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Forgacs to pull the plug on its Newcastle shipbuilding site in 2015 unless Government expedites naval shipbuilding project decisions

February 28, 2014 • News

Forgacs Engineering Pty Ltd, one of the major shipbuilding companies in Australia, has announced that it intends to close down its site in Newcastle by the middle of 2015 unless the Federal Government expedites naval shipbuilding project decisions.

Image credit: flickr User:  novoimagery

Image credit: flickr User: novoimagery

The company has been conducting refit and maintenance work for the Royal Australian Navy since 2009 and has been constructing hull blocks for the Hobart-class destroyers, but this might come to a stop unless the Government expedites decisions on new naval contracts that were put on hold by the previous government.

According to the article on ABC, the Abbott Government has announced definite decisions on new contracts following the production of the new Defence white paper due at the beginning of 2015.

However, Lindsay Stratton, Chief Executive Officer of Forgacs, says that would be too late.

“I go to bed every night thinking about what the hell we are going to do with 900 people if we are not going to get the extension of these programs. From a Newcastle perspective that’s a big deal, 900 jobs in that region,” he said.

According to Mr Stratton, unless the process is completed sooner, they will be forced to sack 300 workers in three months’ time and another 300 after that and pull the plug on its operations by August of next year.

“Our wages bill is $10 million a month. We can’t hold on to those people, as terrible and sad as that sounds. We can’t,” he said.

Defence Minister David Johnston warned the industry that they must “deliver productivity”, despite stating that he is very responsive to the arising concerns.

“We must be cost effective, so our earned value figures must be right up around a dollar for dollar,” he said.

Many believe that that was his way of warning the local industry to improve their work since there is not much money to throw around and the new government is currently dealing with a crisis in resourcing for Defence.

“It’s been a hospital hand ball. The change of government has yielded the fact that there are virtually no plans to create a shipbuilding enterprise,” he said.

According to him, the Government will also produce an industry policy along with the white paper due to be released next year.

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