HII expects to break into new markets through AUKUS

HII prepares to deliver Virginia-class submarine New Jersey as the company looks to open new markets through AUKUS deal. (Janes/Michael Fabey)

HII sees the AUKUS agreement made by Australia, the United Kingdom, and the United States for submarine programme development as a vehicle for new international business.

“We actually see that as an opening of markets,” Christopher Kastner, HII CEO and president told investment analysts on 2 November, during a quarterly earnings call.

In particular, HII expects to realise new market opportunities in both Australia and the UK, Kastner said.

HII is following the lead of the US Navy (USN) on how to move forward with AUKUS matters. The USN is being “methodical”, he said.

The short-term benefits of the deal are “really not material financially”, he said, adding the benefits are more “top line” with more “medium- to long-term” opportunities.

Still, he added, the company needs to take steps now to ensure it is prepared for AUKUS work and future opportunities.

He said federal funds “could flow next year” for needs such as workforce development, supply chain assessment, and infrastructure support.

These needs have become acute for fulfillment of the AUKUS, which calls for the US to sell Virginia-class submarines to Australia, even as US shipbuilders – HII's Newport News Shipbuilding and General Dynamics' Electric Boat – struggle to meet the current USN delivery needs.

“Because Australia could take decades to build its own attack submarines, the pact calls for the United States to sell a limited number of Virginia-class nuclear-powered attack submarines (SSNs) to Australia as an interim step,” the Congressional Budget Office (CBO) said in its report, An Analysis of the Navy's Fiscal Year 2024 Shipbuilding Plan, released on 26 October.