Australian shipbuilder Austal has entered into an agreement to buy new land and dry dock facilities on Mobile’s waterfront that will help it compete for steel shipbuilding contracts from the United States Navy.
In an announcement Monday, Austal USA confirmed it had entered into an agreement with Modern American Recycling and Repair Services of Alabama (MARRS) that would secure more than 15 acres of waterfront property, buildings, and other assets adjacent to Austal’s U.S. shipyard in Mobile.
The company’s existing footprint continues to produce aluminum-hulled ships like the Littoral Combat Ship (LCS) and Expeditionary Fast Transport (EPF) for the United States Navy, but the acquisition of the MARRS property would allow it to move into steel ship production as well.
While the exact price is unclear, information released by Austal suggests the purchase would cost less than $10 million and be funded from cash holdings following a record year of profits for the Australian shipbuilder.
During an annual earnings call on Monday, CEO David Singleton mentioned the expansion of steel shipbuilding in Mobile among Austal’s opportunities for future growth.
“These opportunities include the development of a modern steel shipbuilding capability at our shipyard in Mobile, Alabama, which has already begun,” Singleton said. “This investment in steel shipbuilding will supplement our existing aluminum capability and allow Austal USA to compete for a number of new, major steel shipbuilding programs in Austal’s size range that are expected to be tendered in the medium term.”
A spokesperson for Austal’s facility in Mobile said local representatives would offer additional comments after the land deal with MARRS closes, which is expected to occur over the next few weeks.
The planned acquisition comes on heels of news earlier this year that Austal USA will receive $50 million from the U.S. Department of Defense over the next two years, at least some of which will help develop its capacity to construct steel naval vessels. Austal has previously indicated it would match those DOD funds, bringing the total investment into its Mobile shipyard close to $100 million.
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