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Joint venture logical choice for defence Contract

February 14

Joint venture is the logical choice for NZ defence contract

Having joined forces, Tenix Shipbuilding NZ and Babcock New Zealand say they are the logical choice for the forthcoming Royal New Zealand Navy vessel contract.

The two companies are proven partners in delivering New Zealand’s maritime capabilities, particularly through their experience in the ANZAC ship programme.

Tenix Defence Managing Director Robert Salteri and Babcock New Zealand Chief Executive Mike Franklin said today that Tenix and Babcock are the only two companies with the existing facilities and skill base, the proven track record and the New Zealand industry connections to make them the logical choice for the prime contractor for the RNZN’s future naval vessel requirements.

Both companies have been providing services to the New Zealand maritime sector for many years.

Mr Salteri said the New Zealand build programme - a requirement of the ANZAC ship project - had delivered substantial benefits to New Zealand through jobs, capability and infrastructure.

Figures from the government’s Industrial Suppliers Office suggest the project generated about 1200 jobs in New Zealand.

He said that the Tenix-Babcock team believed that their combined New Zealand based infrastructure, with supporting skill-base, intellectual property and technology, would dramatically contribute to the Government’s growth and innovation framework announced earlier this week by Prime Minister Helen Clark.

A Tenix-Babcock build of the Ministry of Defence’s recently announced naval vessels has the potential to even further the success of the ANZAC frigates.

“It generates more jobs and puts New Zealand dollars back into New Zealand, benefiting New Zealand’s economy,” Mr Salteri said.

Mr Franklin said that through the individual and collective strengths of the two companies, Tenix and Babcock offered unrivalled capability as they could build and provide through-life support for all classes of vessels here in New Zealand.

“This is a contract which offers potential for meaningful New Zealand industry involvement.

“Together with Tenix, we will be actively championing a total New Zealand solution,” Mr Franklin said.

Tenix Shipbuilding NZ is a subsidiary of Tenix Defence, Australasia’s largest defence and technology contractor.

With over 30 years experience, Tenix has constructed more than 200 vessels, ranging from guided missile frigates to patrol boats and specialist commercial vessels such as container ships, survey and offshore supply vessels, tugs and fishing trawlers

Babcock New Zealand Limited is New Zealand's largest integrated mechanical, electrical and electronic engineering facility, supplying products and services to a broad range of international naval and a growing range of commercial shipping customers.

In New Zealand, Babcock currently provides in-service support for all RNZN vessels, including the ANZAC frigates built by Tenix Defence. It is located at the Devonport Dockyard.


ENDS

Information brochures and images available by contacting kate@comtrumps.co.nz.


Tenix Defence appoints New Zealand manager

Australasia’s largest defence company, Tenix Defence, has appointed former Industry New Zealand head Bruce McLean as its New Zealand manager.

Bruce has been charged with coordination of the Tenix bid for the NZ$500 million Royal New Zealand Navy vessel construction programme which was annouced by the Minister of Defence, Mark Burton last month.

Prior to joining Tenix, Bruce was Acting Chief Executive for Industry New Zealand over its establishment period.

From 1991-1994, he was Prime Minister Jim Bolger’s advisor on industry matters and has a background in project management, ranging from industry to marine, defence and property.

Bruce has held various management and engineering positions in Canada, Israel and New Zealand.

He was the New Zealand project manager for the successful joint venture tender for the ten-ship ANZAC frigate project, won by Tenix Defence in 1989.

In late January, Tenix Defence confirmed it would be a bidder for the Navy vessel construction programme, saying that if Tenix was successful, it would mean continued jobs and earnings for New Zealand businesses.

Independent research shows the ANZAC ship project has bought in work for over 600 New Zealand companies and has provided over 3000 jobs for New Zealanders, including 300 jobs at Tenix’s shipbuilding yards in Whangarei.


ENDS


Leaders in maritime capabilities join forces

Tenix Shipbuilding NZ and Babcock New Zealand have joined forces to build and provide through-life support for the Royal New Zealand Navy’s new naval vessels.

These two companies are the proven partners in delivering New Zealand’s maritime capabilities through their experience as builders for, and through-life supporters of, the Royal New Zealand Navy.

Both companies have been providing services to the New Zealand maritime sector for many years.

They are the only companies with facilities and a skill base in place, the track record and New Zealand industry connections to make them the logical choice for the prime contractor for the RNZN’s future naval vessel requirements.

