From The Source: Tony Davis Chief Executive Officer, Rolls-Royce Australia Services Pty Ltd | ADM Feb 2009
As CEO of Rolls-Royce Australia Services, Tony Davis is responsible for the Australian arm of a company which provides half of the installed aero engines in the Australian and New Zealand defence forces, and has a leading position in the civil aerospace, marine and energy sectors.
ADM's Senior Correspondent, Julian Kerr, spoke to him about his role.
Tony Davis
1977 - Joined RAN as Cadet Midshipman.
1982 - Graduated UNSW, Bachelor of Electrical Engineering.
1989 - Graduated Master of Science (Computer Science), US Navy Postgraduate School Monterey.
1991 - Weapons Electrical Engineering Officer, HMAS Sydney.
1993 - Weapons Electrical Engineering Officer and FFG-7 Class Coordinator, HMAS Darwin.
1994 - Commander, Combat and Communication Systems Manager ANZAC Ship Project.
1997 - Business Development Program Manager, Saab Systems Pty Ltd.
2002 - General Manager, Naval Systems Division, Saab Systems Pty Ltd and Director Aerosonde Pty Ltd.
2002-07 - ANZAC Ship Alliance Board Member.
2004-07 - Director of Operations, Naval Systems Division, Saab Systems (global).
2005-07 - Deputy Managing Director, Saab Systems Pty Ltd.
2008 - Chief Executive Officer, Rolls-Royce Australia Services Pty Ltd.
ADM: How does Rolls-Royce structure and operate its business in Australia? How many employees does the company have in Australia; what's the annual turnover?
Davis: We're a world-leading provider of power systems and services for use on land, at sea and in the air, and we've established a strong position in civil aerospace, defence aerospace, marine and energy.
All of our business units are represented and are very active in the Australasian region.
In recent years we've expanded our activity in the marine sector in both countries through supplies to the regional commercial and naval marine fleets and in the energy sector through the supply of gas turbine engines for power generation and oil and gas production.
Today, 1,700 Rolls-Royce gas turbine aero engines are in service, or on order, in domestic and international civil and defence aircraft, helicopters, transporters and fighters throughout Australia and New Zealand.
We also have aero derivative gas turbine engines in use pumping oil and gas or producing electricity for our customers in a variety of locations, for example with Woodside in the NW Shelf.
We're also a leading supplier of advanced propulsion, motion control, winching and maintenance systems for commercial shipping and naval vessels in the region.
We have 75 staff in the region, with a significant proportion of highly skilled engineering professionals, focused on sales and after market services.
ADM: What percentage of Rolls-Royce business in Australia is defence and what percentage civil? What's been the growth of each over, say, the past five years?
Davis: The revenue profile of the Australian business parallels the Rolls-Royce global business profile - civil aerospace, defence aerospace, closely followed by marine and then energy.
Around half of the installed engines in both the Australian and New Zealand Defence Forces are from Rolls-Royce.
We power and support the RAAF C-130 transporters, both variants; the AP-3C Orion maritime patrol aircraft, the Hawk lead-in fighters and the Navy's Sea King helicopters.
Across the Tasman we also power the equivalent aircraft as well as the two Boeing 757 strategic transport aircraft.
Rolls-Royce marine products are extensively used and supported in most RAN and RNZN ships; in particular the ANZAC-class frigates.
We support our entire installed marine product base with a regional support network, from relatively simple spares support through to more complex integrated material support partnerships.
We have the ability to reach-back to the parent and the global network, as and when necessary.
For the defence aerospace business we've seen major growth in the helicopter market in Australia, through the selection and introduction into service of the MTR390 in the ARH Tiger and the RTM322 in the MRH90, both of which are collaborative engines.
Our involvement in the F136 engine for the F-35 Lightning II (through the GE Rolls-Royce Fighter Engine Team) has also seen an increase in the collaborative work that we're doing with Australian industry and academia.
A successful F136 programme would benefit Rolls-Royce and Australian industry from both a business and technology development standpoint.
For our marine business we've been successful in securing a sizeable contract with DefenceSA to build the new shiplift at the Techport facility in Adelaide.
We've also seen growth in our regional marine services business through the Integrated Material Support contract for the Amphibious and Afloat Support System Program Office, with support from our partner Kellogg, Brown and Root.
New stabiliser product has been incorporated in the RNZN's Project Protector patrol vessels.
Austal is also a major customer for our Kamewa water-jets for its domestic and international export business and installed the 250th water-jet during 2008.
