Mr Greg Tunny, Managing Director and CEO, ASC Pty Ltd

Greg Tunny was appointed managing director and CEO of ASC Pty Ltd in October 2004. A phycisist by training with an MBA from the University of Melbourne, he had previously spent some 25 years in the defence and aerospace electronics industries. He spoke to ADM editor Gregor Ferguson.
PROFILE: Mr Greg Tunny
2004 MD and CEO, ASC Pty Ltd
2002 MD Thales Air Traffic Management (Australia)
1999 Director of Business development, ADI Ltd
1993 General Manager, Software & Systems, ADI Ltd
1983 Vipac Engineers & Scientists

ADM: Can you provide a rough outline of the company's future workload in support of the Collins-class boats?

Tunny: The workload on the Collins is beginning to head towards a steady state. After we deliver the Collins in July, which will be the second full cycle docking that we have completed, we will for the first time in the Through Life Support history have one boat at Osborne and the rest in the West. The long term standard operating load is one boat here in full cycle docking and the rest in the West. The balance between SA and WA will change slightly, but overall staff numbers will remain essentially the same at around the 1,000 mark.

Now, we do expect some evolution on this. We have full-cycle dockings, mid-cycle dockings, intermediate dockings between mid-cycle dockings and a new one called the IMAV, or Intermediate Availability, which occurs between intermediate dockings. The workload actually levels out at a pretty steady load. We expect some efficiency gains from just climbing the learning curve; we expect some additional gains because we have a number of significant performance and efficiency improvement initiatives underway, and at the same time we will see additional capability added to boats as they come through full cycle dockings. There will be obsolescence issues as we go through the life cycle - there are over 108 different systems on board the Collins, so we are still in the process of fully modelling all of the systems for the whole of life, to look at the detail of what we will be working on, and when.

ADM: What's your current mix of workforce in SA and WA?

Tunny: About 150 there and about 850 here. The large bulk of the Engineering Team is here. They support the work done in the west via intelligent video conferencing: we can have a relatively small team of good people in the west, fully plugged into the large team here.

ADM: Collins has been in the water and operating now for 10 years. Has that first 10 years thrown up any unexpected maintenance or logistics issues?

Tunny: "Capital-U" unexpected, no. What was always realised on the Collins program was that the RAN would be the parent Navy and therefore we'd be the parent yard. It was also known that this would be not just a first of class, but a true state of the art vessel. All those things combined, meant there was going to be a lot to learn, and we are learning it. It takes a long time to build up statistical validity on all of the activities: we are just completing our second full cycle docking so we haven't gathered the enormous bank of statistics that we've had on all previous ship classes in this country. So, we are learning a lot and we have developed systems to capture those lessons.

ADM: What sort of platform upgrades (besides the Replacement Combat System) do you expect the submarines will undergo over the next 10 or 15 years?

Tunny: Really, all of the major systems on the boat have potential to evolve during its lifetime. I believe we are heading into the area of evolutionary development of the platform in the same way as we see evolutionary development of electronic systems. There are lots of good reasons to evolve the boat in this evolutionary way, rather than planning one gigantic high-risk, high-cost upgrade during its lifetime.

ADM: How about air independent propulsion, is that on radar at this stage?

Tunny: Air independent propulsion has always been something that would be considered. But there's still a lot going on in the AIP world and I think it's far from clear which is going to emerge as the dominant technology. Having said that at the moment, nobody is arguing the Collins isn't the leader of the pack of conventional submarines. So we do have the time to continue to watch the evolution of technology. I can't speak for the Navy, but certainly I would hope that we would be leading edge without being bleeding edge!

ADM: You recently achieved design authority status on the Collins-class submarines. This is the first time an Australian yard has had that status. What did it take?

Tunny: It took a relentless effort over more than two years, working with our capability partner Electric Boat. We more than doubled the engineering staff that we had in the organisation to over 250 now, we worked with Electric Boat to develop our engineering processes, to better train our people, we recruited to bridge the experience gaps that we had and further developed our management operating systems for us to be able to measure our performance and direct the entire activity, and we did all of that over a two year period. Electric Boat set up a measurement framework to assess us on a monthly basis. That was not dissimilar to the CMMI type of frameworks that are used in the electronics area.

We actually passed the target number on the assessment set by Electric Boat in mid-December and formal acknowledgment came through in February.

ADM: Was Electric Boat in effect Defence's surrogate in this process?

Tunny: Electric Boat was our Assessor yes, and they are certainly the most qualified people I can think of to make such an assessment

ADM: The company now is building three big surface ships. What skills and capabilities do you think ASC still needs, that it doesn't have at present.

Tunny: With our build plan it's about ensuring that we have no fundamental skill gaps. What we do need is more people - there are a number of ways we go about getting the right people. We've ensured we have the majority of the senior management team on board now, to undertake the AWD and supplemented our own people who have a lot of experience, albeit in submarines, with a number of key people from Bath Iron Works. So that gave us the majority of the senior level team under which we start building. To flesh that out, of course, we'll take senior people out of our existing operation areas and recruit some additional people with similar skills and experience and then we will go through a much longer phase of ramping up all of the engineering staff, schedulers, estimators, draftsmen and designer and finally the trades.

ADM: But you are going to be competing for trained manpower with the LHD contract and also with non-defence resources projects like the Olym
Tunny: Yes, I think we have. We are all very aware that there is a train of projects planned in WA and there are already a multitude of mining and infrastructure programs around the country, drawing down on resources. We took the decision right up front not to try and do too much here at Adelaide. That was a strategic decision based on the amount of capital investment required, based on the number of people we had to ramp up, and ultimately ramp down, the available resources here, the existing capacity in other ship building or Module-building centres, the number of trained people they already had.