Tenix Shipbuilding NZ is a subsidiary of Tenix Defence, Australasia’s largest defence and technology contractor.

With over 30 years experience, Tenix has constructed more than 200 vessels, ranging from guided missile frigates to patrol boats and specialist commercial vessels such as container ships, survey vessels, offshore supply vessels, tugs and fishing trawlers

Babcock New Zealand Limited is New Zealand's largest integrated mechanical, electrical and electronic engineering facility, supplying products and services to a
broad range of international naval, and a growing range of commercial shipping customers.

In New Zealand, Babcock currently provides in-service support for all Royal New Zealand Navy vessels, including the ANZAC frigates built by Tenix Defence. It is located at the Devonport Dockyard.


Tenix Shipbuilding NZ

Tenix Shipbuilding NZ is a shipyard and fabrication site in Whangarei where a major part of the ANZAC ships have been constructed.

The contract, worth about NZ$7.3 billion, has delivered two frigates to the Royal New Zealand Navy and will have delivered five to the Royal Australian Navy by the end of this year. The project will continue until a total of ten frigates have been completed.

By contract completion, Tenix will have invested NZ$955 million into New Zealand industry through over 500 companies throughout New Zealand as a result of their commitment to New Zealand industry.

Tenix has delivered some 200 paramilitary and specialist commercial vessels, backed by its extensive experience in designing, building and supporting the maritime industry.

It has constructed 35 patrol boats, all built to commercial standards. These boats were exported to Hong Kong, Kuwait, the Philippines and the Pacific Island nations.

Tenix has three shipyards: Whangarei; Williamstown, in Victoria; and Henderson, in West Australia.

The Whangarei shipyard was purpose-built and Tenix has plans to expand it to provide launch facilities.



Babcock New Zealand

Babcock New Zealand operates New Zealand’s largest ship repair and engineering operation out of the Royal New Zealand Navy’s refit and repair facility at Devonport.

The company provides in-service support to a wide variety of commercial ships and voyage repairs at any New Zealand port. Services include dry-dock and afloat repairs, together with maintenance and installation of propulsion equipment, mechanical systems, marine engines, electrical and distribution systems, communication and navigation systems, and hydrographic and oceanographic systems.

The company works closely with the Royal New Zealand Navy to provide high-quality marine engineering and technical support services to the fleet. Babcock engineering staff develop detailed designs to upgrade and modify naval ships to improve performance and operational availability.

The company has steadily grown its commercial marine repair operation to now account for over 50 percent of turnover.

New developments for Babcock include a thriving fishing vessel repair business and a growing reputation in the superyacht repair industry. Babcock has been invited to tender for the build of a number of significant superyacht projects.

Babcock’s marine business has a clear export focus, with projections of over $10m of foreign exchange earnings for the last 12 months.


The ANZAC Ship Project – invaluable to New Zealand industry

In September 1997, an independent study into the effect of the ANZAC ships project on New Zealand companies found that those involved improved production by over 30 percent.

The report was commissioned by the Defence Industry Committee of New Zealand and was conducted by Kriegsmann Research.

It found that the industrial production of those participating companies increased by 82 percent between 1991 and 1997, compared to an industry average of just under 50 percent.

It found that the companies had superior economic, operational and financial performance compared to industry overall.

The project was the most successful in the world in terms of cost efficiency and contribution to participating companies’ international competitiveness.

It significantly contributed to the companies’ capability development through Tenix promoting best practice philosophies and it added a new dimension to the companies’ marketing capabilities.

It found that, as a result of the work from Tenix, their reputations increased for being able to participate in large projects, to deliver to tight deadlines and to produce work of the highest standard.

Speech by Robert Salteri, Executive Director of Tenix Defence Pty Ltd to announce the joint venture.


(Politicians__address)_____(will provide later)______________distinguished guests, ladies and gentlemen.

It gives me great pleasure to welcome you here to share the announcement of an important joint initiative between Tenix Defence Pty Ltd and Babcock New Zealand Ltd.

The marine industry is one of the star performers in New Zealand and it is set for even more impressive performance. With turnover in excess of $600 million, and year on year growth of 23%, New Zealand’s marine excellence is clearly not confined to the America’s Cup.

As I speak more than $200 million of large recreational vessels are under construction here in New Zealand and international demand for kiwi boats continues to increase.

