By Max Blenkin

In a community where more and more factories were shutting up shop, the auto business was in terminal decline and unemployment was soaring, legislators desperately sought to attract new jobs and wealth-creating industries.

This isn’t South Australia in the wake of Holden’s closure, but the US mid-west a decade ago as the global recession started to bite. Jennifer Granholm, the former Democrat governor of Michigan, said they adopted a motto: “Go anywhere, do anything to bring jobs to Michigan.”

And that’s how Italian shipbuilder Fincantieri came to buy up a pair of historic shipyards on the Great Lakes, invest US$140 million to upgrade facilities, and start building the US Navy’s new Freedom class Littoral Combat Ships (LCS). These vessels now emerge from the Fincantieri Marinette Marine (FMM) yard in Marinette, Wisconsin, right next door to Michigan, splashing sideways into the Menominee River at the rate of one every six months.

Since 2009, FMM has hired more than 700 additional employees, and every day 1,500 workers plus another 1,000 suppliers and sub-contractors enter the yard.

FMM has 200 suppliers in Wisconsin and Michigan and 800 in total across 42 states. Fincantieri also acquired the civil yard, now Fincantieri Bay Shipbuilding, and an aluminium fabricator which makes the LCS’s superstructure, Fincantieri ACE Marine.

South Australia now may not be in the dire state that Wisconsin and Michigan were in at the peak of the global financial crisis, but Fincantieri cites its experience in the US, specifically its investment and technology transfer to create a sustainable shipbuilding industry, as an exemplar for what it could do in Australia if it wins the deal to construct nine Future Frigates for the Royal Australian Navy.

Fincantieri Australia chairman Dario Deste said Project SEA 5000 featured three pillars – build advanced warships, build them in Australia with a local workforce, and develop an Australian industry capability.

“We have done this operation many times,” he said. “The US is significant and very similar to Australia. There was a strong program for the US Navy and the opportunity was to build a local shipyard and create a sustainable business. We went there, we won the contract and we bought the shipyard. We went from a basic shipyard to a state-of-the-art shipyard.”

Deste said right now Australia was the hottest spot in the world for shipbuilding. As well as the nine Future Frigates, there are the 12 Future Submarines plus 12 Offshore Patrol Vessels. With the demise of the car industry, the government is using its investment in new ships to create a new national high technology industry based around shipbuilding.

Wisconsin and Michigan are rust belt states which voted overwhelmingly for Donald Trump and his promise to “Make America Great Again.” Beau Boulter, a former Texas Republican congressman and, along with Jennifer Granholm a Fincantieri board member, played a key role in bringing the Italians to Marinette.

He admitted there was some initial resistance, with one Congressman declaring he did not want Italians coming in and taking jobs from Americans.

“He didn’t get the message,” Boulter said.

Granholm said in every community there was a fear of outsiders, especially that they would take away jobs. “If you can explain they are coming to bring jobs, that’s a whole other thing,” she said.

Granholm said Fincantieri made the case that they wanted to come to the mid-west as a US company, albeit a subsidiary of a foreign firm. “We are a manufacturing state and we love advanced manufacturing, and we are not giving up on manufacturing. So the idea for us was to really focus on where we could add value,” she said.

She and Wisconsin governor Jim Doyle travelled to Italy to invite Fincantieri to come to the mid-west. “We wanted them to hire locally and we wanted them to invest locally, and we wanted them to be part of the community locally and we wanted them to use local suppliers so we could create an industrial cluster around advanced manufacturing,” she said.

Fincantieri did just that and even exceeded their promises, she said.

Through the LCS project, for which Fincantieri is partnered with Lockheed Martin as prime contractor, local employment at the plant has increased more than 80 per cent. The company has invested in local training to build its skilled workforce, and nurtured suppliers.

In the US as in Australia, Fincantieri wasn’t well-known, and Granholm said she didn’t know them at all.

“But the fact that they over-performed on what they said they were going to do was a really great thing,” she said. “It wasn’t a bait and switch. They didn’t bring in a bunch of people, they hired our people, they were committed to our people, they were committed to our suppliers.

“Which is exactly what we wanted,” she added. “They have helped nurture a bunch of suppliers. All of these companies got a lifeline and are now thriving. It is the largest employer up there.”

One employer is Team Industries which supplied pipework for power plants, factories and now warships, launched eight years ago with the partnership with Fincantieri.

From supplied plans, the company makes up pipe spools (sections), with up to 90 per cent of welding done under controlled conditions in their factory rather than on-site. One of its three facilities is now devoted just to the marine side of the business.

“If it’s super-critical steam, lethal services, 100 per cent x-ray, that’s what we thrive on. We introduced ourselves to naval specs, the military, the copper-nickel, the bending, that’s what we have been able to grow on,” said Team Industries president John Panetti.

