Austal snaffles US$450M contract to expand US shipyard in support of navy

Shipbuilding company Austal Ltd (ASX:ASB) has been awarded a US$450 million contract to expand production capacity at its shipyard in Alabama, to support the delivery of two crucial submarine types for the US Navy Submarine Industrial Base.

Subsidiary Austal USA received the contract from General Dynamics Electric Boat, allowing it to augment the existing infrastructure of the Mobile shipyard- in particular through the construction of a new module fabrication and outfitting facility – with this enabling production of one Colombia-class and two Virginia-class submarines per year.

Construction works on the new building are set to kick off in the US autumn, and be completed in 2026. Around 1000 people should be employed at the new facility, which will provide capability to fabricate, outfit, and transport submarine components.

Austal Limited Chief Executive Officer Paddy Gregg said the contract demonstrated the strength of the relationship between his company and General Dynamic Electric Boat.

“General Dynamics Electric Boat has recognised that Austal USA is a solid partner to deliver
high-quality components for Virginia- and Columbia-class submarines,” he said.

“This growing partnership demonstrates confidence in Austal USA’s commitment to meet the needs of the U.S. maritime industrial base and support the most critical needs of the U.S. Navy.”

Investors seemed happy with the news, sending Austal’s share price up. By 13:26 AEST, shares were trading at $2.45 – a rise of 9.15% since the market opened.