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“We’re employing again”: SA engineering firm escapes valley of death

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After years of struggling to survive in the so-called ‘valley of death’ between major defence contracts, an Adelaide engineering company has won a $5.5 million job that will allow it to start hiring new staff and expanding.

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At the end of 2014, Adelaide shipbuilding company MG Engineering was in trouble.

Having finished constructing the huge mast ship blocks for the Air Warfare Destroyer program in October of that year, the work had dried up.

It was years until the next major defence contract – the $3 billion Offshore Patrol Vessel program – was due to begin.

“We had to let go quite a lot of people,” managing director Anthony Brdar tells InDaily.

“The entire 2015-to-2016 period, up to now, we haven’t had a large contract.

“We’ve been just working month to month – just survival… we wouldn’t know what was around the corner.”

MG Engineering had to make 35 of its staff redundant.

The ambition of the business during what has come to be known as “the valley of death” was simply to survive, and to retain the skills in its workforce so that by the time new defence work arrived, the required professionals would still be prepared to take it on.

“We’ve been running a workforce of 13 [people] … for probably the last year and we’ve managed to hold on to skilled people who are capable of building ships,” says Brdar.

“That’s been the goal of our business – to sustain the skills till the defence [work] comes around.

“We [mostly] found jobs for them, but it was tough … sometimes we just kept the workforce when we had no work.”

But the uncertainty has ended.

MG Engineering has won a $5.5 million contract to build a fishing trawler for New Zealand-based company, Penwarden Holdings.

The ship will be built in South Australia and designed by local company Oceantech Design.

It’s is expected to create 15 new jobs within MG Engineering, and a further 25 within the local supply chain.

Brdar says the contract opens a whole new market for the company, and “the future is looking bright”.

“We’ve hung on – we’re turning the corner, and it’s exciting,” he says.

“In this fishing industry here, a lot of the boats … need replacing [including] 25 or 30 [boats] that will need to be built.

“There’s no reason why we can’t be employing 100 people in a couple of years’ time.”

He says his company, founded in 1996 in South Australia, is among several in the local industry that have suffered “hard times” over the past two years.

But he says the new work will secure its survival and expansion.

“We’re employing again – it’s good,” he says.

“We’ve built on the capability that we already have, and it’s put us in the position that … we’re ready to take on the jobs.

“Things are looking good for the future.”

Defence Industries Minister Martin Hamilton-Smith told InDaily it was important that local companies are able to maintain and build capacity in the lead up to the multi-billion-dollar defence projects set to begin next year.

“With over $89 billion of naval shipbuilding work commencing in Adelaide from 2018, it is vital that our local companies are able to build capability in the lead up to the Offshore Patrol Vessel program,” he said.

“We have to support our local industry at a federal and state level to build capability and experience and ensure Australian companies don’t miss out on the Future Frigate and Future Submarine programs.”

He said he wanted the Federal Government to commit to 90 per cent of Australian industry content in the build of the first Offshore Patrol Vessels “to stabilise the naval shipbuilding supply chain and increase our industrial capability”.

“We need to this to occur ahead of the larger, more complex $35 billion Future Frigate program in 2020, or we risk diminished local content.”

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