Katherine Ziesing | Canberra
The increased focus from government on Australian Industry Content (AIC) and supporting local companies is a welcome change for many. No longer is the overseas off the shelf solution the gold standard for acquisition and sustainment solutions. But how local companies engage with Defence and with one another still has much room to improve.
As seen on P22 of this month’s edition, where is the value in the new framework of road shows and engagement programs? Particularly for SMEs, who do not have the deeper pockets and global reach back of the local primes. There is an increased emphasis on getting local companies to be part of the primes global supply chains in an effort to reach the wider international market.
Defence launched the Global Supply Chain (GSC) program in 2009 as an enhancement to the AIC program. It is designed to assist entry by Australian defence industry into the global supply chains of multinational primes. Since that time, the program has grown to include Raytheon, Boeing, Lockheed Martin, Northrop Grumman, Rheinmetall, BAE and Thales and has done a reported $830 million in business.
A greater focus on STEM through the education and economic pipeline underpins this imperative
As seen on P13 this month, both BAE Systems and Northrop Grumman have renewed their GSC deeds with the Commonwealth. All seven primes involved in the program have internal offices to coordinate their efforts with varying degrees of success if anecdotes from SMEs are any indication.
BAE Systems Australia CEO Glynn Phillips confirmed the company's commitment to the Australian Small Business Supplier Payment Code launched by the Business Council of Australia. This is a voluntary, industry-led initiative that recognises the importance of prompt and on-time payment for suppliers and the need for a set of best practice standards.
“Prompt and on-time of payment is particularly important for small business suppliers, as it means better cash flow and working capital which strengthens their viability and ability to grow and create jobs,” he said. “It is in the long-term interest of everyone, including purchasing businesses and governments, to have a viable and productive small business supplier base.”
It is these practical steps that provide true support for the GSC program. Many primes also help SMEs in their journey towards various ISO standards, a key component of global readiness. Lockheed Martin, through efforts on the F-35 in particular, has seen rapid growth in the manufacturing capability of many Australian SMEs, which has seen them become globally competitive. This jump in capability has also helped these companies reach into adjacent markets. One only has to look at the likes of Quickstep to see their growth in aviation but also vehicles thanks to their composite work.
It is this high value-added work that will truly bring an economic multiplier effect to the wider Australian economy. There is only so long we can dig things out of the ground, be it food or resources, before the international high technology economy overtakes us. A greater focus on STEM through the education and economic pipeline underpins this imperative. All nations are in the race to grow their own talent in this regard. Investing in this pipeline, at all levels, will be key as Australia looks to grow its shipbuilding and sustainment capability.
Local content doesn’t always have to mean a tradesperson in hi-vis gear bending metal. While it is the most visible part of the Australian Defence industry (and one favoured by politicians who also get to don said hi vis gear for a photo), it is not the be all and end all of local capability. The wide array of groundbreaking technologies that we have in country is astounding. It’s piecing them together through innovative collaboration that will be essential in unlocking the potential.
Local content is Australian workers doing work for Defence, regardless of the logos on the shirts they wear. That’s your taxpayer base. That’s your voter base. That’s your community. And that’s the capability you want to be able to call on when forces need to deploy, complete with an unfair advantage. To be clear; we want the ADF to have an unfair advantage when they go into any fight.
Note: keen readers may also like to note that as of late June, the IIP website will be released in ‘due course’, according to a Defence spokesperson. Sigh.