Austal USA, a global manufacturer of defense and commercial ships won a new contract to build two littoral combat ships. Austal will bag an estimated $1.6 billion for manufacturing two combat ships for the US Navy. The US Department of Defense revealed that Austal bagged the order for two out of three warships approved under its fiscal budget for 2019. The news comes three months after Austal USA won two out of three orders for combat ships sanctioned under the US Department of Defense’s 2018 fiscal budget. The cost of building each vessel has been capped at $US584 million.
While the third ship to be manufactured is still up for grabs, the two combat ships won by Austal will be the company’s 18th and 19th creation in the aluminum trimaran-variant category under a program that commenced the manufacturing of such ships a decade ago. The company is expected to bag an overall amount of $1.6 billion for manufacturing the littoral combat ships. Further, the contract will extend Austal’s ship manufacturing out of its Alabama shipyard to 2025. Another notable development that is expected to drive the Australian-based warships manufacturing market value is Australia’s Export Finance and Insurance Corporation announcement of lending $80 million to Trinidad and Tobago. The Trinidad and Tobago government will use the money for purchasing two Cape class patrol boats from Austal. The Australian government also plans to help Austal to strengthen the country’s defense exports by providing the company with its Efic’s Defense Export facility. The company’s shares were up 5.5 cents on account of the key developments.
The US navy further plans to award contracts for building next-generation frigates which are expected to be capped at $850 million per warship including the weapon systems that will be used in the production of the ship. While Austal is a leading competitor for the same other companies that are in the forefront include Lockheed Martin, General Dynamics Bath Work, Huntington Ingalls, and Fincantieri Marine. The concept designs for the frigates are due to be submitted by the end of the year while tenders for the project need to be submitted in 2019. The US Defense Department is expected to announce their decision of awarding the contract to the deserving contender in late 2020. Earlier this month, Austal also won the contract for procuring long lead-time materials required for constructing US Navy’s 14th Expeditionary Fast Transport (EPF) vessel which was valued at $40.4 million. In October, the company had already received a procurement contract for providing long lead-time materials for the 13th EPF.