In my 30 years’ experience in the Defence industry, I have had the great fortune to be involved in many international programmes and the opportunity to work in a number of different countries, including two years in the UK as the Global Head of Engineering for BAE Systems. One of the main things I have taken away from these international experiences is that Australian engineers are equal with the best from anywhere in the world.
The thing that holds Australian Engineering back is not our capability; it is quite simply, the lack of opportunity.
I’d like to start by expressing BAE Systems’ support of the Defence Industry Policy released last year in conjunction with the White Paper and Integrated Investment Plan, and to the ever expanding set of initiatives being put in place by Kate Louis, Andrew Garth and others in Defence and Government that underpin this policy.
Defence is a long term game. The development lifecycle for new capability and product is rarely shorter than a decade and often much longer.
We saw JSF for the first time on Australian shores earlier this month. JSF represents the pinnacle of state of the art combat aircraft technology, so it’s hard to believe that the JSF program started before there was such a thing as Google or e-Bay or Smart Phones, which today are an automatic part of our everyday life.
Nulka, which is today state of the art in defending ships against Anti-ship missiles, was started before there were personal computers and just at the dawn of digital computing.
We are starting to focus on a number of Maritime programs that will not enter into service until the next decade at the earliest.
How many changes in leadership will our companies and organisations have in this period?
How will our workforce change?
How many changes to Defence plans and budgets will we see in this period?
How can we be sure when we start investing in new technologies that there will be a market for them on completion?
It’s hard enough for a global company like BAE Systems, let alone for the SMEs whose financial resilience is significantly less.
All this points to the need to approach this as an Australian Enterprise if we are to achieve the aspirations of the Defence Industry Policy and create a strong Australian Defence Industry – Government, Defence, Industry Primes, SMEs, Academia all working together for a common goal.
That is why initiatives like the DMTC and now the CDIC and Innovation Hub are important.
Through the DMTC model however, we have achieved significant success in a number of programs;
- The DMTC support to setting up the Titanium Machining capability for JSF has resulted in opportunities being realised and significant exports for Australian Industry – not just for BAE Systems
- The DMTC support to the Corrosion Prognostic Health Management technology has facilitated successful integration of this technology into the JSF Global Fleet
In both of these cases, the end customer was identified and engaged prior to initiating the activities, and so there was a clear route to market. All we had to do was to achieve the objectives of the technology development activity.
Having a clear route to market, having a customer who sees benefit in looking first to Australian Industry for their solutions, and having an environment where industry is engaged and kept informed of customer needs early enough to be able to plan, is what is needed to ensure a viable and strong Australian Defence Industry.
Why is it important to have a strong Defence Industry in Australia?
The Defence Industry Policy clearly identifies the defence need to have a strong Indigenous Defence Industry, characterised by identifying Defence Industry as a Fundamental Input to Capability (FIC).
But there are other reasons to focus on strengthening the Australian Defence Industry. The new approach to Defence innovation by the Commonwealth Government is absolutely vital, not just because it is critical to maintaining Australia’s ability to continue providing leading edge defence capabilities, and for ensuring sovereign control over those technologies and capabilities, but it is also vital for economic purposes, as Australia seeks to transition from a resource-led to a technology-led economy.
Having a strong engineering and manufacturing industry is good for any economy, particularly if that industry creates exports as well as servicing national needs. But for developed countries like Australia, competing in the high volume production markets against developing countries is difficult.
Having a high standard of living is something we enjoy, but we pay for it with our lack of price competitiveness in some areas.
One way to combat this lack of price competitiveness is through leveraging our high skill base. It is therefore important that we, Australia, focus on industries that demand a highly skilled workforce. That is where we get the competitive advantage.
The need for innovation drives a need for highly skilled personnel.
The analysis showed that while BAE Systems Australia:
- Employs over 3,300 people directly and sustains over 7,500 jobs in total through supply chain activity and consumer spend
- We have a direct economic contribution of $700m - this relates in a total GDP contribution of $1.3bn (nearly double)
- Since 2011 BAE Systems Australia has invested over $250m in R&D - the intensity of this investment is clear when you consider that it is more than two times higher per employee than the manufacturing sector average and more than 4 times higher than the Australian-wide economy average
- 69% of our procurements are from Australian suppliers, supporting 1,600 Australian suppliers in all
- Our labour productivity is 40% higher than the national average, with a skilled to non-skilled workforce ration of 2:1
- We also create close over $80m per year in exports.
To ensure a healthy Defence Industry we need to support the development of indigenous technologies and products and support the continued development of our skilled workforce.
Initiatives like DMTC are a good example of how this can be done, so I look forward to the continued success of DMTC and in particular to hear throughout the rest of the day, about the successes of the DMTC and plans for the future.