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Newsroom

Chief Executive Glynn Phillips Address to CEDA State of the State

Committee for Economic Development of Australia State of the State, Adelaide Intercontinental
Good morning everyone, distinguished guests
 
I would like to acknowledge the traditional owners of the land on which we are gathered … and pay my respect to their Elders past and present.
 
I would also like to thank CEDA for hosting today’s forum.
 
Let me start by saying that there is no doubt that the state of the Defence Industry in South Australia is very sound. Many of you here today would be surprised to learn that the Defence industry employs around 28,000 South Australians, contributing more than $2 billion to the state’s economy each year.
 
And everyone in this room can be confident that the Defence Industry is well positioned to continue to contribute more to this State. It can employ more people – many more people; it can provide more opportunities for our young graduates and it can help build new local businesses that can succeed not just in South Australia, but on the international scene.
 
But, can I say – the state of our Defence Industry is not just about submarines. The future submarine project does not characterise the heritage of our industry in this state over the past 60 years. And…we should not limit our thinking of the opportunity for South Australia to just this program alone.
 
Granted – securing this work for the State is very significant, but it is by no means the whole story. The whole story is a much bigger picture.
 
The recent Defence White Paper outlines some $195 billion of defence spending in the decades ahead and the opportunity that exists for our industry and for our economy. The challenge for industry is to grow our State’s slice of that pie.
 
As the head of Australia’s largest defence company, which has experience in every aspect of Defence – from cyber security to aerospace, I am confident that together we can succeed.
 
To help paint the picture of the Defence Industry in this State, I will talk to you about 3 things today:
 
  • Firstly, the depth of our industry’s heritage;
  • Secondly, the opportunities ahead of us; and
  • Thirdly, how Government and Industry can work together to grow South Australia’s slice of the pie
 
So, first to our heritage.
 
Unbeknown to many, South Australia has a long history in defence. It’s not something that happened overnight. 
 
Our company for one has a long involvement in Australia’s Defence Industry – we’ve been here in Australia designing, integrating and maintaining systems for the Australian Defence Force for more than 60 years.
 
Over this time, we have delivered programs that help protect the nation. We have employed thousands of highly skilled individuals, many of whom had the inspiration and ideas that have allowed us to continue to secure more work for this state.
 
We’re not alone - Nova Systems has upgraded Chinooks helicopters and satellite communications for the Army, ASC is building the Air Warfare Destroyers for the Navy, Levett Engineering is machining specialist parts for aircraft, Saab is a leader in development of combat systems, Raytheon is leading the upgrade of the Woomera defence facility … and there’s much, much more.
 
Today, our national workforce is 3,500 strong. Around 1,000 people work at various locations here in South Australia, including over 260 highly skilled engineers. And, we are poised for growth.
Our employees have also played vital roles in many great Australian defence innovations that had their beginnings here in South Australia.
 
I would like to mention just two.
 
 
The first is High Frequency (HF) radar technology that is used by the Jindalee Operational Radar Network (known as JORN).
 
JORN is Australia’s real-time, long-range detection system that plays a key role in the protection of Australia’s Northern borders.
 
Here, in South Australia we worked closely with Defence to develop world-leading HF radar technology, which has now evolved into sophisticated sensor systems that we export to the US.
 
And for 35 years, we’ve helped to maintain and upgrade JORN. We have 200 experts at six sites – including some of the most remote work sites that you can imagine.
 
Defence progressively upgrades JORN, and the next major upgrade is set to commence in 2018.  The aim is to move to the next generation of technology and extend the operational life of JORN.
 
For South Australia this creates the opportunity for our local innovators, local academics, and local engineers to play key roles in the ongoing evolution and innovation of this home-grown technology.
 
Now global defence companies will always offer their international expertise, and this can be important – but when it comes to technology, and when it comes to innovation we must also have faith in what we can do locally.
 
Our academic institutions and our local supply base have great ideas and can move quickly if given the chance. The approach of BAE Systems in Australia is to invest locally – and this will be our proposed approach for the JORN Phase 6 program.
 
 
The second South Australian innovation has become Australia’s largest and most successful regular defence export. It's called Nulka … and it really is a clever piece of technology.
 
Nulka – is a hovering rocket developed here in South Australia that works as a decoy to protect naval fleets around the world.
 
A ship under attack, fires the Nulka which then lures the missile away from its target by hovering above the water line and emitting an electronic signature the makes the missile “think” it’s the target.
 
Since the project start, Nulka exports have generated sales of over $1 billion.
 
 
Now that’s a good place to move my focus from the past to the future.
 
Perhaps the most significant opportunity that has been presented to this State, and there are many, is its participation and central role in Australia’s National Shipbuilding program for the Royal Australian Navy.
 
Shipbuilding in this country has left a rocky road behind it, with the biggest challenge being certainty.
 
Building and maintaining ships are long-term investments. They require an investment in infrastructure, in skills and in supply chains for not just a few years, but decades ahead.
 
And, unless you are sure where or what level to invest, companies will be reluctant to do so.
 
Industry across the board has worked closely with Government and the Defence Force at every level to help deliver the certainty that was required not just for one ship building program, or one contract, but for a long-term sustainable ship building enterprise.
 
And the best way to do that was to select a suitable location, identify the programs that were required, pick the most suitable partners, and then let industry invest.
 
