Gabby Costigan, Chief Executive Officer, BAE Systems Australia
I know there has been a bit of movement with the date for today’s event due to my crazy travel schedule. To be honest, I feel a bit like a defence export myself on most days. This brilliant job that I have is insanely busy – but busy I like to think is good. Busy means progress – busy means exports and busy usually means business is good and profitable and I can happily say that in our case at BAE Systems – busy does mean business is good!
But it is not just our business that is in a good place right now, the broader defence sector is as well. This has been driven by the incredible investment by the Federal Government of circa $200 billion in capability upgrades and replacements for the Defence Force. The big contracts, as I am sure most of you know are the Submarines, our fantastic win on the $35B Hunter Class Frigates program, and others such as the multi-billion dollar LAND 400 program just to name a few.
The Federal Government has made Australian Defence capability a priority in its procurement processes and recognised the importance of removing the boom and bust cycles that can result from the beginning and ending of major acquisition programs. Exports play an important role in supporting this. But before we get into a discussion about Government policy and sovereign capability, it is worth reflecting on some of the remarkable products underpinning our ability to export in Australia.
I would like to talk to you about a few of those today.
The largest (in revenue terms) and the most successful Defence export is a highly sophisticated weapon system, known as Nulka. Some of you may have heard of it others maybe not but it is in military terms – a great piece of kit!
It is a decoy system, packed with electronics that is used to protect our Naval fleet. There is not a lot more I can tell you about it for reasons I’m sure you understand but it is brilliant technology. It is a unique national defence capability which was developed by the defence sector right here in Australia – and my employees just down the road in Richmond played a key role along with DST Group.
Through our collaboration we are responsible for the design, development and integration of Nulka not just on Royal Australian Navy ships but also US and Canadian warships.
Nulka is now Australia’s largest defence export, having generated more than $1 billion in revenue for our economy.
I think it is important everyone understands that it is not just BAE Systems that benefits from the export revenue something like Nulka achieves. Approximately 50 per cent of Australia’s manufacturing workshare on this decoy is distributed to local subcontractors. By exporting Nulka, we have been able to create further opportunities for Australia, invest further in research and development, create new jobs, and further expand our Australian supply chain.
I think that is something we as Australian’s can certainly be proud of.
There are lots more examples of where Australia demonstrates it has world-class capability.
Australia’s first F-35s will arrive here later this year. The Joint Strike Fighter is a truly global program and Australia is not just a buyer of the aircraft but also helping to build and sustain them in our region.
My business, has invested more than $15 million in facilities and equipment to establish a titanium machining facility in Australia to manufacture F-35 vertical tail components.
Titanium machined vertical tail parts are then supplied to an Australian family-owned engineering firm Marand, here in Victoria, who assemble them and export them to the UK.
Our initial investment has led to more supply opportunities on the F-35 program, including titanium components for EW Systems, Navigation and Identification modules and also a Corrosion Prognostic Health Management system (that is quite a mouthful).
We are just one of the companies in Australia supporting this important global program. The total value of Defence exports over the next decade is expected to be more than $500 million.
The last example I want to talk about is the program that is consuming a significant amount of my life at the moment - the Hunter Class Frigate Program. This program will see us build nine Anti-Submarine Warfare ships for our Navy. The program has incredible potential to support Australian exports. BAE Systems will require hundreds of Australian small to medium size enterprises to support this exciting 35-plus year endeavour. Five Australian companies are already exporting into the Type 26 frigate program in the UK, from which our Hunter Class frigate has evolved. At the moment, it is a 17 ship global program so as the program matures in Australia so will the opportunities for Australian companies.
So, I know have mentioned a number of BAE products and I do that with no shame …… but I did want to share with you some of the impressive capabilities we already have here in Australia. Indeed, quite a lot of that capability and technology, right here in Melbourne.
If Defence was characterised as a stand-alone industry, it ranks fifth highest in Australia. It is a highly skilled and productive workforce and can support a more balanced and sustainable economy. And with such unique products we are very well placed to compete in the export market where innovation and technology deliver an important market edge.
With Australia currently achieving in the order of $1.5 to $2.5 billion per year in defence exports, there is clearly an economic opportunity for Australia to grasp.
But there are also other important reasons to maximise our defence exports – and that is, ensuring our sovereign defence capability. It is one of the fundamental reasons the Australian defence industry exists.
It is in our national interest to have a strong defence industry that is able to meet our sovereign capability needs. It allows Australia to have greater self-sufficiency and maximise the economic benefits of large capability investment. It ensures we have greater control in meeting our security needs and it helps us control our destiny and to protect us and our National Interests.
Our defence capability also sends a message to the region in which we live and to our coalition partners around the world. Our Defence capability is also about the projection of our power as a nation.
As a country, we need to continually innovate to ensure that Australia has the best possible equipment and support for our Defence Force. Scale is needed to achieve this and Defence exports certainly help with this objective.
I said earlier that I couldn’t talk about defence exports without commenting on the Government’s Defence Export Strategy.
We at BAE Systems certainly welcomed its release back in January this year. This strategy has the potential to incentivise investments that support sustainable Sovereign Industry Capabilities and will also help to develop the export potential of Australian developed technologies.
The strategy helps to ensure the sector gets the focus it warrants, not just from government but also the wider business community. Other industries, such as the
Education sector are critical to ensuring we have the skilled workforce and supply chain we need as the Defence sector grows.
I hope you would agree with me that strengthening defence trade to our priority markets makes sense and my company would welcome any initiatives that further strengthen these existing trade relationships with Australia’s key partners.
So almost time for us to get in to the panel discussion and for me to let you enjoy your lunch.
I hope through some of the examples I have mentioned today I have demonstrated to you how the Australian defence market is globally competitive.
I also hope I have conveyed my excitement and passion for our sector. There is so much great and exciting stuff happening.
We have a challenge in our industry to get our young Australian’s interested in our business and to see the world of opportunities open to them.
We know the Australian economy is changing. While in the past we may not have been particularly good at turning R&D into commercial IP – I think Defence has demonstrated it can be done and NOW is the time to seize the opportunities in the Defence sector.
Australia’s exports don’t have to be restricted to things dug out of the ground or grown.
The opportunities are enormous and the benefits to our community are significant.
Thanks for listening and I hope we can explore this a little more in our discussion.