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Austal USA gets $50 million to steel itself for the future

LCS 26, the future USS Mobile, was christened at Austal USA in Mobile, Ala., on Dec. 7, 2019.

LAWRENCE SPECKER, AL.COM/TNS

By LAWRENCE SPECKER | (Birmingham) Alabama Media Group | Published: June 23, 2020

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BIRMINGHAM, Ala. (Tribune News Service) — A $50 million federal shot in the arm for Mobile-based Austal USA is intended to offset effects of the COVID-19 pandemic and will help the shipbuilder gear up to build steel ships.

The developments were announced in recent days by the Department of Defense and Austal USA’s Australian parent company, Austal Limited. The Department of Defense announced that it was allocating $187 million in five actions under the Defense Production Act Title III “to help sustain and strengthen essential domestic industrial base capabilities and defense-critical workforce in shipbuilding, aircraft manufacturing, and clothing and textiles.”

The money comes from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in response to the economic impacts of the coronavirus shutdown. According to a statement attributed to Department of Defense Spokesman Lt. Col. Mike Andrews, the boon to Austal “will protect jobs and bolster the local economy in a region hit hard by the COVID-19 pandemic and ensure critical capabilities are retained in support of U.S. Navy operational readiness.”

A statement from Austal Limited said that subject to Department of Defense approval, Austal “intends to use the funds to commence investment in the development of additional capacity for steel naval vessel construction at the Mobile shipyard.” Austal also said it likely will match the funding, raising the total investment to about $100 million.

The money will fund “capital projects that will be executed over the next 24 months, beginning in June 2020.”

Though the Department of Defense and Austal announcements did not refer to it, the funding follows news earlier this year that the Navy had awarded a major contract for a new class of frigates to a different shipbuilder. A win in that competition would have guaranteed years of work after Austal finished the ships currently on order.

The shipyard builds two aluminum vessels for the Navy: A futuristic Littoral Combat Ship and a multipurpose catamaran called the Expeditionary Fast Transport (EPF). It will take several years to finish the ships currently on order, but the Navy has made clear that it intends to order no more LCSs and the prospects for more EPF orders remain uncertain despite interest in a new medical variant.

Austal USA’s specialization in aluminum shipbuilding has set it apart, but also has been seen by some as a liability when it comes to ships that could have to withstand heavy battle damage. Branching out into steel construction could improve Austal’s ability to compete for Navy work and could help maintain its workforce of about 4,000 people.

The other recipients announced by the Department of Defense were Weber Metals Inc. of California, which will receive $25 million, GE Aviation, which will receive $55 million, uniform maker American Woolen Company of Connecticut, which will receive $2 million, and W International of South Carolina, which will receive $55 million “to maintain, protect, and expand critical domestic industrial base capability for the U.S. Navy nuclear shipbuilding industry.”

In other recent developments, Austal Limited announced that the Navy had awarded Austal USA a contract modification worth up to $43 million for “LCS Class design services, material to support LCS Class design services and the US Navy’s Integrated Data Product Model Environment (IDPME).”

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