re- focused Henderson on defense and support work, chiefly patrol boats, while retaining the capacity to handle the bigger ferries that underpinned the group for so long and using its workforce and skills to push into new areas, such as accommodation facilities for the booming WA resources sector

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