Now, with the Commonwealth Government’s clear signal that South Australia will be the host to the construction of submarines and the Navy’s offshore patrol vessels and Future Frigates – the industry has much greater stability, confidence and focus.
 
And, all parties – Defence, Government and Industry can work together to ensure the right infrastructure is in place to ensure that the programs ahead of us are a success.
 
The Commonwealth’s plan for continuous shipbuilding is so big that it will require all of the key industry players to work together to manage both the flow of work within single programs and across all of the programs.
 
It will be a significant logistical and project management effort.
 
This will be one of the biggest nation-building efforts in Australia’s history in terms of size, scale and duration.
 
BAE Systems has had a long and very strong history of building naval ships in Australia.
 
More recently, we delivered two 20,000 tonne Landing Helicopter Dock ships including HMAS Adelaide that only last month visited South Australia.
 
Today we are working hard to ensure that we play a role in helping Australia deliver a national ship building enterprise, and one that is sustainable for the long-term.
 
The Future Frigates program at $35 billion is a program that will deliver 2,000 jobs and long-lasting benefits to South Australia through the building of the nine ships.
 
Then during their 30-years or more in service, these state-of-the-art ships will require maintenance and upgrades to ensure they have the capability to operate as and when required by the navy.
 
Critical to the success of the Future Frigates will be the ability of industry to work with South Australia’s supply base to ensure that we have the right companies, the right people, and the right skills to deliver a successful program.
 
Our Company’s Global Combat Ship is one of the designs currently being considered by government as being capable of delivering to their requirements.
 
We’ve already begun work on determining how local industry can be involved.
 
And, over the next few months we will be engaging both in South Australia and across the country to help increase awareness of the scope of this enormous project and of the significant supply chain opportunities that lie ahead.
 
BAE Systems Australia has an existing supply chain of more than 1,700 companies across the nation, helping us to deliver the air, land and sea platforms that we support for the Australian Defence Force.
 
We also give Australian companies large and small the opportunity to access our global supply chains; to pitch their products and services into our worldwide operations.
 
At every opportunity, we aim to maximise Australian industry involvement in our Defence projects.
 
And this is an important point – you may be aware that only yesterday we were selected as one of two companies to participate in a trial to supply the Army with 225 armoured vehicles.
 
Australian Industry Capability is at the very core of our offering.  We have committed to manufacturing our proposed vehicle, the AMV35, in Australia and we have not been idle. We have already run industry events across Australia with around 300 industry attendees putting their hands up to contribute skills and expertise to this project.
 
This Defence program without doubt could be a great opportunity for South Australia.
 
 
Finally, I would like to touch on what I think is important to ensure that the Defence Industry’s footprint in South Australia grows,  and does so in a way that benefits the local economy and the people of this State.
 
It must be mentioned that the State Government, led by Premier Jay Weatherill, has been a great advocate for Defence – well understanding the strategic, long-term and wide-ranging benefits of supporting a sovereign defence capability.
 
As well as its strong lobbying, the State Government has invested in important defence infrastructure … not just in shipbuilding but other initiatives that have the potential to be catalysts for jobs and economic growth.
 
And, it is collaboration between those that are interested in the success of our industry here that I believe is most important to guaranteeing our future.
 
The world’s largest Defence program today is the F35 Joint Strike Fighter.
 
There is not a better global example of collaboration. This program involves multiple countries and numerous industries contributing to 3,000 aircraft. It is collaboration both in the design and manufacture of the next generation fighters, but also in the servicing and sustainment which will take place globally.
 
Again you may not be aware, and perhaps the Defence Industry needs to tell its story better – that Adelaide plays a key role in this global program.
 
At BAE Systems national head office at Edinburgh Parks, we manufacture high end titanium machined components that are used in the construction of the vertical tail of the F35.
 
To do this, we invested in a machine that is the only one of its type in the southern hemisphere – in fact it’s one of only two in the world.
 
But, we could not have done this alone. It was only with the help of the State Government that we were able to invest in state-of-the-art machining technology that was required to effectively and efficiently produce aircraft parts.
 
We also teamed with a local company RUAG who established a new business in the State, heavily invested in infrastructure and employed many local South Australians, to  ‘finish’ our aircraft parts prior to them being shipped to the customer.
 
We’re now using the unique machining capability that we have to step up production of parts into the program - we’re producing 26 parts per aircraft. This year, we will make almost 2,000 vertical tail parts.
 
And, we are targeting more work in aerospace and other industries where precision machining of complex materials is required.
 
Advanced manufacturing is alive and well at Edinburgh Parks!
 
 
In conclusion, I think it is clear that the Defence Industry in South Australia is and will continue to be a catalyst for growth and innovation in this State.  
 
It can be a catalyst not only for companies like BAE Systems  as we strive to better support the men and women of the Australian Defence Force … but also for those companies in our supply chain who partner with us and bring their unique skills and ‘know how’ to the table.
 
The role for business is not to wait, but to take the lead.
 
We must take the lead in developing and maintaining industry collaboration and partnerships to unlock greater value for the Australian Defence Force.
 
We must take the lead in working with Government to ensure the infrastructure, skills and support is in place to deliver the programs the Defence Force requires.
 
And, if we get it right, our Defence Force will get the support, and industry capability it needs to undertake the critical role it has to keep us safe.
 
 
Thank you