Tide Turns On Adi

Newcastle Herald

Friday June 27, 2003

Tide turns on ADI

IN cutting ADI from a short list of three contenders for a $750 million contract to build a fleet of Navy patrol boats, the Federal Government has all but ended Newcastle's days as a shipbuilding port.

In a short notice posted on a government website after the close of business on Wednesday night, the Defence Department said two Western Australian shipbuilders remained after ``the setting aside of ADI's bid as not sufficiently competitive in value for money terms".

As word filtered out from Canberra, it appeared that the Government had not bothered to warn any of the affected parties about the impending decision.

Everyone the politicians, the bureaucrats and the defence chiefs knew the impact that their action would have.

ADI came to Newcastle after winning the $1 billion Huon class minehunter project in 1994, and had been quietly but firmly warning that the factory it had purpose built for the six fibreglass boats was likely to close if it did not win another major contract.

The Forgacs shipyard at Tomago is still in business, but not a single new ship has emerged from the once busy site since the receivers were called into then-owners Carrington Slipways in 1990.

In leaving word of ADI's exclusion to spread by itself, Canberra has not had the courage to look the victims of its actions in the eye.

For the past 20 years, most of Australia's government-owned shipyards and defence companies have been closed or sold. ADI, for example, is the privatised Australian Defence Industries.

Cost of competition

The shift to tenders and private sector contracts was pushed by economists as being more efficient.

But the unfortunate side effect is that each successive contract requires a number of bidders to ensure competition, and all but one of these are destined to fail.

The minehunter contract is the only success the Hunter has had in four tilts at major naval contracts. The Collins class submarines in 1987 and the ANZAC frigates in 1989 were emotional and draining losses for the community.

Then, as now, it is difficult to avoid the conclusion that politics, and not bid quality, may have come into play, especially as the preferred tenderer should have been announced months ago.

Defence said ADI was cut from the tender because of cost, but while details of the three bids remain confidential, a Defence department report comparing fibreglass with steel and aluminium suggested that ADI's designs should have been cheaper to build and operate.

ADI, hoping to salvage something from the mess, is unwilling to criticise the government, but this is the time for our MPs to do the job they are paid to do, and take the company's concerns along with those of the wider region to Canberra.

The current federal administration might be wedded to the idea of a rationalised shipbuilding industry, based at Adelaide and perhaps one other port.

But that does not make it a good idea, or mean that we have to accept it.