Forgacs sale 'great news for Hunter': chairman Peter Burgess

The deal has been welcomed as good news for the region, especially with the buyer, Civmec Ltd, pushing hard to win work with the submarines and the Navy’s future frigate program.

Civmec is based in Henderson, WA, in the heart of that state’s shipbuilding precinct at Cockburn Sound, south of Perth.

It has outlets in Broome, Darwin, Gladstone, Macksville, Sydney and Singapore and employs more than 1000 people.

It listed on the Singapore Stock Exchange in 2012, and on recent share trading has a market capitalisation of $S195million ($193million).

Forgacs chairman Peter Burgess said the sale was great news for the Hunter because Civmec had been very successful in winning oil and gas industry work in WA and was keen to replicate its success on the East Coast.

Mr Burgess said Civmec was also wanting to expand into Naval shipbuilding and had been talking to the various large international companies involved in submarine design.

While the deal had been agreed to in principle, it had to be approved by Civmec’s shareholders at a meeting in December.

Mr Burgess declined to comment on a sale price, but said he and the other shareholders in Forgacs were likely to take a stake in Civmec as part of the deal.

He said Civmec approached Forgacs ‘‘a few weeks ago’’ about a sale.

Paterson MP Bob Baldwin welcomed the sale as the start of a new era for Hunter defence work, giving Forgacs the ‘‘reach and capital it needs to pursue bigger and better contracts’’.

Hunter Unionssecretary Daniel Wallace was cautiously optimistic about the announcement, saying a lot depended on how many jobs were saved as a result, and whether the Coalition government could end the ‘‘valley of death’’ that had dogged shipbuilding companies across Australia.

Mr Burgess said Civmec was likely to keep using the Forgacs brand in its Newcastle operations.

He said machinery from Forgacs’s Hexham engineering arm would be moved its Tomago shipyard, putting the two businesses on the one site.

Forgacs would hold onto Ingleburn-based products arm, ‘‘Forgacs-Broens Pty Ltd, and Civmec was not taking Forgacs’s leased Carrington site or its workshop in Gladstone, Queensland.

Mr Burgess said Civmec wanted to take a core of skilled staff from Forgacs, but he was unable to say how many jobs would transfer.

At the height of the Navy’s air-warfare destroyer contract, Forgacs had more than 1000 employees at Tomago but this is down to 100 tradespeople and about 40 project managers.

It also had about 30 people at Hexham.

 ‘‘But the last destroyer modules will leave Tomago soon, and there is no more work there at present,’’ Mr Burgess.

Civmec was founded in 2009 by its executive chairman, James Finbarr Fitzgerald, and its chief executive Pat Tallon, listing in Singapore in 2012.

Mr Fitzgerald said on Tuesday that buying Forgacs was ‘‘an ideal opportunity to replicate our West Coast operations on the East Coast, while adding Forgacs’ naval construction and repair capacity’’.

Describing Forgacs as Australia’s ‘‘largest privately owned engineering and shipbuilding company’’, Mr Tallon said the purchase was ‘‘an exciting opportunity to gain a long-established foothold in defence shipbuilding’’.

Forgacs was established in 1962 by its founder, the late Stephen Forgacs, who took the business into Naval repairs in 1990.

 Fairfax Media files show Civmec has won a range of big engineering contracts in recent years, working at Gina Rinehart’s Roy Hill iron ore mine and joining with another company, Sedgman, to win a $145million BHP contract in the Pilbara.

It launched its defence division in September, appointing a former Royal Australian Navy Commodore, Mike Deeks, to head the unit.

Chairman James Fitzgerald said Civmec wanted to work with a lead contractor on a submarine bid.

‘‘Our experience means we certainly have the capability to be their in-country builder,” Mr Fitzgerald said.

By Tim Dornin

 Australia’s next fleet of submarines will be agile, potent, affordable and sustainable but the federal government is in no hurry to make a decision on who will build them, a defence conference has been told.

With both the submarines and the wider Defence White Paper, the government will take the time to ensure it adopts the right strategy for a modern Australia, Defence Minister Marise Payne says.

‘‘To meet our future challenges the government will deliver an Australian Defence Force with the highest levels of military capability and technological sophistication,’’ Senator Payne told the Submarine Institute of Australia conference in Adelaide.

Within that context, she says submarines remain a core strategic capability.

‘‘We don’t see the submarine as an option but a necessity,’’ the minister said.

‘‘Submarines are a vital element of our defence strategy today and will be so into the second half of this century.’’

Chief of Navy, Vice Admiral Tim Barrett, said if Australia wanted to play a role in deterring conflict and contributing to peace and security around the world it must have a defence force sufficiently lethal to sanction anyone who might use armed force.

‘‘This is where the submarine features in Australia’s strategic reckoning,’’ he said.

‘‘Our submarines deliver our government with the requisite lethality to achieve these outcomes.

‘‘Such is the destructive power of submarines.’’

The comments came after an industry spokesman said the defence portfolio had suffered from ‘‘decision paralysis’’ with three ministers over the past two years.

Australian Made Defence spokesman Chris Burns said the defence sector was looking to Ms Payne for a fresh outlook on defence acquisition.

‘‘For years governments have failed to lead the nation towards a continuous shipbuilding strategy, as a result the Australian shipbuilding industry is being forced to lay off workers,’’ Mr Burns said.

‘‘This is not just about the defence businesses, it’s about national security, sovereignty, skills and Australian taxpayer dollars.’’

Tuesday’s conference also brought together the three groups from France, Germany and Japan bidding to build Australia’s next fleet of submarines.

If successful, the French plan to build a submarine called the Shortfin Barracuda Block 1A, which has been designed specifically for the Australian Navy.

The Japanese have proposed building a sub based on the Soryu Class currently in service and Germany’s ThyssenKrupp Marine Systems has proposed an 89-metre submarine known as the Type 216.

All three groups must have their final bids before the federal government by November 30.

 APP