Specialist Boat and Shipbuilding

BRIEFING NOTE SUMMARY
  • Cairns has a long and proud history of shipbuilding, with Defence and Coast Guard vessels, cruise ships, and passenger ferries being constructed in the region since 1954.
  • The Cairns Marine Precinct has proven capability in ship maintenance and sustainment, as well as pre-existing supply chain arrangements and infrastructure, and transferrable skills and knowledge that would ensure a ship and specialist vessel building industry could be quickly established.
  • Cairns is ideally located to play an important strategic role in any future foreign policy objectives in the Pacific. However, the industry needs further depth if it is called upon to play a strategic role in northern Australia
  • A commitment from the State and Federal Governments is sought to secure the long-term, continuous building of small specialist Defence vessels in Cairns, as well as commercial boats and ships.
  • Specialist boat and shipbuilding will further enhance sustainment capabilities in the region and will enhance the overall capacity, capability, and resilience of the industry.
THE ISSUE

The Cairns Marine Precinct (CMP) supports Australia’s strategic defence and foreign policy initiatives, as well as border and fisheries, tourism, and maritime trade operations.  The precinct is home to a large and diverse marine sector with 1603 commercial vessels across tourism, fishing and shipping, and cruising yacht sectors in addition to several Royal Australian Navy (RAN) and Australian Border Force (ABF) vessels. COVID-19 exposed the fragility of Cairns’ tourism-based economy, and the continued growth of the marine precinct is critical for economic diversification in the region. The reestablishment of a small specialist vessel and ship building industry to service Defence and industry needs would provide stable growth and jobs for the Tropical North Queensland (TNQ) region and build on the pre-existing capability in the precinct and region.

The Federal Government’s 2020 Defence Strategic Update1 outlined the changing environment for Australia and the strategic realignment of the Indo-Pacific in global geopolitics, primarily due to strategic competition between the United States and China.  This has led to Defence prioritising sovereign industrial capability2 and a nation-wide approach to investment.  The objectives of the Defence Industrial Capability Plan3 are to broaden, deepen, and grow the industrial base of Defence to enhance Australia’s national security.  Cairns is ideally located to assist with these objectives, with existing marine and international airports that would allow it to play a strategic role in the Federal Government’s Step-Up to the Pacific program and other foreign policy objectives.

Cairns also has proven capability in ship maintenance and sustainment, along with a long and proud history in shipbuilding.  The pre-existing supply chain arrangements and infrastructure, as well as transferrable skills and knowledge in the precinct would ensure a specialist boat and ship building industry could be established quickly, whilst contributing to a Defence strategy of regionalisation.

As well as Defence vessels, there are a number of commercial vessels that could also be manufactured in Cairns. These include tourism and cargo vessels. The Defence and commercial sectors together could provide workload for a continuous pipeline of work that would enable a greater underlying level of business, leading to increase in private investment in the region.

The commitment of long-term Defence contracts will underpin private sector work and lead to growth and resilience. Investment in a specialist boat and ship building industry in Cairns will ensure highly skilled jobs and a more diversified and resilient economy for the region. Most importantly, Australian sovereign capability will be improved.

 

BACKGROUND

From Defence vessels to commercial barges, ferries, and catamarans, Cairns has a long and proud history of ship and boat building. Since 1954, commercial and Defence vessels have been built in the Cairns Marine Precinct. NQEA, a world-renowned shipbuilder based in Cairns, constructed 11 landing craft, 14 Fremantle Class Patrol boats, hydrographic survey vessels, as well as Coast Guard patrol boats, passenger cruise ships, and passenger ferries between 1965-2008. A significant portion of these skills still exist in the marine precinct today, with several businesses still constructing fishing and tourism vessels.

Small-scale Defence shipbuilding has also recommenced in Cairns with Tropical Reef Shipyards and fabrication firm BME NQ being awarded the $4 million contract to build 7 new Army watercraft in March 20215.

The opportunity now exists for  the Australian Defence Force (ADF) to invest up to $800 million to design and build in Cairns (as an alternative to Perth) new Australian-built amphibious vehicles and landing craft for Army from 2026.  The Land 8710 Army Littoral Manoeuvre Phase 1 Project involves replacing LCM-8 and LARC-V small boats and would be ideally suited for the capabilities of the Cairns Marine Precinct. The phase 1 vessels will likely be based in Townsville, ensuring a truly regional product. These vessels should be designed, constructed, and sustained close to their operational base and HMAS Cairns for interoperability. Having these vessels constructed thousands of kilometres away from their home base in N.E. Australia increases the length of the supply chain, increases risk, and has the effect of placing “all eggs in one basket”. Enhancing shipbuilding capacity in Cairns diversifies Australia’s shipbuilding capability and improves resilience.

From a commercial shipping perspective, Sea Swift is a large Cairns-based international sea freight company servicing Australia’s northern borders, supplying 54 communities over thousands of kilometres of coastline. With 26 ships, Sea Swift’s civilian fleet is the size of a small navy and has specialist capability in servicing a broad range of markets, many in remote areas. In the event of a maritime security threat, Sea Swift has sovereign and specialist capabilities in remote logistics that could support or supplement Defence capabilities.

Sea Swift requires seven new barges over seven years and is currently evaluating local construction in comparison to offshore. Such a program would add to the continuous pipeline of work to enable a sustainable long-term industry. Sea Swift could also potentially provide Australia with enhanced sovereign capability through targeted upgrades, particularly around integration, plug-in capability, surveillance, logistics, and hydrographic uses, should the need arise.

Combining the above two maritime initiatives significantly improves resilience, resulting in a more sustainable marine industry. Furthermore, Cairns’ other large existing marine sectors such as fishing and tourism will also underpin demand and a viable business case.

 

 

NEXT STEPS

The reestablishment of Cairns as a regional centre for ship and specialist vessel building is a logical step for Defence and industry due to the existing infrastructure, skills, and supply chain arrangements already in the region. The current investment being undertaken in the Cairns Marine Precinct would assist and support ship building and align with the ADF’s strategy of strengthening Australian manufacturing capability.

To further develop the Cairns Marine Precinct and re-establish the small specialist vessel shipbuilding industry in Cairns, a long-term commitment from State and Federal Governments would be required. This could be through Defence contracts, private sector partnerships, or both. Depending on the outcome of the Cairns Marine Precinct business case, reshoring shipbuilding in the region could create hundreds of jobs over the next 10 years and ensure the re-establishment of a commercial shipbuilding industry in Cairns. There is already a commitment in sustainment and maintenance in the Cairns Marine Precinct, and specialised boat and ship building that includes enhancing existing and new vessels would be a logical next step to ensure a continuous program of work. It would also assist to develop a viable and resilient industry that will attract significant private sector investment.

RECOMMENDATION
  • That Cairns be recognised by the Federal Government as a high priority alternative for specialist ships to the current “default” ship building locations as identified by Defence.
  • That the State and Federal Governments commit to working with SeaSwift, a leading private sector shipping company with sovereign capability, to ensure their program of work – including vessel upgrades – is constructed in Cairns.

PRIORITY: Policy
COUNCIL: All TNQ
STATE ELECTORATE: All TNQ
FEDERAL ELECTORATE: Leichhardt