Shipbuilders Seek Australia Orders as Jobs Seen at Risk

Shipbuilders in Australia are trying to lock in defense contracts with Prime Minister Tony Abbott’s government as the nation’s biggest manufacturing union warned the industry may lose 3,000 jobs unless projects are secured.

BAE Systems Plc (BA/), Europe’s largest defense company, and Forgacs Engineering Pty, the nation’s biggest privately owned shipbuilding and repair company, said they are in talks with the government over the future pipeline of work.

Naval shipbuilders are seeking a “commitment to a rolling build and to some certainty for the industry,” said Glenn Thompson, assistant national secretary of the Australian Manufacturing Workers’ Union, which says the workforce could be cut to 1,000 from 4,000 within two years.

Abbott’s government, elected in September pledging to create 2 million jobs within a decade, faces a manufacturing sector squeezed by an elevated currency and high labor costs. About 50,000 jobs in the nation’s auto and parts industry are in jeopardy after Toyota Motor Corp. this month followed Ford Motor Co. (F) and General Motors Co. (GM) in announcing plans to quit making cars in the country, while Alcoa Inc. this week said it will close an aluminum smelter and two mills with the loss of 980 jobs.

“We are in discussions with the Australian government in relation to whether or not work can be found that would secure the longer term future of the Williamstown shipyard” in Melbourne that employs about 1,000 workers, BAE Systems Australia spokesman Simon Latimer said by phone from Adelaide. The company manufactures naval ships and submarines, and current production and design work ends in 2015.

Job Threat

Forgacs has held talks with state and federal governments over “the imminent threat to jobs and the economic impact of interruptions to the naval manufacturing pipeline,” the New South Wales state-based company said today in an e-mailed statement. The company is part of a team building the A$8 billion ($7.2 billion) Hobart Class Air Warfare Destroyers for the Australian defense force, according to its website.

Australia has long-term plans to acquire about 80 ships, from submarines to an Antarctic icebreaker, at a cost of more than A$100 billion, according to the union.

Bringing forward the construction of at least two navy supply ships and setting out a timetable for the design and construction of patrol boats and warships would protect jobs, Thompson said. The union, which represents about 100,000 workers, will meet with the government next month, he said.

Defense Minister David Johnston is examining options on the naval shipbuilding program, he said today in an e-mailed statement. A new defense white paper and 10-year defense capability plan will be published before April 2015 “to give authoritative guidance to defense and provide a logical and sustainable basis for investment and procurement decisions,” he said.

To contact the reporter on this story: David Stringer in Melbourne at dstringer3@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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