Austal USA’s eleventh littoral combat ship, LCS 22, destined to become the USS Kansas City, completed acceptance trials in the Gulf of Mexico recently and will be delivered to the U.S. Navy later this year.
Acceptance trials demonstrate that the ship’s major systems and equipment function as expected.
The LCS ships are designed for high speed and shallow draft missions, capabilities useful for surface warfare, mine warfare and anti-submarine warfare.
Including the Kansas City, Austal has six ships under construction at its Mobile waterfront shipyard. The USS Oakland (LCS 24) has launched and is preparing for trials. The USS Mobile (LCS 26) and the USS Savannah (LCS 28) are in final assembly. Modules are under construction for the USS Canberra (LCS 30) and the USS Santa Barbara (LCS 32).
Austal USA is headquartered in Mobile, with additional operations in San Diego, Seattle, Portland and Singapore.
The U.S. Navy has awarded Austal USA a $21.5 million order for planned post-delivery work on the Independence-variant Littoral Combat Ship USS Charleston (LCS 18).
The work will be done by Austal’s West Coast operations team in Seattle, Washington through September 2020.
“The fact we’ve received our third LCS post shakedown availability contract in less than 11 months is a testament to our services team and the great work they’re doing to support the Navy’s small surface combatant fleet,” said Craig Perciavalle, president of Mobile-based Austal USA.
As the number of Austal-built ships in the fleet continues to grow, the company is expanding its west coast operations in San Diego and its Asia-Pacific operations in Singapore to meet the Navy’s current and planned deployments of small surface combatants and Expeditionary Fast Transports.
September 26 is the deadline for one of the largest defense contracts in history, at least $16 billion worth of bundled contracts for the construction of 20 newly designed Navy frigates.
One of the four contenders is Mobile-based Austal USA, the current maker of scores of Littoral Combat Ships for the Navy.
The new frigate is designed to replace the LCSs with a much heavier and more versatile vessel.
In June, the Navy issued its final request for proposals to the four prospective bidders, about one month after one prospect, Lockheed Martin, dropped out of contention.
Besides Austal, companies submitting final bids for the winner takes all $16 billion contract package are: General Dynamics, Huntington Ingalls Industries and Fincantieri Marinette Marine Corp., an Italian corporation.
Unlike the LCS, which was made to patrol coastal waters, the new frigate is a high seas vessel that supports a carrier fleet. And its Navy wish makers have loaded it with a deep stable of dream weapons, including:
some 32 cells to fire surface-to-air missiles for aerial defense
from eight to 16 anti-ship cruise missiles
a flight deck for a Sikorsky Seahawk helicopter
accommodation for a 150-kilowatt laser weapon
The Navy says to expect announcement of a winner some time in 2020.
Austal’s Expeditionary Fast Transport #11, soon to be the USNS Puerto Rico, has completed sea trials and is ready for delivery to the U.S. Navy.
For the first time on an EPF vessel, the sea trial process combined the builder’s trials with the acceptance trials. “Combining the two trials allows for greater efficiency, cost reduction, and earlier ship delivery to the customer,” Austal said in a press release.
“Our customer’s confidence in this program and the maturity of the production line is a direct reflection of the outstanding work our team is doing to reduce cost and delivery on schedule,” said Craig Perciavalle, president of Austal USA, located on the waterfront in downtown Mobile.
“Sea trials involve intense comprehensive tests that demonstrate the successful operation of the ship’s major systems and equipment while underway in the Gulf of Mexico,” Austal explains. “It is the last milestone before delivery of the future USNS Puerto Rico to the U.S. Navy in the fall, the eleventh ship in Austal USA’s growing 14-ship portfolio.
For centuries, Mobile County has been Alabama’s connection with world commerce. Increasingly, its economy is based on moving things in and out.
Airplanes arrive in pieces and fly out as fully assembled jets. Lately, aerospace developments involving Airbus have been making the most business news, but shipbuilding remains strong as does manufacturing.
Items that will line the shelves of some 800 Walmart stores are shipped to a new regional distribution center to go on to other distribution centers. Cargo of all kinds comes and goes via water, railroad and truck. Jobs multiply to keep everything moving. From steel mills to beaches, the Mobile County economy is diverse, and it’s international.
