Queensland wins $5b army vehicle deal

HOLDEN’S former engine plant in Melbourne will remain vacant for now after a Queensland consortium was awarded a federal government contract to build more than 200 armoured defence vehicles for the Australian army.

The factory at Fishermans Bend was to have been the assembly plant for a rival Victorian bid to build BAE Patria AMV-35 vehicles under the Defence Department’s hotly contested $5 billion Land 400 program.

Instead, the contract will go to German-based Rheinmetall Defence for its armoured Boxer Combat Reconnaissance Vehicle (CRV) to be built at a factory yet to be established at Ipswich, south-west of Brisbane.

The Victorian government has cried foul, with state industry minister Ben Carroll calling the decision a political move to shore up marginal Coalition seats in Queensland ahead of the next federal election.

Victoria had been banking on the federal contract to help soak up some of the hundreds of unemployed automotive industry workers made redundant when Ford, Holden and Toyota quit manufacturing in Australia over the past two years.

But the federal defence minister, Christopher Pyne, said the Rheinmetall Boxer CRV was recommended by the Defence Department after rigorous testing over three years.

However, the Boxer is said to be more expensive than the AMV-35, meaning that only 211 vehicles can be afforded instead of the original 225 called for under the contract.

The first 25 are expected to be built in Germany with Australian workers working alongside German counterparts before the program shifts to Queensland where 330 new jobs will be created.

Not all is lost for Victorian manufacturing, however, with a number of manufacturers and technology companies in the state picking up contracts to supply components for the Boxer CRV.

The federal government says 170 new jobs will be created at these suppliers in Victoria, along with another 140 jobs in New South Wales where companies such as Port Kembla-based Bluescope Steel will have a large input into the manufacturing process.

In Queensland, Rheinmetall has announced plans to turn its Boxer CRV operation into a broader “military vehicle centre of excellence for the continuous design, manufacture, export and support for military vehicles, turrets and tactical systems”.

While the initial purchase will cost $5 billion, the overall transition to the new vehicles and maintenance over the expected life of 30 years is expected to cost $15.7 billion, making the program the biggest in Australian army history.

In Melbourne, Holden sold 37.7 hectares of prime property at Fishermans Bend to the Victorian government in 2016.

The site is earmarked for a technology hub, expanding on existing facilities bordering the area. These include Boeing, the Australia Defence Force research centre and General Motors Design Australia.

Victoria also retains Thales Australia’s factory in Bendigo where more than 1000 Bushmaster armoured troop carriers are being built for the army.