They said the projects would directly secure "more than 2,500 jobs for decades to come", as well as "thousands of additional jobs with suppliers".

The government argues it will commence the build in Adelaide as a way of ensuring a continuous level of activity there, to avoid the so-called 'valleys of death' between projects which sees a loss of employment and workforce expertise, once current work on Air Warfare Destroyers is complete.

However, despite the problems of steel maker Arrium in South Australia, Senator Payne said the steel for the vessels was expected to be sourced overseas, as there was no suitable steel for this particular project produced by an Australian manufacturer.

"These announcements provide for two shipyards to implement the Government's commitment to a continuous build of naval surface ships in Australia", Mr Turnbull and Senator Payne said.

"Major warships will be built in Adelaide and minor vessels in Henderson, Western Australia."

The projects "will ensure Australia retains a sovereign capability to build and sustain its naval vessels".

The government's plans will see the construction of Offshore Patrol Vessels begin in Adelaide from 2018 "following the completion of the Air Warfare Destroyers and transfer to Western Australia when the Future Frigate construction begins in Adelaide in 2020".

"This approach ensures that jobs and skills are retained in Adelaide", the government says.


Three designers have been shortlisted for the $3 billion offshore patrol vessels: Damen of the Netherlands, Fassmer of Germany, and Lurssen of Germany and will now be asked to refine their designs.

Similarly, three designers - BAE Systems with the Type 26 Frigate; Fincantieri with the FREMM Frigate, and Navantia with a redesigned F100 - have been short-listed to refine their designs for the navy's frigates which, as has already been announced, will all be built in Adelaide with the $35 billion projected expected to commence construction in 2020.

Austal Ships Pty Ltd has been selected as the preferred tenderer to construct and maintain up to twenty-one replacement steel-hulled Pacific Patrol Boats in Henderson, Western Australia, at an estimated cost of more ore than $500 million creating over 130 jobs.

Once the patrol boats are constructed, the plan is to maintain them in Cairns with "through-life support and sustainment (including deep maintenance) valued at a further $400 million over the life of the boats".

Defence industry representatives welcomed the announcement.

National spokesperson for the Australian Made Defence campaign Chris Burns said it "breathes hope back into the defence industry, which can now start to make significant investments to deliver key projects in the years to come".



Australian Industry Group chief executive Innes Willox said the announcement offered certainty to Australia's defence industry as its gears up to construct 12 Offshore Patrol Vessels, 21 Pacific Patrol Boats and 9 Future Frigates.

"Designating two shipyards – in Adelaide for major warships and Henderson in Western Australia for minor vessels - to implement the Government's continuous naval shipbuilding plan makes considerable sense, one that recognises the agility and capability of Australia's navalconstruction industry", he said.

"Initial construction of the OPVs in Adelaide in 2018 with transfer to Henderson once the delayed Air Warfare Destroyer construction program is complete will free up capacity to begin construction of the Future Frigates in Adelaide, in 2020. While this strategy is likely to add cost to the OPV program, it will nonetheless provide scope to share the workload across the nation.


However, the federal opposition portrayed the decision as " just another sign of this Government's chaotic mismanagement of our strategically vital naval shipbuilding industry".

"So rushed was this announcement that neither Mr Turnbull or Senator Payne could answer basic questions such as how many Offshore Patrol Vessels would be built in Adelaide", a joint statement from Labor Defence spokespersons said.

"Nor would they confirm there is a contractual requirement for the Offshore Patrol Vessel build to shift to Western Australia in 2020."

"Anything short of a signed contract is just another empty promise", they said.