Brian Mansell, Managing Director, ATI Ltd

Brian Mansell joined the Royal Australian Navy in 1973 and completed ten years service in the field of Command Control, and Tactical Operations.

His first job after leaving the RAN was primarily focused on the modernisation of the RAN's DDGs. From there, Mansell worked for several Australian defence and aerospace companies before establishing ATI in Canberra in late 1989.

In the intervening 11 years ATI has grown to become a second-tier SME, turning over nearly $12 million a year and employing 48 people specialising in electronic warfare, radar, RF communications, 3D visualisation, T&E for tactical data links (TADILs), and the design and development of TADILs including Link-11 and Link-16.

In addition, ATI has become the approved IV&V contractor for both the ADF and industry supporting programs encompassing Link-11, Link-16 and unique communications protocols aboard helicopters, UAVs and satellites.

Brian Mansell chairs the Board of one of Australia's major defence industry associations, the Defence Industry Unit of Australian Business Ltd, and played a significant role in framing ABL's contribution to the Defence industry associations' joint response to the government's public consultation process on defence policy last year. He spoke to ADM's editor, Gregor Ferguson.
ADM: How has ATI weathered the downturn in defence orders over the last couple of years?

Mansell: Where ATI has been quite lucky is the company has two divisions. One is systems engineering and that has been predominantly responsible for repair and overhaul, through-life support, those sorts of things. So with that we've had continuing work. We've also received a couple of contracts during that two-year moratorium: We've done manufacturing of patrol ambush lights for Army and we were also fortunate in being awarded upgrade contracts for the C-130Hs and F111 to put the ALE-47 countermeasure dispensing system in. And we've had continuing work on the Super Seasprite datalink. So we had good work
to take us through - I think we were one of the few companies that actually recruited through those years as opposed to putting people off.

A separate part of the company is our Data Link Test Facility which performed Testing and Analysis of several ADF platforms also during this period.

ADM: Most SMEs in this country are niche players. Which specialist niches has ATI chosen to operate in?

Mansell: The company is a service-oriented company one of our key areas is repair and overhaul on primary and secondary radars and electronics of all sizes. We are the only approved commercial test and evaluation house for datalinks in Australia. And more importantly we do a through-air capability. Nobody else [in Australia] has this capability yet and that's one of the things the Mobile Command Centre truck we developed is used for. Another niche, which is now starting to take off, is that we are the only Australian company doing the design and development of "home grown" tactical data links. Tactical data links are predominantly software products, and almost always bought out of the United States. We've designed and developed our own, so this is definitely one of the niche areas. And the other one we're getting into, which
complements the design and development of datalinks, is 3-D visualisation.

ADM: How do you see the business developing in the future - what are your growth/expansion goals?

Mansell: Two main areas, and we're already on track for this with our new building. First, as a regional support centre for the Original Equipment Manufacturers (OEMs), because Australia will always buy a fraction of what's sold worldwide. Australia predominantly places orders with companies that are building, say, 200 aircraft and we're going to want 20 or 25. So our niche area will be to come in with an exceptionally cost-effective in-country capability to do tear-down and repair of componentry.

The other area embraces 3-D visualisation, interfacing with command support systems. This area is now taking the company into the UAV market.

With regards to our physical growth, I announced last October that on our present commitments we anticipate doubling the staff numbers over the next 18 months.

ADM: Who are your customers these days? Defence, or the industry primes?

Mansell: At the moment it's 50:50. If you look at Peter Reith's speech at Defence + Industry 2001, he calls for stronger industry alliances and so on; Defence is not a risk-taker so those risks will be put back on the major OEMs. With that we will increasingly end up working with the primes. That's a much tougher market because whilst defence has an industry policy which you can wave and which offers some protection, when you get behind closed doors with some primes, that protection is not there. "Give me your best, don't give me risk and don't hit me with a premium." And if not... "Next!"

So you see you don't really have much to bat with unless you've got something that's unique. And then you've got something to negotiate with. But it's very difficult at times to get yourself into that position because it's not in a primes interest to have a subcontractor with a position of strength.

ADM: So from the point of view of an SME you need to be outstanding at what you do in a niche area, or you need to be a very low cost, low risk provider - a no-brainer from the prime's point of view

Mansell: That's exactly right. You need to have the product pretty much mature, ready to roll and you have to be financially stable. Defence says they don't like going with small companies because if something goes wrong they can't get their money back, or the product - but you try and get it out of a large prime! Very difficult. As an SME you've got to have something that will lure them and hold them, and that will afford you the privilege of being able to negotiate on an even plane during the early stages of contract negotiations. For example, getting them to sign up to late payment penalties should they be unable to pay on time.

ADM: What did you think of Peter Reith's speech to the Defence + Industry conference in Canberra in June?

