Austal USA, the American shipbuilder that Hanwha Group is seeking to acquire, has won additional maintenance, repair and overhaul work for U.S. Navy warships. With a large floating dry dock recently certified by the Navy now in full operation, the company is broadening its business base in the MRO market as well as in shipbuilding. As Hanwha's acquisition bid proceeds, attention is turning to whether an expanding record in U.S. warship construction and repair will lift Austal USA's competitiveness and corporate value.
Austal USA has won a $10.8 million contract from the U.S. Navy for emergency repairs on the littoral combat ship USS Oakland (LCS 24), according to European defense trade outlet Defence Industry Europe and other sources on the 21st.
The USS Oakland is an Independence-class littoral combat ship built on a trimaran hull. Homeported in San Diego, it operates in the Pacific. Austal USA built the vessel and delivered it to the Navy in 2021.
The core of the contract is replacing the ship's main service diesel generator. For the work, Austal USA will use the 9,000-ton floating dry dock at its San Diego ship repair facility, which recently received official Navy certification. The dry dock measures 162 meters long and 47 meters wide, and can lift a vessel out of the water for repairs extending to the lower hull.
The generator replacement includes critical work below the waterline, requiring use of the dry dock. The company says the approach improves repair efficiency compared with working on a ship moored pierside, and can return the vessel to operations sooner.
The contract is notable as the first case in which Austal USA will put its newly certified floating dry dock to full use on an actual Navy ship repair project.
The company recently secured certification allowing it to safely dock vessels at the facility and carry out routine inspections, hull cleaning, anti-corrosion coating and equipment replacement. On that basis, Austal USA plans to expand beyond littoral combat ships into maintenance work on a wider range of Navy surface vessels, including Arleigh Burke-class guided-missile destroyers.
San Diego is one of the main hubs of the U.S. Navy's Pacific Fleet. By securing its own dry dock there, Austal USA has reduced its reliance on outside repair facilities and built a base for handling everything from emergency repairs to long-term, large-scale overhauls in-house.
"We are now able to provide comprehensive dry dock support even for long-term repair work that takes more than a year," Austal USA President Gene Miller said. "The additional dry dock in San Diego expands the Navy's capacity to carry out complex maintenance projects and emergency repairs."
Austal USA's expanding MRO business is expected to draw interest during Hanwha's acquisition process. Along with local production facilities capable of building U.S. Navy ships directly, the company is strengthening MRO capabilities that generate recurring revenue across a vessel's entire life cycle.
With the United States pushing to expand its shipbuilding and MRO base to raise Navy vessel availability rates and clear a maintenance backlog, Austal USA could improve its competitiveness for future contracts if it builds a track record using the new dry dock.
The contest for Austal's U.S. unit is currently a two-way race. Hanwha Group has proposed an enterprise value range of $1.05 billion to $1.2 billion for the U.S. unit, excluding cash and debt. Wildcat Infrastructure, headquartered in Miami, has offered $1.25 billion to $1.35 billion. The two sides are expected to renegotiate final pricing after due diligence.
