Sea Power: Babcock's expanding interests | ADM Apr 2011

Katherine Ziesing | Canberra

UK company Babcock International Group has been expanding its footprint in both Australia and NZ over the last few years, moving from a company purely with naval marine interests to aspirations in other Defence domains.

he Australian presence of the company was firmly formed in April 2008 when Babcock bought Strachan & Henshaw. This fitted with the Babcock approach in terms of marine engineering design, systems integration and support contractor specialising in the provision of solutions for defence customers. Strachan & Henshaw Australia was originally established in 1989 to design and supply the weapons discharge equipment for the Collins Class submarine.

Since then, this relationship has developed and Babcock continues to support ASC and the Collins Class via a long term through life support contract. The company has been involved with the Collins project since its earliest days and is still working closely with ASC on maintaining and continually evolving platform and sub systems

“I think Babcock as a group has transformed enormously in the last decade,” Babcock Australia CEO Craig Lockhart explained to ADM. “We have moved from being a collection of refitting contracts into a more focused services group. This, coupled with strong organic growth with some key strategic acquisitions along the way, has created the Babcock we see today.

“We’ve diversified from a single customer company, largely naval marine, through to tri-service covering the Army and the Air Force in the UK. That’s then that led into the wider support services markets.

“In terms of what we regard as mission critical; this is when customers who have major assets where any form of downtime or program unavailability leads to lost revenue, loss of critical services or a reduction in safety performance. Babcock manages those assets on the client’s behalf, delivering increased operation and performance expectations for reduced cost. We’ve been very successful doing that and that success has borne other opportunities in other international markets,” Lockhart said.

The company is involved with the AWD project, procuring contracts for supply of the Mk32 Mod 9 torpedo launchers and the torpedo handling system; work which is now underway at Babcock’s Techport Australia premises. There have also been other smaller subsystem contracts on the AWD such as the contract to supply high-pressure air reduction stations.

Lockhart hopes that being involved with the project from its nascent stages will give the company an edge on the sustainment front as well. Their work in the UK where constrained budgets have been such a huge issue will put them in good stead in Australia’s Strategic Reform Program (SRP) environment, Lockhart feels.

SRP focus

“Many companies probably do, or can claim to do, what we do - there’s lots of business that can claim to fix ships, fewer who can make the same claims over submarines but few approach these markets in the manner that Babcock do,” Lockhart said. “Understanding the customer’s true needs and wants and recognising the true market pressures and dynamic of taking cost out of the existing operations, whilst at the same time providing a stable sustainment portfolio, is a real strength of Babcock.

“We saw that Australia had similar objectives and had signalled that it wanted to make big savings from its support sectors but at the same time was publishing fairly big plans to systematically replace its surface ship and submarine fleet over the next 20 years,” Lockhart said.

Lockhart himself has a background in Babcock’s Scottish submarine yards and admits that of the 70-person workforce in Australia (which is on the up), has about 20 per cent of the personnel from the UK. But the company is working closely with the Defence Teaming Centre in SA and universities to build their skilled workforce such that they do not have to rely so heavily on sending out people from their home market.

On the NZ front, the company bought VT Fitzroy, a company they had previously both partnered with and lost contracts to. Following acquisition of VT Support Services Group, Babcock assumed responsibility for the VT Fitzroy Joint Venture established to operate the Dockyard Management Contract for the NZ navy.

The company undertakes the majority of the programmed and un-programmed maintenance work for NZ Navy as well as providing services to other defence agencies such as Rigid Hull Inflatable Boat and Improvised Explosive Device Disposal, robot maintenance for the Army and calibration services for the Air Force. Babcock Fitzroy also undertakes commercial work including the docking, survey and maintenance of commercial shipping operating around NZ and in the South West Pacific.

The support that Babcock provides to the NZ surface ship fleet is key to the overall contribution that Babcock can make in the Commonwealth market. The NZ Navy operates the Anzac class, as does the Australian Navy and a level of spiral improvement is expected by Babcock as it looks to learn from its management of the NZ maintenance task,” Lockhart explained. “Coupled with the acquisition of Marine Industrial Design (MID), we’re starting to develop the business model which has us pegged as a blue collar dockyard into a centre of excellence for engineering.” Forecasting where the market might go, Lockhart is confident about the long term prospects and opportunities for Babcock in the region.

“Babcock are here to stay and are well positioned for support sectors when budgets are becoming increasingly strained.”