Australian + New Zealand Defence Directory 20/21

AUSTRALIAN + NEW ZEALAND DEFENCE DIRECTORY 2020/21 SOVEREIGN INDUSTRY CAPABILITY EDITORIALS www. d e f e n c e . d i r e c t o r y 19 WE NEED TO THINK DIFFERENTLY TO GROW AUSTRALIAN DEFENCE CAPABILITY W hen the Australian Government released its Defence Industry Policy Statement 2016, it was made especially clear that the goal was to support a stronger sovereign defence industry with the capability, readiness and resilience to help meet Australia’s needs, to the greatest extent possible, within its own borders. Little did anyone know that sovereignty, beyond the defence industry, would become so topi- cal and that its criticality would be illustrated to us all quite so vividly. In the post-pandemic environment, a broader strategic view of Australian supply chains for essential items will be required, and this includes defence supply chains. A key component of achieving greater levels of self-reliance is keeping as much of the criti- cal capability and supply chain elements in Australia as possible. In the defence industry, this concept has become synonymous with the label of Australian Industry Capability (AIC). It’s not new but it is more important than ever as Australia looks at national security from a supply chain perspective. If we think about AIC as merely prime defence contractors engaging Australian small and medium enterprises (SMEs), then the easiest way to incorporate AIC into a defence program is to identify the scope of work and parcel it out to Australian-owned businesses that have the capabilities to complete the task at hand. This type of AIC keeps defence dollars in Australia through investment in Australian businesses and employees. It can even deliver benefits such as increased availability and reduced turn-around. But there problems with this approach too. The work scope offered to Australian SMEs tends to be a little short-sighted and based on what is “ready now”, which doesn’t develop the capabilities of Australian businesses; it simply pays them to do more of what they can already do. There is no stretch. Where AIC offers real benefit is when it is used to invest in the Australian defence industry, increase the number of businesses participating in it and cultivate home-grown capability that offers the potential for international export. Prime defence contractors, like Boeing, need to think laterally about the capabilities of SMEs in their supply chain and how they can create the space to help these businesses grow and develop. Part of the success of Boeing Defence Australia’s Currawong Battlespace Communications System can be attributed to leveraging and growing the capabilities of our strong relationships with our SME partners. Rather than supply a scope of works to local businesses, we shared with them the problem we were trying to solve and let them develop a solution. It was the collective problem solving of multiple Aus- tralian businesses that is helping to deliver the project, which is recognised as a world-leading capability for networked communications by deployed forces. One example of this is our contract with Australian-owned electronics and assembly supplier, Hetech. With no previous defence experience but the right capabilities, Hetech was engaged to prototype and manufacture two sub-systems for Currawong. To date, they have supplied hundreds of signal entry panels and uninterrupted power supplies under Releases 1 and 2 and will continue to work with us on Release 3 of this project. As a result of this contract, Hetech has been able to employ more people, invest to increase automation and autonomy, achieve quality cer- tifications and win contracts with other defence businesses such as SAAB Australia and EOS. But the responsibility for growing Australia’s defence industry capability cannot solely rest on the shoulders of defence primes. We need to see more partnering between Australian SMEs to fill market gaps and provide higher order capabilities. And like prime contractors, they also need to engage Australian businesses in their supply chain to help other businesses to enter and grow in the defence industry. Ferra Engineering, an Australian manufacturer and integrator of complex mechanical and electro-mechanical sub-systems and sub-assem- blies, has been a supplier to Boeing since 2009. Most recently, Ferra Engineering has been selected to supply precision mechanical com- ponents and sub-assemblies for Boeing’s Loyal Wingman Advanced Development Program. Through this latest contract, Ferra will support more than 20 jobs in Queensland and has engaged more than 18 sub-contractors. It is exactly this ripple effect that the Government is trying to achieve with its commitment to growing AIC. In the future, we need to consider what Australian businesses can do today that couldn’t be done yesterday, and what is being created to contribute to the growth of in-country capability for the Australian Defence Force and offer value back to global industry. The Australian Government is making record investments in defence and Australian businesses are eager to be part of this. In my experi- ence, Australian suppliers are end-goal orientated; our culture is to get the job done. And right now, as much as possible, that job needs to be done in country. Nick Gothard Director Supply Chain Management Boeing Defence Australia