Local shipbuilder thrives, eyes expansion in gulf region.

Abu Dhabi, United Arab Emirates--As this Middle Eastern nation boosts the power of its sea service, business is booming for an indigenous company that not only is grabbing a large share of navy contracts, but also is planning to spread out in the region.

Abu Dhabi Shipbuilding is the product of an offset deal between the UAE and Newport News Shipbuilding, based in Virginia (now Northrop Grumman Newport News), which in 1994 was awarded a contract to refit the navy's patrol boats. Even though the contract did not work out, in 1996 ADSB was set up as a joint-stock company.

Now, at a time when U.S. and Western European shipbuilding contracts are drying up, ADSB is busy building corvettes, supply ships and patrol vessels, as well as expanding its facilities and partnerships.

The company shot to fame when it won a contract for the navy's "Baynunah" program at the end of 2003. The contract, worth at least $500 million, is reportedly the largest local defense contract ever awarded in the Gulf region. Under the contract, ADSB will deliver four 70-meter corvettes, with an option for two more, said William Stewart, vice president for marketing.

The water-jet-driven warships will have multi-mission capabilities, including coastal patrol and surveillance, mine detection and defense from air and surface attacks. Baynunah will be the largest steel-hulled naval vessel ever built using water jets as its main propulsion, the company claims. The Baynunah-class corvettes, which have an aluminum superstructure, are powered by four diesel engines, which in turn drive three water-jets.

Rolls Royce will supply the warship with its Kamewa water jets. The ship can go as fast as 30 knots and has a range of 2,400 nautical miles at a cruising speed of 15 knots, according to company documents. The corvette carries water, supplies and fuel, and has an endurance of about 14 days.

"It will be the only ship of that size to have a dedicated fixed hangar for helicopters," Stewart told National Defense. The ship's hangar is specifically designed for the Navy's AS 565 Panther helicopters that are built by Eurocopter.

Constructions Mecaniques de Normandie (CMN) in Cherbourg, France, is a partner on this project. The first ship completed final design and review at CMN's facilities. The first ship will be built in Cherbourg and is scheduled for delivery in 2008. The remaining three will be built in Abu Dhabi, said Stewart.

The Baynunah-class corvettes are a derivative of CMN's BR70 70-meter corvette design. A low draught allows the corvette to operate in shallow' waters.

ADSB chose the Italian company Alenia Marconi Systems as the combat systems integrator and combat management systems supplier.

The corvettes will be protected by the multi-ammunition soft-kill system, or MASS, built by Germany's Rheinmetall Marine Systems. Each corvette will have a two-launcher MASS, stated Rheinmetall documents. As a naval decoy system, MASS offers complete missile defense for both littoral waters and high seas.

European conglomerate MBDA will provide its Exocet MM 40 Block 3 missiles for ship defense. Each ship will be outfitted with eight Exocets. The Exocet has inertial cruise mode and active radar homing and approaches its target at high sub-sonic speed to deliver a 165-kilogram warhead.

Meanwhile, defense from aerial threats will come from Raytheon's MK 56 launchers that can shoot the Evolved Sea Sparrow Missile.

Ericsson, a Swedish company, will provide the agile multiple beam, three-dimensional surveillance radar. The communication suite on the corvettes operates Link 11, VHF and UHF frequencies.

Even though Baynunah is the flagship program for ADSB, the company has been working on several other efforts, said Stewart. "At the moment, we are building two 42-meter landing craft for the special forces," he said. "These are the derivatives of the three 64-meter landing craft that we have already delivered to the UAE navy."

The landing craft are multi-mission vessels, which can transport fuel, water and vehicles, including armored vehicles, he said. "They carry troops underneath the main deck. We have accommodation for up to 56 troops."

The landing craft can be used for amphibious support operations, mine laying and general supply missions. The craft are fitted with three sets of removable rails that are installed on the main deck for mine launching.

One of the 42-meter landing craft already has been delivered and the second one is under construction, he added. The strategic partners on this project are Conan Wu & Associates of Singapore and Times Marine Survey of the UAE.