The Mobile County Public School System remains the county’s largest employer, with 7,500 workers. The University of South Alabama, with its medical school and expanding health care system, is in second place with 6,000 workers. And Infirmary Health — with its flagship Mobile Infirmary in the city — remains the largest non-governmental health system in Alabama.
The single biggest economic development has to be Airbus, not only because of a second final assembly plant for the A220 jet that is under construction next door to the original A320 series plant, but because even more suppliers and other associated business are coming in, creating even more new jobs. It’s all happening even faster than Bill Sisson, president and CEO of the Mobile Area Chamber of Commerce, had hoped.
“The main thing is that in aviation aerospace in particular, that sector is probably going to grow faster, fill out more quickly than we had anticipated,” Sisson says. “What’s also good news is that both of those aircraft, the 320 line and the 220, are very hot-selling aircraft. For them to be here in Mobile, that just bodes well.”
The county also is seeing growth in shipping, shipbuilding, steel manufacturing, distribution facilities, construction, business incubation and health care, among other sectors.
“That’s the beauty of our economy here, it’s so diverse,” says Mobile County Commission President Connie Hudson. “We’re seeing some steady growth across the board in all sectors of our economy. Even when one should dip, the others aren’t.”
Local and state governments, along with the Chamber of Commerce, have established a record of working together in economic development over the last 20 years, regardless of politics or who occupied what public office.
“I think we are all like-minded when it comes to successfully recruiting business and industry to the state and particularly here in Mobile,” Hudson says.
Sisson says Mobile is the right size to present a united front in recruiting new businesses, and the considerably lower cost of living is a major factor. “When a business prospect is looking at this area, all the partners are at the table extending help,” he says.
What happens next? More aerospace, more transportation, more port-related development and more business incubation, Sisson says. “We’re seeing more and more distribution activity related to the container terminal. That’s certainly very promising and that’s happening simultaneously with what’s going on in the aviation-aerospace sector.”
The chamber will be moving into talent development and recruiting for the labor force, as well as for new business, he says. A recent chamber-commissioned study of the labor force revealed that 5,000 new, high-paying jobs had been created in the area in the last four years.
Mobile City Council Vice President Levon Manzie cites Airbus, Austal USA’s contracts for the U.S. Navy and Continental Aerospace’s new facility in saying, “The sky’s the limit.” But he’s especially excited about the new Mobile Downtown Airport at the Mobile Aeroplex at Brookley, where Frontier Airlines has begun passenger jet service to Chicago and Denver.
“The eventual movement of the airport to Brookley Field Complex is going to be big for the city of Mobile,” Manzie says. “Eventually you’ll see all the airlines follow suit, and they’ll build out the total complex.
“I believe the next 10 years will be game-changing years for the city of Mobile.”
Jane Nicholes is a Daphne-based freelance contributor to Business Alabama.
Inside the cavernous Module Manufacturing Facility at Austal USA, a thick sheet of uncut aluminum enters the production line. Fourteen months later, that same piece of metal will exit the 700,000-square-foot facility as part of a module, or a building block, of one of the world’s most sophisticated military vessels.
From there, the module will be shuttled to an assembly bay down the road by multi-axle transporters, capable of moving modules weighing more than 400 tons. It’s in the assembly bay that these building blocks, lifted into place by crane and welded to an existing framework, will slowly begin to resemble a Littoral Combat Ship (LCS).
The speedy, shallow-water LCS has been a familiar sight on the Mobile River for almost a decade. At the end of 2010, the U.S. Navy awarded Austal a block-buy contract for the construction of 10 LCS Independence-class ships. Over the intervening years, they have ordered an additional nine.
Standing beside LCS-22, the recently christened USS Kansas City, Austal USA President Craig Perciavalle reflects on the LCS program.
“We’re delivering ships on budget and on schedule,” Perciavalle says. “We’re putting them out fast and furious.”
Of the 19 LCS ships Austal is contracted to construct for the U.S. Navy, nine have been delivered and another six — LCS 20, 22, 24, 26, 28 and 30 — are in various stages of construction. Lockheed Martin is building an almost equal number of LCSs under a different design — Freedom-class — at a shipyard in Wisconsin.
Founded in 1999, Austal USA is a subsidiary of Australian-based Austal Limited. Its shipbuilding facility has become a staple of the Mobile waterfront, occupying 164 acres on the eastern shore of the Mobile River.