So we tried to balance it to look at a situation where we utilised sensibly and efficiently the existing base, without trying to create a short term "peak" in Osborne which would then have to be dissipated at great cost. By doing that we hope to minimise the pressure we would put on the resources pool. That's been the overall strategy. Having said that, our final fallback is that the organisation with the most exciting new engineering program, has a good chance of getting good engineers and tradesmen because they actually do want to work on the exciting new engineering program.

ADM: When do you expect the Navy's going to start thinking about the Collins replacement.

Tunny: Defence hasn't announced anything - let's assume the Collins replacement will enter service in 2025. It takes roughly ten years to design it and build it, so if you come back 10 years from 2025 you get to 20-15. You probably want to be doing serious concept work and definition studies for at least 5 years, if not more, before that. So, you come back to 2010. I think we have another 5 years before that early work absolutely positively must start. This is if the timelines for a new submarine are similar to the timelines for the previous generation. But of course it would be Defence's decision and Defence's money

ADM: That's about the time the Navy ought to be thinking about replacements for the FFG and Anzac frigates.

Tunny: I think it would precede that. I think there is plenty of opportunity for ASC to continue to add a lot of value to Defence. Defence is building a really world class capability here, so I would hope that we would get an opportunity to exercise those capabilities.

ADM: Now that you've been selected to build the AWDs, when are you going to start the process of selecting suppliers and sub contractors?

Tunny: Until the alliance is actually formed, I can't answer that, but there is an intention to do a road show in October where the alliance will go around the different states laying out to potential suppliers and contractors what opportunities there should be and in what timeframe. Of course the whole process of selecting suppliers will be impacted by the ship design which is selected.

ADM: Where will AWDs be maintained and refitted?

Tunny: That is absolutely, first and foremost, a decision for the customer, and the alliances. The customer will come up with its through life support strategy, and when it does I am sure the alliance will then have the input, but I really can't give the answers to that question now.

ADM: Where do you think the AWD Systems Centre should be located?

Tunny: I have a view, but it would be inappropriate of me to promote that view in isolation from the alliance. We are part of an alliance and we must respect the decision making process that goes on within that alliance. There are obviously many factors: there's where the ships will home port, there is availability of key resources and the ability to compete for them - and by that I mean, you may have one place which is bigger than another, but you may have 10 different industries there all competing for the same types of resources. So, the resource pool may be actually smaller in the big place than the little place. So there's a real need to look at it very carefully. Whether it's in one place only, or whether it starts in one place and moves to another, all these things will be decided by the alliance.

ADM: Given the current skills shortage, do you see a danger of manpower costs rising sharply?

Tunny: Of course there's some danger - that's the short answer. Will that danger eventuate? That is really outside of the control of ASC. What I can say is it's not our strategy to go out into the market with some silly policy of simply paying a lot more. The money is not there to go down that path.

We think that in South Australia we offer people a good lifestyle, a lower cost of living than in most East-coast neighbour cities - all those sorts of tradeoffs. And we will be offering interesting and challenging work and professional development. This is the pitch that we are using to recruit our senior engineers from around the world to enhance our submarine capability. You know what? We've had an enormous number of applicants for the jobs we've had available. So I think the world isn't just about paying 10 per cent extra. Having said that, if the mining industry and the construction industry all conspired to cause average weekly earnings to go ballistic, there is absolutely nothing ASC can do about it. That's the problem of having a strong economy.

ADM: ASC is going to be sold off in due course. What input have you been asked to make in planning the sale of ASC, if any.

Tunny: No comment on that subject, other than to say there was an announcement in the budget that there was money for a scoping study in this financial year, and that will start to define the sale process. My role, and the Board's role, is to ensure that the company is operating at the absolute best it possibly can and is strategically well positioned for future opportunities.

ADM: What effect is the AWD project going to have on ASC's turnover during the peak years of the project. At the moment you are turning over about $255 million a year.

Tunny: A little below that this year; it will roughly double, a little bit more for a short while, but let's say roughly double.

ADM: Companies need to grow or they will stagnate. Where do you see ASC's growth coming from?

Tunny: It's hard to imagine that there wont be a new submarine in the future, given the prowess and importance of submarines to the ADF. That would be a substantial project. I can see Through Life Support (TLS) on the submarine, I can see AWD, hopefully some involvement in TLS of the AWDs and well down the track I can see replacements for the frigates. That's a non trivial business going for many, many decades, so that may not be stratospheric growth growth, but it's good solid cash flow which a hell of a lot of growth companies would give their eye teeth to have.

But also ASC can look elsewhere in the defence arena. We have very substantial and sophisticated engineering capabilities, systems and engineering capabilities particularly associated with platforms and the integration of sophisticated Combat System and weapon system elements into platforms, life cycle engineering capabilities, and also we have done quite a bit of electronic systems engineering submarine. Apart form the combat system, there is a lot of software in the submarine which we are wholly or partially responsible for and I do think that there is an opportunity in the medium term for us to evolve that and to grow it. I think there is a real opportunity for an independent Australian systems integrator - there aren't too many options on that front in this country at the moment and I think an independent Australian systems integrator could do well. We will look at that.

However, in the immediate future, I think we would be remiss if we didn't focus on getting AWD up and running in the right direction. If you look at the litany of troubled major defence programs, the problems inevitably trace back to the early formative stages of the project, so we will be focusing on doing the planning and ramping the program up as a number one priority.