DEFENCE suppliers in the Port need to look at growth potential in the energy sector to cushion uncertainty over offshore submarine productions, local companies say.
It comes as the Federal Government last week backed away from a promise to build 12 new submarines in Port Adelaide to reconsider its defence project options, which include buying vessels made or designed overseas.
The future of more than 15,000 defence sector supply jobs remain in limbo due to the decision but suppliers contacted by the Portside Messenger this week said gas, water, and large-scale building projects provided opportunities.
Simon Kennedy, owner of Port Adelaide-based Smart Fabrication metal business, said defence contracts made up about 10 per cent of his business.
Mr Kennedy said recent expansion into the energy sector meant his company would be able to survive if submarines were not built in SA.
“We’ve just enjoyed our biggest quarter ever, off the back of projects in the gas industry,” Mr Kennedy, a Semaphore resident, said.
“However, companies with more than 50 per cent of their business reliant on defence contracts will struggle.
“That is not a good plan and it’s why diversification is important.
“We’ve changed business plans about five times and energy, water and gas have opportunities.”
Craig Williams, the managing director of 70-year-old Port Adelaide metal fabrication company J & H Williams said companies would need to “ride out” the next 3-5 years.
He predicted another surge in SA’s mining sector following the announcement of the Hillside mine near Ardrossan last month.
He said the spin-off for engineering companies would be winning contracts to manufacture structural components for temporary accommodation and offices as well as making and modifying drilling equipment.
“Manufacturing as an industry is struggling as we know.
“The upgrading of Rundle Mall, the new RAH and other infrastructure projects – a lot of people get work out these projects.
“We need to be innovative and look at manufacturing on a smaller scale – we can whinge or we can offer up a solution.”
But both men said submarines needed to built in Australia for security reasons.
Defence Teaming Centre chief executive Chris Burns said it was unlikely submarines would be built overseas.
“Maybe you could buy offshore and build in Australia and you could design and modify it here,” he said.
“Whatever we do we need to work in batches, three or four at a time, and have continuous build process.”
ASC managing director and chief executive officer Steve Ludlam agreed it was important the new submarines were designed here.
“Then, and only then, would we have a good chance of maintaining the submarine
effectively and efficiently and keeping everyone inside it safe,” Mr Ludlam said.
Prime Minister Tony Abbott last week said defence projects were about security, not jobs.
“We make Defence decisions on the basis of defence imperatives, not on the basis of industry assistance imperatives or regional assistance imperatives,” he said.
Swedish company Saab said last week it planned to buy Adelaide-based submarine maker ASC if it came on to the market, opening up the possibility of Swedish designed subs being built in SA.
Article taken from News.com.au