Our partnership’s early focus will be to meet Defence’s requirement for up to three different classes of ship: a multi- role ship and both inshore and offshore patrol vessels.

Our team believes that our combined New Zealand based infrastructure, with supporting skill-base, intellectual property and technology, will dramatically contribute to the Government’s growth and innovation framework announced earlier this week by Prime Minister Helen Clark.

My colleague Mike Franklin of Babcock will address you shortly and give you his perspective of the importance of our partnership, however let me first tell you about Tenix.

Tenix has delivered some 200 paramilitary and specialist commercial vessels backed by our extensive experience in designing, building and supporting in the maritime industry.

We have built two guided missile frigates, and are well past the half-way mark in a contract to build 10 ANZAC frigates, eight for the Royal Australian Navy and two for the Royal New Zealand Navy..

We’ve constructed 35 patrol boats, all built to commercial standards. Some were exported to Hong Kong, Kuwait and the Philippines; the others were built for the Pacific Patrol Boat Programme for 12 Pacific Island nations.

Tenix has constructed fishing vessels, marine science vessels, ferries, tugs, oil and gas support ships, a 93 metre container vessel and the Australian Navy’s navigation training ship.

Many of these vessels were built to Tenix designs.

Tenix has three shipyards – Williamstown in Victoria, Henderson in West Australia and Whangerei here in New Zealand.

On both the Pacific Patrol Boat and Australian ANZAC programs Tenix is also providing through life support. Tenix is experienced in working closely with customers to arrive at cost-effective solutions to meet their requirements.

It may not be common knowledge that our ship building facility at Whangarei has been a major contributor since 1992 to the entire two-nation ANZAC ten-ship program. The site is now responsible for the construction and fit-out of seven of the eleven modules that make up each frigate.

The percentage of each of Australia’s ANZACs build in New Zealand has increased as the project has progressed and the degree of fitout improved markedly. This reflects our confidence in the quality, timeliness and cost effectiveness of shipbuilding in New Zealand.

This New Zealand build program has delivered substantial benefits to New Zealand
in the form of jobs, capability and infrastructure. New Zealand industry participation was a key contract criteria.

Independent analysis done of the ten-ship program indicates that the net benefit of the project was both direct and indirect. From the direct perspective it injected over NZ$800m of work into the NZ economy since 1991. Figures from the government’s Industrial Supplies Office suggest it generated, on average, 1200 jobs. Other benefits included avoidance of an additional overseas debt and the increase for local industry in technology, capability and skills leading to increased exports.

Building Defence’s newly announced vessels in New Zealand has the potential to secure existing positions and generate many more new jobs over some six years of work. Using ISO’s multiplier again, this would mean an additional benefit amounting to around 75% of the $500 million budgeted cost of the program.

As well, building in NZ will reduce the risk of currency exposure by largely spending in New Zealand dollars.

The benefits of the investment in NZ infrastructure and capacity will be further consolidated with our participation with Babcock in this new Defence project.

While I have talked about Tenix’s involvement in the ANZAC Ship program, I am sure most of you will also appreciate the important role that Babcock has played in the program as the NZ Navy’s in-service support partner.

Mike will expand on this shortly, however the key attribute we offer from our respective pedigrees is the proven track record in both in-country ship build and whole of life support. This is the unique benefit that the Tenix/Babcock team can now deliver as a potential partner to New Zealand.

Other companies are suggesting they can build these vessels in New Zealand. But, we are the only team with the current infrastructure, track record and New Zealand industry’s ability to deliver on this claim.

Our team has the ability to leverage our respective substantial investments in infrastructure, skills and capability to build all the vessels sought by NZ to the required schedule and design.

I’d like to point out though, that we’re not just here with the defence bid in mind, we have already established a sustainable operation to take advantage of commercial as well as naval opportunities. These have significant export potential.

The Tenix Babcock strategy, at this stage, is design independent. By doing this we feel we can deliver maximum value to the Ministry of Defence. We can thus respond with a design that exactly meets the requirement.

We have already shown that we can work with licensed intellectual property from any origin; indeed the ANZAC design originated in Germany. We have ongoing good relationships with most large marine design houses and the classification societies and have both patrol boat and ferry designs of our own.

Our strategy to build all three platforms in NZ would also achieve program economies generated through equipment commonalities across the total program. Use of common systems would be reflected in savings in equipment support and training.

And, if required, we can also offer flexible acquisition options and financing arrangements to suit New Zealand.

