{"id":1155,"date":"2012-09-13T09:55:07","date_gmt":"2012-09-12T23:55:07","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=1155"},"modified":"2012-09-14T15:06:35","modified_gmt":"2012-09-14T05:06:35","slug":"trouble-at-the-docks","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/trouble-at-the-docks\/","title":{"rendered":"Trouble at the docks?"},"content":{"rendered":"

The government\u2019s recent\u00a0announcement\u00a0of a further delay<\/a> to the $7.9 billion Air Warfare Destroyer (AWD) project has been met with a degree of cynicism. Although the government says that the delay is needed to preserve workforce skills<\/a> in the maritime sector, some have suggested that the latest delay had more to do with returning the federal budget to surplus<\/a>. Others have argued out that the delays are unlikely to close the looming gap<\/a> in local naval construction work in any case. So what\u2019s going on?<\/p>\n

Let\u2019s have a look at what we know. To start with, the latest round of delays is relatively small; the first vessel has been delayed an extra three months, the second by six months, and the third by nine months. The progressive slippage in the schedule is shown in the table below. As can be seen, the most of the slippage in the program occurred in the 2011 after problems were encountered with the construction of modules.<\/p>\n

Table<\/strong>: Progressive delivery schedule for the AWD project<\/p>\n\n\n\n\n\n\n
<\/td>\n\n

Original delivery date<\/strong><\/p>\n<\/td>\n

\n

2011 reschedule<\/strong><\/p>\n<\/td>\n

\n

2012 reschedule<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

HMAS Hobart<\/strong><\/p>\n<\/td>\n

\n

December 2014<\/p>\n<\/td>\n

\n

December 2015<\/p>\n<\/td>\n

\n

March 2016<\/p>\n<\/td>\n<\/tr>\n

\n

HMAS Brisbane<\/strong><\/p>\n<\/td>\n

\n

March 2016<\/p>\n<\/td>\n

\n

March 2017<\/p>\n<\/td>\n

\n

September 2017<\/p>\n<\/td>\n<\/tr>\n

\n

HMAS Sydney<\/strong><\/p>\n<\/td>\n

\n

June 2017<\/p>\n<\/td>\n

\n

June 2018<\/p>\n<\/td>\n

\n

March 2019<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

<\/p>\n

The next thing we know is that the delays will result in around $100 million being shifted out of the forward estimates period\u2014the next four years\u2014into the epoch beyond. Now that is a lot of money in most people\u2019s books, but in terms of the federal budget it\u2019s a rounding error. Consequently, we can discount the possibility that the government is harvesting a further round of savings in preparation for the mid-year budget update (though that may yet occur!).<\/p>\n

Nonetheless, it may be that Defence is eager to alleviate some of the internal budget pressures created by the $5.5 billion cut over four years imposed in the May budget. The amount of money set aside for approved capital investment projects was one of the prime sources of \u2018savings\u2019\u00a0returned to government, especially over the near term, with roughly half a billion dollars cut from this year alone. With that sort of pressure bearing down on DMO, $100\u00a0million over four years would be a welcome relief\u2014though probably not reason enough on its own to justify a rescheduling of the AWD project.<\/p>\n

Another factor, which may have affected the decision at the margins, is the new eighteen month interval between the arrivals of successive vessels. Navy has a lot on its plate with the looming introduction of both the Landing Helicopter Docks and the AWD, and the additional time will lessen the challenge of introducing the two new classes of vessel into service.<\/p>\n

Turning now to look at the question of work continuity and the retention of skills in the maritime sector, consider the workforce profile for the AWD project prior to the latest rescheduling. Note that most of the workforce was planned to have dissipated well before the delivery of the final ship. This is certainly still going to be the case except, that the schedule has been shifted nine months to the right. Thus, even with the reschedule, most of the workforce will have moved on from the maritime sector by 2016. Given that the Future Submarine project is not due for second pass consideration until 2016\u201317 at the earliest, how can the reschedule have possibly been beneficial in terms of maintaining skills in the sector? The answer is that it cannot. Under existing plans, the so-called valley of death remains in place (it\u2019s the right-hand slope of the workforce mountain below, click to enlarge).<\/p>\n

Graph<\/strong>: AWD workforce demands \u2013 alliance plus local contractors. (Source: presentation by Defence official, January 2012)\"AWD<\/a>Setting aside the possibility that the government is simply spinning a line on the workforce issue, this means that there is something new being considered by the government for the maritime sector. There are several possibilities:<\/p>\n