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ASC Shipbuilders Pty Ltd
(Australian Submarine Corporation)

The Australian Submarine Corporation (later ASC) was established in 1985 and chosen in 1987 as the prime contractor for the design, manufacture, upgrade and delivery of the Collins class submarines. ASC exists to serve the frontline of Australia's naval defence capabilities. ASC has evolved into Australia's largest specialised defence shipbuilding organisation, with naval design and engineering resources unparalleled within Australia's defence industry. ASC employed over 1,900 personnel across three facilities in South Australia and Western Australia, including more than 380 engineering and technical specialists. ASC continues support the Australian Defence Force by maintaining open lines of communication with the customer, understanding the customer's expectations and priorities, implementing productivity and efficiency improvements, and striving to deliver the best results for defence.

Initially established in 1985 as Australian Submarine Corporation, ASC was subsequently chosen in 1987 as the prime contractor for the design, manufacture and delivery of the Royal Australian Navy's (RAN) fleet of six Collins Class submarines.

At the conclusion of the Collins Class submarine build program in 2003, ASC commenced a long-term contract with Defence Materiel Organisation (DMO) for the ongoing repair, maintenance and design upgrades of the submarines through life. The submarine business's future is assured, thanks to the 25-year, $3.5 billion Collins-class submarine through life support contract with the Commonwealth.

In 2005, ASC was awarded the role of Shipbuilder for the Hobart Class Air Warfare Destroyer (AWD) project. This program will see the most advanced and complex warships ever built in Australia being constructed at ASC's state-of-the-art shipbuilding facility - ASC South - located at Osborne, South Australia. While the AWDs are assembled at Osbourne in Adelaide, 70 per cent of the module construction was expected to be outsourced.

ASC was established under the Hawke Labor Government in 1985 and remained in majority private ownership until 2000. The Australian government initially had a 49 percent interest in the Australian Submarine Corporation. Swedish submarine builder Kockums was principal sub-contractor to ASC, as well as being a 49 per cent shareholder in the company. The Commonwealth acquired Kockums' stake in ASC for $43.5 million in 2000, when the commonwealth exercised its pre-emptive rights to ensure full Australian ownership of the company after the exit of Kockums.

It had been a long-standing policy of the Coalition Government to privatise the company. Shortly after full Commonwealth control commenced in 2000, ASC began a reform process to facilitate eventual privatisation. In December 2000 there were reports the Government was encouraging shipbuilders ADI and Tenix to buy the Adelaide-based Australian Submarine Corporation. The deal could see ADI and Tenix (formerly part of the Transfield group) move most of their businesses to the corporation's Osborne yard near Adelaide. ADI would close its Carrington and Garden Island yards, while Tenix would shut the Williamstown, Melbourne, facility used to build the ANZAC frigates. But nothing came of this plan.

The Government flagged in 2004 that ASC would not be sold until the AWD and amphibious ship contracts had been decided. In May 2006 a Carnegie Wylie report commissioned by the federal government recommended delaying the sale of the company until after the contracts for building the destroyers had been completed. Other reports raised concerns that the contract alliance had not properly bedded down. The selection of the prime shipbuilder for the amphibious ships and the second pass approval for the AWD project were expected by mid-2007. Starting the sale process in late 2007 would also allow ASC and the Defence Department to finalise a range of sale preparations.

On 16 August 2006, the Minister for Finance and Administration, Senator the Hon Nick Minchin, announced the Government`s decision to return ASC to private ownership. The Government`s objectives for the sale of ASC were to preserve and enhance the long term viability of ASC, both financially and operationally, including ASC`s ability to perform its role in relation to the Collins Class Submarine Through Life Support Contract and the Air Warfare Destroyer Project; and to enable ASC to contribute to an efficient and competitive Naval Shipbuilding and Repair Sector which is capable of delivering the best defence technology available to meet Australia`s national security needs.

Recognising the importance of ASC’s Australian-based naval ship building capacity, the Government proposed a foreign ownership limit of 49 percent. A number of other protections will be put in place to protect Australia’s security interests. The Chairman, Chief Executive Officer and a majority of directors will have to be Australian citizens and ASC’s head office, substantial operations and place of incorporation will have to remain in Australia. In late August 2006, the federal government announced that the competitive tender sale process for the sale of ASC would be delayed until after the 2007 federal election. The government had also flagged foreign ownership limits on the company, including a requirement that a majority of its directors must be Australian citizens.

A competitive tender trade sale for ASC Pty Ltd (formerly the Australian Submarine Corporation) started in late-2007, intending to b e concluded in the second half of 2008. The Finance and Administration Department appointed business and legal advisers for the sale, following a tender process. As of early 2008 it was unclear whether or not Australia’s defence giant BAE would be allowed also to buy the government-owned submarine and warship builder ASC Pty Ltd, Port Adelaide, when it was put up for sale later in 2008. The issue of foreign ownership of a strategic asset might complicate the issue [The ASC sale cabinet submission called for foreign ownership of ASC to be held to a maximum of 15 percent].

The plan of first the Howard government, and then the Rudd Government, had been to privatise ASC, but on 27 February 2009 that was put on hold because of the global financial crisis. In announcing the decision, Finance Minister Lindsay Tanner said "It is unfortunate that the current economic climate presents significant risks to a successful sale of ASC." The Commonwealth Government’s announcement that it had decided to defer the privatisation of ASC created a clearer framework to operate within for the foreseeable future. ASC is a proprietary company limited by shares registered under the Corporations Act 2001 and is subject to the Commonwealth Authorities and Companies Act 1997 (CAC Act). All the shares issued in the capital of ASC are owned by the Minister for Finance and Deregulation (Minister).

v In 2009/10 ASC established the Business Improvement and Transformation (BI&T) group, which incorporates the WorkSmart and Process Excellence programs. The WorkSmart program is based on Lean and Six Sigma principles, which aim to identify sources of waste and eliminate them in order to improve processes, performance and customer and staff satisfaction. Overall the programs aim at improving efficiency and instilling strategic cultural change across the business.

After the significant changes made to the business, board and management in the 2009/10 period, 2010/11 [the financial year ended 30 June 2011] started with a fresh outlook on the challenges and tasks that lay ahead. The Company achieved annual revenue of $700 million (2010: $516 million) and profit after tax of $10.6 million (2010: $4.3 million). Close collaboration with DMO and the Royal Australian Navy (RAN ) was strengthened as ASC worked towards sustaining increased submarine availability to meet the RAN ’s requirements. In the shipyard ASC continued to improve the efficiency of the air warfare destroyer (AWD ) block construction and in conjunction with the AWD Alliance ASC sought resolution of issues arising in other parts of the AWD program.

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Page last modified: 27-03-2012 18:12:58 ZULU