MAY 1, 2013 — Austal Limited (ASX:ASB) says that it is transferring service operations from its satellite service base at Henderson, Western Australia, to its nearby primary shipbuilding facility to reduce overhead costs and drive margin growth for both its shipbuilding and service operations. It is also closing its Spanish service business.

The company is also increasing construction activity at Henderson as the Cape Class Patrol Boat program shifts from first-in-class construction and trials to steady-state construction operations.

Austal Chief Executive Officer Andrew Bellamy said the consolidation at Henderson would improve asset and staff utilization in the shipbuilding and services businesses.

"Combining the service base into the shipbuilding facility, which is operating just a few hundred meters away, makes financial and common sense," he said. "Consolidation will provide greater operational flexibility, make both the shipbuilding and services businesses more competitive through reduced overhead costs and will bring management together onto one site."

While Austal will close its service center in Spain, its other service businesses in the Middle East, Americas, Asia and Australia are unaffected.
 
"Our service team in Spain has been extremely committed, but the Spanish and European economies have been too big a burden on profitability in that business," Mr Bellamy said.

Austal expects approximately 14 staff will be made redundant at the service centre in Spain, with two staff repatriating to Australia. At Henderson, 12 positions have been made redundant as a result of the consolidation.

The company is intending to recruit more than 100 people in trade positions over the coming months at the Henderson shipyard to work on the Cape Class Patrol Boat (CCPB) program for the Australian Customs and Border Protection Service.

The increased labor requirement has been timed to coincide with the impending, phased increase in construction activity on the CCPB vessels after delivery of the first-in-class Cape St George earlier this month.