With 4,000 employees, Austal is the sixth largest industrial employer in the state, a standing owing, in large part, to the company’s ability to land high-profile contracts with the U.S. Navy. Following the procurement of a contract in 2008 to build 10 Joint High Speed Vessel ships (now known as Expeditionary Fast Transport vessels) and the LCS contract in 2010, Austal was able to make $160 million in capital investments to its facility along the Mobile River, while adding 3,100 employees.
But the LCS program hasn’t been without controversy. When cost increases, schedule delays and concerns about the vessel’s survivability in combat cast a shadow of doubt in the early years of the contract, Perciavalle remained determined to adhere to any changes the Navy deemed necessary.
“As the requirements were maturing with the Navy and, quite frankly, as we were going through the design maturity process, there were a lot of challenges,” Perciavalle says. “We’ve certainly overcome them now.”
U.S. Rep. Bradley Byrne, whose district includes the massive shipbuilder, says he’s proud of the way Austal has coordinated with the Navy on LCS.
“The LCS program has truly been a team effort between the Navy and Austal. As with any new program, there have been challenges, but the Navy and industry have worked together on tackling setbacks and evolving the ship’s capabilities to best serve the Navy’s requirements.”
In 2014, cuts in military expenditures and concerns about the vessel’s combat power put the LCS program in the spotlight. U.S. Defense Secretary Chuck Hagel directed the establishment of the Small Surface Combatant Task Force to review the viability of LCS and to explore possible design modifications.
In 2016, following a spate of LCS breakdowns, two of which were owing to sailor error, the Navy ordered a handful of changes to the vessel, aiming to improve its combat punch. The Navy also set out to reevaluate sailor training.
Designed for speed and flexibility, one of the signature traits of the LCS design was its modularity — the ability to swap out weapons and sensors to suit a particular mission. Critics, citing the sailor error breakdowns, accuse the Navy of wanting the ship to be more versatile than was practical.
The LCS program illustrates several of the challenges associated with fulfilling a contract for the Department of Defense.
“They’re the most demanding customer on the planet, and they should be, quite frankly,” Perciavalle says. “The vessels that we build do pretty important stuff in support of our nation’s defense, and the number one priority is having ships that are very capable to do that and also understanding that we have sailors that are sailing on these ships. So there’s a lot of demand put on us or any defense contractor.”
It’s important to recognize, Perciavalle says, that a client like the U.S. Navy has evolving needs.
“There’s no doubt that, as years go by, the Navy requirements change because the threat could change,” he says. “The beauty about our ships is that we have the adaptability to actually flex the capabilities of the ships and to adapt them to increases or changes in requirements. That’s the beauty of a multi-hull vessel.”
Of course, unexpected modifications required by the Navy can affect cost estimates for government contractors. In 2016, following Navy shock trials on the USS Jackson (LCS-6), Austal entered into a trading halt and issued an earnings announcement warning about an increase in its cost estimate for future hulls “due to design changes required to achieve shock certification and US Naval Vessel Rules.” The modifications required on the USS Jackson and 10 other ships under construction resulted in a full-year loss for fiscal 2016.
Furthermore, in January of this year, Austal confirmed in a release filed through the Australian Stock Exchange that it was “assisting an investigation by ASIC into market announcements by the Company with respect to earnings from its Littoral Combat Ship program.” The investigation is said to be focused on statements Austal issued in 2015 relating to cost increases during the construction of the USS Jackson. In regards to the investigation, Perciavalle says that Austal is “supporting the process.”
Looking ahead to 2020
In February 2018, Austal was one of five companies awarded a $15 million contract for conceptual design of the Navy’s new guided-missile frigate. The FFG(X) program, which the Navy is developing as it phases out LCS, seeks the construction of 20 frigates with more lethality. The multi-billion-dollar contract is slated to be awarded in 2020. Austal is proposing a variation of its aluminum Independence-class LCS, leveraging the ability of the multi-hull vessel to accommodate new frigate requirements without drastically changing the existing production process.
“We’ve got a whole team internally here in Mobile that is working on the concept design for frigate,” Perciavalle says. “That collaborative environment has been very, very good. So there’s been a lot of good dialogue making sure we understand the requirements the Navy has and making sure the Navy understands things that can be leveraged in our parent design, so that they can leverage that and help develop a cost-effective solution.”