ADM: Where in Australia does the company have its biggest physical military presence?
Davis: The largest concentration of our engines in the ADF is in the C-130 transport and AP-3C maritime reconnaissance fleets.
They are the T56 engines powering the C-130H and AP-3C aircraft based at RAAF Richmond and RAAF Edinburgh respectively, and the AE 2100 engines powering the C-130J, also at Richmond.
Both those engines are collectively managed by Defence's Air Lift Systems Program Office (ALSPO) at RAAF Richmond, responsible for a combined total of 230 Rolls-Royce engines on wing.
We have Rolls-Royce technical reps at two bases in Australia and both they and the customer are backed up by our Operations Centres that offer 24/7 specialist technical support.
We also have a sizeable marine professional engineering workforce co-located with the Amphibious and Afloat System Program Office supporting the amphibious ships HMA Ships Tobruk, Kanimbla and Manoora as well as the underway replenishment vessel HMAS Success.
Our regional Marine offices in Fremantle and Melbourne, as well as Christchurch, also provide close technical support and depot level overhaul services for the marine installed product base.
Again we're on call to support the Navy as and where necessary.
ADM: Is the lengthy gestation of the defence White Paper having any impact on your Australian business?
Davis: The majority of regular defence aerospace business conducted between Rolls-Royce and the Australian Department of Defence is in support of engines that are already in service with the ADF.
That activity continues outside of the White Paper.
Similarly, our current marine business is not being significantly impacted by the White Paper process for the same reasons.
However, I'm very interested in the naval defence strategy going forward, in particular for the potential future replacements for the two underway replenishment ships.
We have a very credible and capable ship design capability and our NVC design, which we showcased at Pacific 2008, will be a potential contender for these future UNREP ships.
I'm also waiting to see, from both a business and personal perspective, the possible plans for the replacement for the ANZAC ships.
I was intimately involved in the ship's design, development, delivery and test as the Combat System Manager during my service in the Navy so my interest in a potential new frigate is more than passing.
We will definitely be looking at marine product and support opportunities with the customer and potential prime contractors for the future frigates.
While not a White Paper issue per se, I'm also looking forward to further refinement of the Australian Customs/Border Protection Command intentions and requirements for the replacement of the Southern Ocean patrol vessel and other fleet.
Again we have a market-leading and proven UT ship design, which will lend itself very well to service in the Southern Ocean extremes for economic exclusion zone enforcement and other duties.
I would expect that our extensive marine product portfolio will also be appropriate for the Bay Class replacement.
ADM: What impact do you anticipate the current economic crisis will have on Rolls- Royce operations in Australia?
Davis: Our balanced portfolio and large installed product base in Australasia, coupled with long term after market services and partnerships with customers, provides resilience in these uncertain times.
Given the strength of our business in Australia we do not expect any adverse implications for our customers.
ADM: Has growth in the number of Rolls-Royce engines in ADF service (ie Tiger,
MRH90) stimulated investment in local support facilities? If so, how and where?
Davis: Substantial investment in support facilities has occurred as a result of the inventory of MTR390 and RTM322 engines for the Tiger and MRH90 fleets respectively, the most obvious being the establishment and expansion of the Turbomeca Australia facility at Bankstown by our partner in both of those programs.
This complements the long-standing relationship between Rolls-Royce and Qantas Defence Services (QDS) who have supported the T56 engines for the C-130 Hercules and AP-3C Orions for decades, and more recently the overhaul facility for the Adour engine in the Hawk.
The prospect for additional work to go to Australian SMEs increases further if more of the responsibility for through-life engine support is placed with the OEM.
This arrangement can also bring significant cost savings and greater levels of availability to the customer.
ADM: What further growth do you see in the military aerospace market in
Australia, and in what area will this be greatest?
Davis: Like many others, I'm awaiting the outcomes of the Defence White Paper and the re-alignment of the Defence Capability Plan.
While not wishing to predict the outcome I would expect that there will be a number of significant defence aerospace opportunities for Rolls-Royce in Australia.
The largest and most exciting is the partnership with GE on the F136 engine.
Other prospects include the next tranche of MRH90 aircraft powered by the RTM322 engine for the RAN.
Concurrent with both of these is the opportunity presented by Air 7000 Phase 1 through the Global Hawk offering which includes the AE 3007 engine.
We will also be interested in the C-27J (AE2100) as a possible future replacement option for the RAAF Caribou.
