ANALYSIS: Work in the defence sector is scaling up at Wangara-based diversified contractor Duratec Australia.
Chris Oates began to fully appreciate the extent of the opportunities available to his business in October, when news broke of the federal government’s plan to make Henderson a defence industry hub.
Mr Oates, managing director of diversified contractor Duratec Australia, said defence work had been a regular part of Duratec’s remit, despite underperforming the company’s financial expectations last year.
But the future that looks particularly bright in the space for defence-facing contractors such as Duratec, and October’s announcement was evidence of that.
“We probably didn’t appreciate the scale of it over in Henderson, that the hub was brewing there,” Mr Oates told Business News in the days after the news broke.
Henderson is primed for upgrades in the order of billions over the years ahead, part of an agreement between the state and federal governments that includes an initial funding commitment of $127 million towards planning, consultation, design and feasibility.
Duratec could be forgiven for not expecting that scale of development at Henderson, given its defence focus in Western Australia has been across the water at Garden Island.
Duratec’s joint venture with major shareholder Ertech Holdings – from which it spun-out in 2020 – has delivered a solid pipeline of work there.
The island’s naval base, HMAS Stirling, will be the subject of $738 million worth of investment in maritime infrastructure and facility upgrades to be carried out in preparation for the scale up of the Aukus defence agreement between the UK, US and Australia.
A day after the announcement of Henderson’s proposed consolidation, Duratec announced the JV had received $10 million worth of initial contracts at HMAS Stirling to plan nuclear compliant infrastructure and upgrades in support of future submarines.
The contract covers planning only, with potential for a larger delivery phase to follow.
“We’re obviously doing more on Garden Island, so we understood what was happening there, probably a little bit better than at Henderson,” Mr Oates said.
“When people come out and say, ‘[defence is] going to be second to mining’, I think most of us struggle to understand that, in a sense.
“I’ve lived in mining for thirty years and know the scale and size of the projects and the opportunities.
“It’s interesting to even put them in the same conversation. But when you start to see [the pipeline] laid out a little bit, you can start to understand it.”
The $2.2 million acquisition of GF Engineering by Duratec subsidiary Wilson’s Pipe Fabrication brought with it a facility at Naval Base, which the company identified as strategic given its proximity to both Henderson and Garden Island.
Duratec is not the only defence industry business that would stand to benefit from a scale up in defence and defence-adjacent work in WA.
However, it is a prime example of the sorts of diversified business that could benefit from an uptick in defence work across WA.
“It’s fluctuated from probably forty to fifty per cent of our overall revenue, so it gets a lot of attention inside the business,” Mr Oates said of defence.
“It may creep above fifty per cent depending on how we grow in other sectors; we’ve still got energy and mining, and they are still growing as well, so it’s probably going to be about what sectors grow the most.
“For us, we’ve always said if it grows to sixty per cent of our business, we’re not worried.
“It’s obviously a great customer, which pays very well, and they’re very fair.”
