Australia's embattled naval shipbuilding industry will be thrown a lifeline by Defence Minister Kevin Andrews, who will present a plan for continuous construction of warships to avoid periodic job losses and shore up political support across three states.
Mr Andrews will on Tuesday reveal the Abbott government is considering "a continuous build strategy" for more than $100 billion in new warships, submarines and other naval vessels over the next 20 years.
But he will warn that the industry must lift woeful productivity on existing big ship projects, that there may not be room for as many shipbuilders in the future and that warships may have to be retired from service much earlier than is currently the case for the scheme to work.
The naval shipbuilding industry is currently going through a periodic trough due to a lack of new ship projects, which means thousands of jobs are likely to be shed over the next two years.
Layoffs have already started at BAE Systems Australia's Williamstown shipyard in Melbourne, which has up to 1400 employees, at Forgacs' shipyard in Newcastle, which has up to 900 employees, and at Adelaide-based government-owned ASC, which boasts 1100 jobs.
Any rolling construction plan is likely to be released with a new Defence white paper in an effort to shore up jobs and political support in South Australia, Victoria and NSW ahead of a federal election.
"One of the options we're looking at to sustain a shipbuilding industrial base and avoid [the] peaks and troughs we are experiencing –*and have experienced in the past –*is the feasibility of a continuous build strategy, with the regular pace of delivering new warships," Mr Andrews will tell an Australian Strategic Policy Institute conference on the future of Australia's navy warship fleet in Canberra.
"By adopting such an approach the industry would no longer be characterised by a stop-start approach to naval shipbuilding.
"This would require Defence to carefully manage its acquisition processes and keep future frigates operational for relatively less time than has been the norm to date."
'HARD DECISIONS' REQUIRED
Mr Andrews will say the current approach isn't working because it is expensive, provides no long-term certainty to workers, and doesn't enable industry to plan investment or provide the necessary skills base.
He will say that "the only way Australia can continue to have a naval shipbuilding industry is if the industry is properly structured to drive efficiencies and improve productivity. This will require hard decisions and a commitment to a productivity-based culture from all parties –*including unions."
Unlike in Japan, where a continuous build program for its submarines means boats are built at a steady rate and one is retired as another is built, Australian governments tend to have gaps of years between build programs.
Though Mr Andrews has announced a new program to build 21 patrol boats for Pacific nations which is being keenly contested by shipbuilders such as BAE Systems, this is not a big enough program to fill the so-called "valley of death" as the jobs trough is now known.
A review of naval shipbuilding found Australia may not be able to support two big shipbuilders and recommended a tie-up between BAE Systems and ASC's shipbuilding arm.*
Fabrication flaws on the $8.5 billion program to build three 6500-tonne air warfare destroyers in Adelaide have delayed the project by two years and seen costs blow out by $800 million.
The $3 billion project to build two 29,000-tonne large troop transport ships is also winding down.
The government came in for heavy criticism from the SA government and shipbuilding unions after it opted to go offshore for a $1 billion project to acquire two 19,500-tonne refuelling ships late last year.
But it is expected to spend $25 billion building up to eight new frigates to replace the by then ageing existing fleet by the mid-2020s.