Dario Deste said Fincantieri would focus on building a supply chain in Australia, as it did in the US, with very real prospects for Australian firms to export into the company’s global supply chain.

Already the company has given a taste of what could follow, with WA engineering firm Hoffman contracted to construct a bow thruster for a landing ship for the Qatari Navy. Bluescope Steel has been awarded a pilot contract for supply of steel for cruise ships under construction overseas.

Fincantieri Australia has also released a request for proposal (RFP) to South Australian shipbuilders for the build of three cruise ship blocks in Adelaide.

Adelaide Ship Construction International, ASC Shipbuilding, MG Engineering and Ottoway Engineering have been invited to provide quotations for the build of the blocks using Australian steel, starting in the second quarter of 2018.

Building these ship sections would give Australian industry an opportunity to demonstrate its capabilities and create a trusted working relationship with Fincantieri, the Future Frigate contender stated on November 24. The successful placement of other shipbuilding work in Australia would also bolster Fincantieri’s Australian Industry Capability (AIC) planning case for its SEA 5000 Future Frigate bid.

Deste said the purpose of this initiative is to start up Fincantieri’s shipbuilding operations in Adelaide and to gain familiarity with local partners’ capabilities leading into SEA 5000.

With SEA 5000 bids now submitted and under consideration, Fincantieri has emerged as a very serious contender in what some initially saw as just a two-horse race. It’s up against Spanish shipbuilder Navantia with its F-5000 which is a variant of the Hobart class AWD, and BAE Systems Australia with its Type 26, a new design for which work has just started on the first vessel for the Royal Navy.

The requirement for SEA 5000 was spelled out in the 2016 Defence White Paper which says nine new Future Frigates “optimised for anti-submarine warfare” will enter service from the late 2020s, replacing the Navy’s eight Anzac frigates which entered service between 1996 and 2006.

With proliferation of more capable submarines across the Asia Pacific, the acquisition of new ASW ships will redress a longstanding shortfall in ASW capability,  when the Navy didn’t see this as a priority and in any case lacked a dedicated ASW helicopter.

For SEA 5000, Fincantieri is proposing its version of the FREMM, a European-designed multi-mission vessel. Of the 10 FREMM vessels to be acquired by the Italian navy, six are in service. Fourth of class, ITS Carabiniere which was commissioned in April 2015, visited Australia earlier this year to showcase this capability.

Italian FREMMs displace 6,700 tonnes and measure 144 metres, comparable to Australia’s new Hobart-class AWDs. Crew complement is 147, with an extra nine for a second helicopter, and space to accommodate up to 200 personnel if required.

Fincantieri Australia is confident it can build FREMMs in Australia from 2020 because the company is a global shipbuilding powerhouse, constructing a range of vessels in yards in Italy, the US, Vietnam, Norway, the UAE, Romania and Brazil. Enormous Fincantieri-built cruise liners are regular visitors to Australian ports.

At around 3,700 tonnes the Freedom-class LCS is smaller than a FREMM, and the design stems from a US Navy requirement for a new vessel able to perform a range of missions including ASW and surface warfare in inshore waters to replace 71 older types, including FFGs and minehunters. Twenty-nine vessels are currently planned.

There are actually two types of LCS, the Freedom class vessels made by Fincantieri, and the Independence class made by Australian firm Austal and General Dynamics in Alabama. Independence class vessels feature the distinctive trimaran hull.

These are the greyhounds of the fleet. Freedom class vessels have clocked up more than 45 knots. Their shallow draft of under four metres means they can go places and visit harbours off-limits to larger vessels. These have already deployed into the shallow disputed waters of the South China Sea including a rumoured sortie directly over the top of Mischief Reef at 40+ knots.

The LCS has been criticised as being too lightly armed and vulnerable. Although proponents point out that every new US vessel, including the well-regarded Perry class FFGs (of which Australia still has two) has been criticised as being too lightly armed and vulnerable.

And in any case it’s not appropriate to judge them against the fleet heavyweights such as the Arleigh Burke class DDGs and Ticonderoga class cruisers which have different missions.

But the US DoD has decided the Navy needs better armed vessels with greater blue water capability, and has launched the FFG(X) program, for which Fincantieri is offering a FREMM derivative as a mature proven design.

Decision time for FFG(X) is 2020, by which time Australia will have started construction of its own Future Frigates, which raises the intriguing prospect that Australia and the US could again end up operating a similar class of surface combatants.

Should the US head down this path, the FREMMs would be constructed at Marinette, requiring substantially more investment and making the people of Wisconsin and Michigan very happy, along with the politicians and the large number of firms in the Fincantieri supply chain.

This article appeared in the November-December edition of the Australian Defence Business Review