Marine industry: we have the skills

New Zealand shipbuilders say the $500 million contract to re-equip the Navy should go to local industry and energise a vital business, writes ELLEN READ.

The America's Cup, super yachts and the Anzac frigates have meant hundreds of millions of dollars of work for New Zealand's marine industry.

Now the industry is banding together to make sure the dollars keep coming, by snaring a $500-million Government contract to re-equip the Navy.

Almost half the money will be spent on a new multi-role vessel to support military operations, relief projects and to patrol New Zealand waters. The other $250 million will pay for at least two new speedy deep-water patrol boats, and for upgrading or replacing the Navy's five inshore patrol boats.

Announcing the package in January, Defence Minister Mark Burton said New Zealand shipbuilding companies would be particularly encouraged to submit proposals. Strong interest is also expected from Singapore, Australia, Britain and South Korea.

Tenders have yet to be called, but one group is already working to make sure New Zealand companies get the lion's share of the work.

Tenix Shipbuilding and Babcock New Zealand, which worked together on the Anzac ship programme, have announced that they are joining to tender to build and support the ships in New Zealand.

Tenix is the prime contractor for the Anzac ship project and is in the process of delivering 10 frigates - two for New Zealand and eight for Australia.

More than 500 New Zealand companies have provided $800 million of components to the project. In the process, those companies acquired technology, upgraded quality systems, won long-term supply contracts, gained new export orders and became more competitive internationally.

Babcock is New Zealand's largest integrated mechanical, electrical and electronic engineering facility, supplying products and services to international naval and commercial customers. Babcock New Zealand is based at the Devonport dockyard, where it supports the Navy fleet.

Another potential contender is Australian Defence Industries. The firm, formerly owned by the Australian Government, is said to be considering building the vessel in Wellington if it wins the contract.

If either of these bids is successful, what does it mean for New Zealand business?

The Ministry of Defence hopes to have registration of interest documents out in the next few weeks and liaison officer Tom Just says he already has boxes full of letters of interest from companies around the world.

Until the details of the job are released, he says, it is hard to judge how much flow-on work will be available for New Zealand.

But, as a guide, between two-thirds and three-quarters of the $1.25 billion Anzac contract was spent in New Zealand.

Plenty of New Zealand companies are already putting their hands up for the work.

About 150 business gathered in Auckland this week for an industry seminar on the defence contract, organised by Tenix. Similar seminars are being held around the country.

Those attending were told that Tenix and Babcock had compelling reasons for the ships being built and supported in New Zealand:

* They can be built here competitively with New Zealand content of more than 60 per cent.

* With a relatively minor upgrade to present facilities, the ships can be built, launched and outfitted here.

* Companies in New Zealand can competitively supply components for the ships as they have done on the Anzac ship project.

* Ships built here can then be supported more cheaply and effectively than those built overseas.

* A large long-term contract allows for more staff training.

* The facilities established will offer a major benefit to the growing marine industry.



* The project is a natural extension of the Anzac success.

Peter Busfield, chief executive of the Boating Industries Association, says winning the Navy contract could be as important for the marine industry as the America's Cup has been to the superyacht business.

Busfield describes the marine manufacturing industry as the country's largest non-agricultural based exporter and a $700 million a year business.

Over the past four years, he says, the industry's exports have grown by 23 per cent a year, but new opportunities are needed to maintain that growth.

"If the country wishes to diversify beyond agriculture we must take these opportunities" says Busfield. "The marine industry is still light on building commercial vessels.

"We can use this to prove to other countries the capability we have to build these kind of craft, leading to ongoing opportunities from defence around the world."

The options are not limited to Whangerei; even Dunedin and Invercargill are capable of building a medium-sized hull, says Busfield.

Lower Hutt is a potential site for an Australian Defence Industries operation, and Taranaki is also keen to do at least some of the work.

New Plymouth MP Harry Duynhoven says that because of the petrochemical industry, the region's engineering industry is the most varied in the country.

He says a lot of fabrication work could be done in Taranaki then moved to wherever the shipyard is.

Brian Souness, from the Engineering Taranaki Consortium which represents the region's engineering firms and does marketing work overseas, agrees that Taranaki companies could do some of the work and says they have worked on the Anzac frigates.

The Northland Regional Council is also keen to make sure the work comes to its part of the country.

"The worst that can happen is for the work to go overseas, that would just be stupid," says chairman Mark Farnsworth.

"Whangarei has a really good track record from the frigate work and the ripple effects were felt throughout the country."

Tenix Defence managing director Robert Salteri and Babcock New Zealand chief executive Mike Franklin say their companies have the facilities, the skills, the track record and the New Zealand industry connections to meet the Navy's requirements.

Salteri says the New Zealand build programme - a requirement of the Anzac ship project - has delivered substantial benefits to the country through jobs, capability and infrastructure.

Des Ashton, chairman of the Defence Industry Committee - industry representatives, the Ministry of Defence and Trade New Zealand - says the Navy project is "a great opportunity for New Zealand industry".

"If the boat happens to be built in one area, work will still be available in all parts of the country. Lots of companies will be looking to develop partnerships."

Tenix believes that New Zealand's relatively low labour costs, the effectiveness of the labour force and the exchange rate all make it possible to compete internationally, particularly for projects of this size.

And as the ships are likely to be in and around New Zealand for the next 30 to 40 years, it will be much more cost effective to maintain them if they are built here.

nzherald.co.nz/marine