Before handing over to Mike, let me reiterate a couple of key points.

The Tenix/Babcock team is a trusted and proven partner to New Zealand and has been throughout the build and support phase of the ANZAC ship program.

We are now seeking to extend this relationship to become the Ministry of Defence’s chosen contractor for the next phase in this most significant extension of New Zealand’s maritime capability.

Thank you for your time, and I would now like to hand you over to my colleague Mike Franklin, chief executive of Babcock New Zealand Ltd.

Speech by Mr Mike Franklin, CEO Babcock New Zealand Limited to Announce the Tenix-Babcock Team

Introduction by Robert Salteri
Thank you very much Robert.
Introduction
Ladies and Gentlemen (honourable Guests), first let me say how pleased I am to be part of this exciting new venture between Babcock and Tenix.
This announcement not only marks the coming together of two internationally renowned defence contractors, but also launches an alliance of two of the most significant members of New Zealand’s marine industry during what will be seen as one of the most exciting periods in that industry’s history.
Babcock Background
Babcock has been in New Zealand now for almost eight years. We are the largest integrated marine engineering facility in the country and, being based at Devonport on Auckland’s North Shore, are one of the largest industrial employers in the region. We have over 250 full-time employees.
Babcock’s involvement in New Zealand is as the facilities manager of Her Majesty’s New Zealand Dockyard at Devonport.
Babcock’s commercial success has been hard won, the transition from a public enterprise into a fully commercial business has not been easy.
Over the years the company has steadily built up the commercial marine engineering and ship repair side of the business, from essentially a zero base, to a position where our commercial work exceeds that contracted by the Navy.
The results have seen foreign exchange sales of over $10 million this last year.
Our customer base now includes companies from the US, the Pacific Islands, Australia and Europe. Perhaps even more significantly the last 3 to 4 years has seen Babcock actively target New Zealand shipping companies such as TranzRail’s Inter Island ferries. They had largely given up on the prospect of getting quality work completed to time and budget in a New Zealand shipyard. We were able to turn that around and millions of dollars worth of skilled engineering work that used to be carried out in the shipyards of Eastern Australia, is now being successfully completed in Auckland.
Recent developments by Babcock at a corporate level has greatly improved Babcock’s capability and credibility to work with our team partners Tenix Shipbuilding New Zealand, to offer world class solutions to meet the requirements of the customer for the multi-role vessel and patrol vessels as they are being formulated.
Babcock acquired the internationally renowned ship designers and naval architects, Armstrong Technologies last year. Armstrong has a long record in the design of new, and modified, logistics ships, being involved in a number of projects for the UK Ministry of Defence and Middle Eastern nations.
Babcock also now owns a company called FBM, who is one of the world’s foremost designers and builders of patrol boats. Over 11,000 FBM designed hulls are now in service with many international navies.
New Zealand Project
We in New Zealand have the full support of, and access to, the resources of the Babcock Group. Combining that with our local partners Tenix, we offer unrivalled capability through our New Zealand operations. The individual and collective strengths of our companies in ship and patrol craft design allows us to work in close consultation with customer and designers. This will not only meets the requirements for operations in the South Pacific, but will also incorporate the best equipment solutions from New Zealand suppliers.
Our experience shows that involvement of New Zealand suppliers at the front-end of a project of this type allows great scope to reduce the costs of ownership through the life of a platform.
New Zealand’s marine industry is now not only world-class, but is proving to be cost effective. Hence, the growth of NZ marine export earnings by nearly 25% year on year since 1994. Last year alone, $280m in export earnings were generated by New Zealand boat builders and marine component manufacturers.
We are confident that this industry will be competitive against a whole of life capability offered from overseas.
There have been few Defence projects since ANZAC that offered potential for meaningful NZ industry involvement in the manufacture of equipment, and we welcome Government’s recent decision.
And, with Tenix, we will be actively championing a totally New Zealand solution.
Summary
So, In summary I would say that the project in which Tenix and Babcock will collaborate provides the greatest opportunity to involve NZ industry since the model was successfully proven on the ANZAC frigate project.
The benefits to NZ industry are undeniable, with the potential to create new jobs and exports for sustainable manufacturing within the marine industry.
New Zealand’s world-beating marine industry stands on the threshold, ready to make the next incremental step of its development. Involvement of Defence, Industry and Government in a spirit of true cooperation provides the best mechanism to take that step.

Thank you.


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