The impact of winning the 2020 contract, which could guarantee years of production following the conclusion of the LCS program, can hardly be overstated. The Navy is considering awarding the contract to a single builder. The ramifications of not winning the contract would be felt in Mobile and across the state, which is home to almost 400 of Austal’s suppliers.
“To us, it’s a competition,” Perciavalle says, “and you know what, we’ve been in competitions since, certainly, the first day I got here.
“We have the best team in the country here working on these ships,” he continues. “The work ethic, the pride, the ownership in what’s happening has really enabled us to improve performance dramatically over the years and really enabled us to provide a cost-effective solution to the Navy.”
Perciavalle points out four areas of focus when looking at the future of Austal USA. “Expeditionary ships, small surface combatants, unmanned autonomous [vessels] and the service business,” he says. “All of which have plenty of opportunity and all of which we’re in a very good position to excel in.
“We have to continue to mature and continue to build. That’s our culture, and that’s what we’re going to continue to do going forward.”
Breck Pappas and Mike Kittrell are Mobile-based freelance contributors to Business Alabama.
Three Alabama companies were recognized for the inaugural Alabama Safest Manufacturers Awards presented by Business Alabama magazine at the Business Council of Alabama’s Manufacturer of the Year Awards event May 1 at the Alabama Activity Center in Montgomery.
Business Alabama created the Alabama Safest Manufacturers Awards to recognize safety best practices in manufacturing, a business sector that is responsible for the livelihoods of more than 260,000 Alabamians.
In creating the award, Business Alabama worked with Matt Hollub, of Alabama Safe State, to create the criteria for the award application. In addition, the Alabama Technology Network and the Alabama Society of Safety Professionals provided judges to review the applications and choose the winners.
Alabama’s Safest Manufacturers for 2019 are United States Gypsum Co. in Bridgeport, which received the Overall Safety Standout award, shipbuilder Austal USA in Mobile and Specification Rubber Products Inc. in Alabaster.
United States Gypsum Co.’s first and most important core value is safety. The company is committed to the safety of its employees, customers and the communities where they live and do business. The company’s first safety rules were documented more than 100 years ago, and United States Gypsum was a founding member of the National Safety Council.
United States Gypsum has been in Alabama for 20 years. The Bridgeport facility employs about 142 men and women who make wallboard and other gypsum products, joint compounds, and surfaces, and support the overall operation.
In 2016, the company earned the National Safety Council’s Robert W. Campbell award, a respected celebration of a safety-first culture, for excellence in environmental, health and safety management. The company also received the 2015 EH&S Today Safest Companies Award, 15 Sentinels of Safety Awards and 17 OSHA VPP Star sites.
The company emphasizes that safety performance is closely tied to employee engagement and behavior and that daily safety best practice is fundamental to success.
Austal USA is a winner of the Alabama’s Safest Manufacturers Award for 2019. A premiere military and civilian shipbuilder, Austal USA employs about 4,000 men and women mostly in Mobile where its shipyard was established 20 years ago. It’s the center of manufacturing for the Littoral Combat Ship and Expeditionary Fast Transport programs for the U.S. Navy.
With a work-hour loss ratio at half the maritime industry average, Austal USA has received awards from the Shipbuilders Council of America for Excellence in Safety and SCA awards for safety improvement from the American Long Shore Mutual Association for Best Large Shipyard.
The company emphasizes that safety is the responsibility and goal of everyone, from the newest employee to top management, and that an unsafe work environment is not acceptable. Company officials say that each year, the goal is to reduce the overall recordable rate by 15 percent.
Specification Rubber Products Inc., in Alabaster, also is a winner of the Alabama’s Safest Manufacturers Award for 2019. Founded in 1968 as a maker of molded rubber components for the waterworks industry with a specialty in rubber gaskets, today its 62 employees also supply engineered rubber products to ductile iron pipe, valve and hydrant producers, and provide specialty mechanical molded goods for industrial applications.
The company’s safety training schedule involves all levels of employees including new hires, established employees and management. The company’s recordable three injuries for 2018 was 70 percent fewer than in 2017 and there were no lost-time accidents for 2018.
The company lists “zero accidents” as a goal for 2019, noting that the goal can be attained through training and awareness.
Dana Beyerle and Bob Farley are freelance contributors to Business Alabama.