What Sea Power edition of any Defence magazine would be complete without a mention of the dreaded Valley of Death? For those living under a rock for the past few years, the term encompasses the period between 2015 and 2018/2019 when the Defence shipbuilding program become somewhat quiet. And by quiet I mean absent.
The issue has been agonised over by governments of both persuasions, industry groups, shipyards, shipbuilders, learned blogs/reports from the Australian Strategic Policy, Lowy Institute etc and the media for some time now. There is no strategy that has been articulated by any government in regard to the Valley and its long term implications.
A look at recent history into industry support from government does not paint an optimistic picture for the Australian defence shipbuilding industry. Taking a wider view of the Australian economy, government funding support has vanished for the car and gaming/simulation industries while recent individual cases of Qantas and SPC Ardmona reinforce the government’s ‘no support’ policies, despite the thousands of jobs attached to them, both direct and indirect. As always, we have to accept that these decisions from government are based on sound macro economic planning designed to future proof the economy, despite the pain of upheaval and industrial dislocation. As I’ve said before, the government of the day has the right to set economic priorities as they see fit.
So what would happen if the Valley of Death was approached with masterful inaction from industry and government? There is a very good chance that there would be massive rationalisation of shipyards and shipbuilders in the country. The South Australian State Government has poured millions into Techport and the West Australian State Government has made similar investments in the Australian Marine Complex. They have modernised their facilities to be world class, common user precincts, encouraging a number of related businesses in adjacent industries to come together and share various peaks and troughs together.
Labour costs are an issue nation-wide but that’s the price you pay for doing business in Australia. Shipyards on the east coast would have a much tougher future ahead of them. Many lack modern technologies and the companies operating them have union backed agreements that make wages even higher, meaning they pass this cost on to Defence. There is a very possible future where Williamstown, Garden Island and other east coast yards simply become maintenance facilities for civil and Defence work.
Is this a bad thing? For the companies operating these facilities, undoubtedly. For the wider Australian economy, maybe. Industry has been keen to point out that there is a loss of skills (both management and blue collar workforces) between major build programs and that the cost of ramping them up again is significant. This was clearly seen between the Anzac class, Collins class and Hobart/Canberra class builds over the past 30 years. There have been cost, quality and schedule concerns raised on current shipbuilding programs that can be traced back to these loss of skills caused by the ramping up and down of this workforce.
The argument that Defence cannot be seen as a pseudo industry policy, directed by government is absurd. The symbiotic relationship between the capabilities needed by the ADF and provided by industry cannot be separated. Globally, Defence is not a level playing field and will remain highly protected internationally well into the foreseeable future.
In this case, it is time for the government to make it clear to all parties that it will not be seeking to bridge the Valley of Death, if that is its position. Industry may not like this position but at least they can plan for it as best they can. Uncertainty is the bane of future planning for both government and industry. A long-term plan for Defence shipbuilding needs to be made explicit rather than the current ad hoc approach. This limbo is not doing anyone any favours.
A coherent long-term national shipbuilding plan from government for Defence and other government agencies, endorsed by industry, would be a wondrous thing but so are unicorns. I doubt I will see either any time soon, much to my disappointment.
On a more personal note, I will be going on maternity leave for a few months to introduce the Ziesing Mark II into service. I leave ADM in the very capable hands of senior correspondent Nigel Pittaway as Editor, ably supported by the regular ADM team. I’ll be back on deck in the third quarter of 2014. As always, please feel free to contact any of the team (contact details to your right) if you have any feedback/suggestions on ADM.