Mansell: The jury's still out. He made very strong claims that this is the best White Paper and Defence Capability Plan that's ever come out, but there is no proof in the pudding yet. We in industry are sitting and watching. At the moment, yes they've turned the tap on: they said they'd get a White Paper out, and it came out; they said we'd have the Air 87 tender out on the streets and they'd stick to these dates, and to date they have. But if there are any delays from here on in and they are late in signing a contract of that size, you watch industry. They'll say "That's it, forget it!" We've already seen Tenix and BAE Systems lay off people during that two year period, and you'll see industry just withdraw, and potentially go back to where we used to be 10 years ago with some major companies just having a one-man representative offices in this country.

While Reith can hang his hat on some performance to date, all he's done is activate a policy. Those big dollars he's been quoting - none of these have been spent yet. So where he says this is something that industry can build on, from an investment point of view I don't invest in something until I've seen some performance.

ADM: Does Reith's vision of long-term alliance and partnering relationships hold any benefits or dangers for SMEs dealing with the big primes?

Mansell: He talks a lot about alliance contracting. My understanding of alliance contracting is where the contractor and Defence unite to develop something together and share the risks. With that approach, it's unlikely that a Major company would subcontract an SME to support their endeavours. Again the benefit would be to the SME to contract directly with Defence, however its back to having the proven product and capability before it can be considered.

ADM: Reith spoke about integrated Australian companies into the global supply chains of the multi-national defence primes. Is this a realistic goal?

Mansell: It can be - as I said earlier you have to have something commercially viable. We have signed up with Litton now Northrop Grumman to be the regional support centre for all of Litton's products. This is a significant opportunity to grow our business. The reason they chose us is, first, because of the diversity of ATI. We do repair and overhaul for radars, all the way through to developing our own software. Litton were looking for a "one-stop shop" and that is difficult to find in an Australian company.

The other thing is that we do have something to offer, we're privately owned, aggressive, all of those things. Litton knew that their business is important to us and we would deliver actual results instead of just being an agent.

ADM: What sort of outcomes do you personally, and SMEs in general, hope to see from Reith's "small-R" review of industry policy?

Mansell: To be honest with you, nothing! When he does a review he's got to go in with an intent for an outcome not just more policy reform. What does he want to do with the review? He's already made some pretty big statements in his speech, the White Paper gives the department and industry some direction and the department was aligned before he got there? What industry wants to see now is performance and real results.

A review of industry policy has never ever brought any confidence to industry because it happens at the highest government level. A more practical review would be to actually inspect and learn about what capability does exist here in Australia and not have the industry categorised as "Risk" or "Premium" when being considered for Defence related projects. If Reith wants to do a review he wants to get to the grass roots, not the policy level.

I think the main thing is, if defence wants to build its industry skill base it's got to have an element of trust in the Australian product. That way, every time they do come out with policy, industry won't be as sceptical. They've got the words, the policy, the White Papers, they've got everything. Now they have to just step up and actually do it.

ADM: The Defence White Paper and this year's defence budget seem to have set a firm direction for defence and the industry primes for the next decade or so; does this provide a stable business environment for SMEs?

Mansell: The jury's still out. There's only one way to measure: they have to meet their deadlines as published, the tender has to hit the street, the tender has to close on time, the contract has to be signed on time. If they diverge from that, doubt sets in.

If they say they're going to negotiate and get the contract out by a certain date then it should be accomplished, come hell or high water. They need to demonstrate that they'll do it and then they'll find industry will begin to trust and then invest. But should Defence continue to under achieve their own initial milestones, a situation could occur where the major suppliers will not take Australia seriously and thereby not consider bidding. As a consequence, Defence gets a reduced level of interest which in turn means potentially not the best product. Ultimately, for Defence to get the systems they want they will then have to pay a price that won't be competitive.

ADM: There's a school of thought which says our neighbours and our potential adversaries can buy the same equipment - ships, aircraft, weapons etc - as us, if they want to spend the money; therefore our combat edge comes from the value we add in this country to the things we acquire overseas. How do you think we should seek that added value?

Mansell: The Australian government must, first, mandate that there will be Australian Industry involvement and that means making policy enforceable; that's not been the case before, with Defence worried about paying a premium, and so on.

That takes us to the next stage primes must be made well aware that this policy is here for a reason and that reason is to establish tangible "Self Reliance" for Through Life Support. Moreover, it would be advisable to not use the word "premium" instead talk about "investment" - and recognise that the investment pays off as a reduction in through-life support costs.

The through life support activity is as important as the acquisition itself, but it's always seen as a secondary. Purchasing overseas products is sometimes necessary and I'm not disputing that however, the real costs of systems get blown out when having to source the support from outside the country. And the risk of support increases in times of conflict and that's when you need it most. The Government has to step up and put more strength to the policy. This would go a long way towards encouraging industry to invest.

ADM: What is the current state of your business relationship with Litton, now that the company has been taken over by Northrop Grumman? Does this bring new opportunities?

Mansell: We signed up under a DIIREC scheme to be the regional support centre for Litton, to cover all of Litton's products. We will not be representing them, we will just be providing product support and there is an enormous market in both Australia and around Asia. Northrop Grumman has acquired Litton. That's good, because Northrop Grumman brings further opportunities to ATI and with the demand for C4ISREW capability in Australia growing, ATI can actually provide product to Grumman as opposed to them having to import it.