Also for special operations, ADSB is working on four fast supply vessels, said Stewart. "It is a derivative of the fast troop carrier, but instead of people, it carries small armaments vehicles."

The vessels are built in cooperation with the company's Swedish design partner, SwedeShip Marine AB. These 26-meter FSV's will be similar to the navy's 12 so-called Ghannatha fast troop transport vessels. Like Gannatha, the vessels will be built of aluminum and will have a water-jet propulsion system.

The FSV is designed to be maneuverable at all speeds and capable of operations in shallow water. The ship can travel at a maximum speed of 35 knots when it is loaded. "It has a hydraulically operated bow ramp for vehicles and troops to offload on a beachhead," explained Stewart.

The contract is worth approximately $12 million, he said. SwedeShip is building the first vessel in Sweden, and the remaining three will be built in Abu Dhabi, he said. All four vessels are scheduled for delivery in 2006, said Stewart.

The company also is working on the mid-life refit of two 44-meter patrol vessels for the UAE navy. These vessels were originally built in Germany during the 1980s and are similar to the six TNC-45 fast attack ships already refit by ADSB.

The shipbuilder recently finished delivering to the navy and coast guard a total of 12, 24.5-meter boats that can reach speeds of 33 knots. The coast guard also received 63 9.5-meter assault boats with an aluminum hull, said Stewart. The design partner on that project is Seaspray, a local firm.

The company currently is expecting other contracts from the navy, said Stewart. One of them is for retrofitting existing vessels and two other contracts could be for new construction. "We have been working very closely with the navy on these contracts," he said, refusing to divulge more details.

One of the top UAE procurement officials, Staff Brig. Obaid Ketbi, said that the navy is working on a new frigate program. It is too early to discuss requirements and details, Ketbi said.

In anticipation of new business, ADSB is plowing away at expanding its capabilities. In February, the company announced it would build a high-tech facility to construct ships from composite materials. "The molding shed will be open in May, and we are pushing hard for new contracts at the moment," Stewart said.

The company has established itself as a builder of steel and aluminum ships, and now is trying to enter the market for composite materials, he explained.

ADSB builds patrol boats from advanced composites, he said. Other Gulf Cooperation Council countries--Bahrain, Qatar, Oman, Saudi Arabia and Kuwait--have a need for patrol boats, and ADSB is seeking to win their business, said Stewart. "We are hoping to build composite ships up to 50 meters in length," he said.

Already experienced in shipbuilding and repair, the company wants to expand to logistics and integration of defense systems. To that end, ADSB and Alenia Marconi Systems established a joint venture, called Abu Dhabi Systems Integration. ADSI initially will be aimed at providing a broad range of defense systems, products and services for naval platforms.

ADSB slowly is starting to gain a foothold in neighboring countries. At the end of last year, the company signed a contract with Oman's navy for the construction of one 64-meter landing craft. "We are looking at exporting more and more," Stewart said. "The strategic aim is to support the UAE navy, but also to move to other Gulf countries." ASDB is bidding two Baynunah-size vessels for Kuwait and is in a competition for a six-boat contract in another unspecified Gulf country.

This relatively young company anticipates steady business for at least the next 10 years, Stewart said. When ADSB started in 1996, it had 150 employees, and now boasts 800, he said. "We will grow in the next two years, as Baynunah kicks in, to about 1,200 people," he added.

"We are one of the few companies that experiences a boom in shipbuilding," Stewart said. "Every navy in the gulf is growing at the moment."

Stewart attributes part of his company's success to ADSB's use of strategic partners. The company is able to build ships more cheaply than the European shipyards that have traditionally dominated the market in the region. ADSB strategic partners are CNM in France, Halmatic in the United Kingdom, Cunan Wu in Singapore, Seaspray and Times Marine Survey in the UAE, Daman in the Netherlands, and Northrop Grumman Newport News and Gibbs & Cox in the United States.

The partners usually design the ships and build the first vessels at their facilities. Subsequent production is moved to Abu Dhabi, where labor rates are low.