Austal-Hanjin finalizing Subic shipyard negotiation

Negotiation between two global shipbuilders Hanjin of South Korea and Austal of Australian for the Subic shipyard is expected to be finalized next month or two, according to the Australian Ambassador to the Philippines.

At the annual media briefing, Ambassador Steven J. Robinson said that negotiations, which have been ongoing for the last couple of year involving Austal, Hanjin Heavy Industries and Construction-Phils. Inc. (HHIC-PH) and a number of other entities, have entered into a “critical” stage. 

“I am hopeful that there will be some progress made in the next month or two that will see a finalization of these negotiations,” said the ambassador, but added that details of the negotiations are still commercially confidential.

Overview of the shipbuilder Hanjin Heavy Industries and Construction-Philippines (HHIC-Phil) shipyard in Subic Freeport. (MB file photo)

“Let’s just hope there is a positive outcome that will see Austal expands further here in the Philippines,” the ambassador added.

The ambassador also noted that if the Hanjin facility negotiation will come into fruition, it will be a significant expansion of its existing shipbuilding facility in Balamban, Cebu where Austal already invested significant funds.

In the same briefing, Dave Shiner, Austal director for Asia based in Manila, also confirmed that discussions are ongoing as he expressed hopes “fingers crossed” of further news in the coming weeks.

Shiner also said that Austal is committed to the Philippines and would like to invest further to become a shipbuilder of choice not just in the country but for the region.

Earlier, the Australian shipyard company and the US-based Cerberus were said to be taking over the Hanjin facility.

The Hanjin Subic shipyard is one of the major shipyards that catapulted the Philippines to become the fifth largest shipbuilding country in the world.

The Korean-owned HHIC-PH filed for bankruptcy protection in January 2019 after failing to repay $1.3 billion loans in what is regarded as the country's largest-ever corporate default.

Since several potential bidders came up including interest from North American, German, Turkish, and other Asian companies. Chinese bidders have also expressed interest, according to the Department of Trade and Industry.

At its peak, the Subic Shipyard employed over 30,000 people  with tens of thousands more in the local economy depending indirectly on its operation.

Meantime, Austal is Australia’s global shipbuilder and a prime defense contractor designing, constructing and sustaining some of the world’s most advanced sea vessels.

For more than 30 years, Austal has contracted more than 300 vessels for over 100 commercial and defense operators in 54 countries worldwide. Austal Group’s subsidiary, Austal Philippines, currently builds ships in its Balamban shipyard in Cebu.

In 2019, the region’s leading global shipbuilder and defense prime contractor, completed its $20 million expansion project at its facilities in Balamban, Cebu. The new facility should enable the Australian firm to produce offshore patrol vessels for the Philippine Navy and other large naval vessel projects for export.

With the expansion, the company has tripled its capacity as it can now accommodate large vessel projects for hull assembly, final outfitting, and painting capacity; the JR Assembly bay is an impressive structure measuring 120 meters long, 43 meters wide, and 41 meters tall at its John John Rothwell Assembly Bay.

Austal had earlier expressed interest to build six offshore patrol vessels (OPVs) for the Philippine Navy, as part of the modernization program of the Armed Forces of the Philippines. The vessels offered by Austal are a larger variant of the Cape-class patrol vessels used by the Royal Australian Navy and Australian Border Force.

The expanded state of the art facilities in Balamban have trebled the company’s shipbuilding capacity and will allow OPV’s to be immediately constructed and maintained for the Philippines by an experienced and ready workforce. The shipyard is also ready to construct other navy vessels, for export.

Located in the West Cebu Industrial Park, Austal Philippines shipbuilding facilities operates as a global center for commercial vessel design, development, and construction of Australia based shipbuilding company Austal.

The facility is strategically positioned to cater to future market demands for commercial and defense vessels, including passenger and vehicle passenger ferries, workboats, offshore crew transfer vessels, and naval ships.