My view is that our long term defence aerospace business should be underpinned by the greater provision of services by Rolls-Royce directly to the ADF customer through Mission Care contractual arrangements, where Rolls-Royce guarantees the availability of serviceable engines on the wing and accepts the risk of managing the inventory.
ADM: Are you actively marketing the F-136 engine to equip the RAAF's JSFs?
Davis: The F136 engine will begin flight testing in the F35 Lightning II in 2010 and will be available for US and international customers beginning in 2012.
We will continue to stress the attributes of the F136 engine - along with the benefits of engine competition - to all our customers.
ADM: Where is Rolls-Royce heading in the Australian naval marketplace? Sustainment and engineering management? Or are there still opportunities to sell product (propulsors, stabilisers, water jets etc) and even ship designs such as strategic sealift ships etc?
Davis: Our marine strategy is to position for power and propulsion systems on all emerging RAN, RNZN and regional paramilitary programmes and to tailor our support of the systems in service to meet our customer's needs.
Opportunities are also expected to arise for our niche ship designs derived from our highly successful portfolio of merchant and offshore vessels.
In addition we've designed submarine rescue and escape gear ships, again based on the successful UT design, which we believe will be very attractive to the RAN and potential industry partners.
Similarly, in New Zealand we will be a contender with our NVC design for any proposed replacement of HMNZS ENDEAVOUR when that vessel is ultimately retired.
ADM: How much of its defence business in Australia requires Rolls-Royce Australia to be able to reach back to Derby, Bristol, Indianapolis or elsewhere for expertise?
Davis: For defence aerospace, Rolls-Royce has placed expertise, figuratively speaking, on the hangar floor for our customers.
However, the great strength of the company is the level of technical and technological depth, in terms of both knowledge and experience that resides in the engineering teams.
The 24/7 Operations Centre is geared to address any conceivable operational issue and resolve it to the customers' satisfaction.
For marine, Rolls-Royce has established a significant presence in Australia with offices in Sydney, Melbourne and Fremantle from which we support not only our naval marine products but also merchant and offshore customers.
Again, we have the ability to reach-back to the parent and the global marine network, as and when necessary, to support our customers.
ADM: Has Rolls-Royce sought or had had any discussions with Defence or the RAN about propulsion - nuclear or conventional - for the Collins class replacement?
Davis: SEA 1000 is at a very early conceptual stage and we have not had any direct discussions with the Navy or Defence Capability on this subject.
Rolls-Royce has one of the world's most capable and advanced nuclear submarine propulsion system design and support capabilities but I don't think this is particularly relevant to SEA 1000's potential requirements.
ADM: What opportunities are you looking at with the AWDs and LHDs?
Davis: The AWDs and LHDs are largely MOTS solutions with pre-existing products incorporated as part of the original baseline design.
We have explored potential for design changes to these MOTS vessels, and to see where we could add value, with the respective prime contractors but have concluded that there is no significant opportunity with either, for reasons that are perfectly understandable.
ADM: Aside from the obvious areas of marine and aero propulsion and associated technologies, what are the emerging markets in Australia for the company's defence products and services?
Davis: Rolls-Royce's strengths in power generation have strong potential for application within the ADF in support of expeditionary capabilities, particularly when tasked with setting up deployed bases in austere environments or during humanitarian relief operations where indigenous infrastructure has been destroyed.
Similar technology, when integrated within the propulsion system, may also have application in military unmanned aerial vehicles (UAVs) or other combat platforms when demand for power is high but weight is a decisive factor.
Another example is the diversity and utility of our marine design and product capability.
Just think about the "Pacific Responder" as an example.
Pacific Responder is a Rolls-Royce UT738 ship design, the vessel has her home port in Cairns but spends the majority of its time at sea, available for emergency tasking by the Australian Maritime Safety Authority should a maritime incident occur, such as the grounding of the "Pasha Bulker" off Newcastle.
The vessel is also able to respond to other marine incidents, such as pollution and search and rescue.
Australia (and New Zealand) is likely to be challenged by future threats from marine pollution around our extensive coastline, as well as the need for extended patrols in the Southern Ocean and elsewhere to enforce our economic exclusion zone.
I can see a definite role for our ship design expertise for these demanding ship types.
ADM: How do you envisage Rolls-Royce's defence business in Australia in 10 years' time in both size and in product?
Davis: My vision for the company is that Rolls-Royce, with its Australian industrial partners, will be a fundamental part of the ADF's operational capability, providing not only OEM equipment, as it traditionally has for the 87 year life of the RAAF and more recently with the RAN, but continue to expand its after market support to provide comprehensive direct support and services to our warfighters.