Shifting the submarine maintenance contract from South Australia to Western Australia would not be in the national interest, a report by Flinders University has found.
South Australian government-commissioned analysis by Flinders’ Australian Industrial Transformation Institute concludes moving the Full Cycle Docking process from Adelaide would cost close to half a billion dollars and generate significant risks.
The report “Prime location. Optimising submarine sustainment in Australia” by AITI Director Professor John Spoehr and Dr Ann-Louise Hordacre found there is enormous strategic value in the mature naval shipbuilding and sustainment ecosystem at Osborne.
It finds Western Australia does not have experience in submarine Full Cycle Docking – which involves cutting submarines in two to remove engines and then re-welding – and would require a transfer of skills from SA, training scholarships, relocation costs, increased reliance on Fly-In-Fly-Out workers and incur substantial duplication expenses.
The report states that assembling the necessary capability to effectively execute major naval ship and submarine upgrades is challenging, and that “risks are magnified at sites where a critical mass of advanced naval shipbuilding skills and a mature supply chain are not in place.”
It is calculated it would cost $293 million to equip Western Australia’s Henderson site for FCD, and another $251 million in duplicated wages would be incurred during the transfer of work. Training costs would be some $29 million and FIFO costs would exceed $16 million.
“The case for relocation of Collins Class FCD to Western Australia has not been accompanied by evidence of any benefit to the nation,” the report says.
The report summarises that “relocation is likely to erode significant operational gains achieved by the FCD program at Osborne. The evidence available suggests that risks associated with relocation are unacceptable and that the costs would be substantially higher.
“A prudent course of action would be to strengthen the existing division of sustainment responsibilities between Osborne and Henderson. The case for maintaining all FCD at Osborne is overwhelming and the case for relocation to Henderson is unfounded.