Manufacturing is not dead
Sitting out the Avalon air show for the first time since I joined the ADM team (injured not dead, I’ll be ok) made me nostalgic. So I referred to my archives to see what ADM was writing about five years ago in this very column. I was on maternity leave at the time so Deputy Editor Nigel Pittaway took to this page to talk about the importance of manufacturing.
To remind you of the context at the time Land 400 was still a dream, the car industry was in its death throes and the Valley of Death for shipbuilding was all anyone could talk about.
“There has also been a detectable public reluctance to continue subsidising a motor vehicle manufacturing industry that is losing money and this sentiment has no doubt been noted by the government,” he reflected.
“But what will happen when these industries finally close their doors? Apart from the emotive aspect of the loss of hundreds of jobs and important skills, what will be the impact on other industries, the Australian economy and the expectations of ongoing high standards of living?
“Some in the naval shipbuilding industry will tell you that the Valley of Death moniker doesn’t accurately describe the current state of play, as it suggests there may be a way across. Many will argue that it is already too late, even if projects are brought forward, and the situation should more accurately be described as ‘The Cliff of Oblivion.’”
Fast-forward five years and the landscape is vastly different. We did in fact not fall off a cliff. Yes, we peered into it intently and thought about what comes next and that looked like the Land 400 industry roadshow, which we jumped into. Both Rheinmetall and BAE Systems conducted a massive nation wide fact finding tour to see what was out there in terms of the local supply chain. Companies came out of the woodwork to participate.
This format is now the norm for large programs, with every shipbuilding program certainly on the roadshow bandwagon. Industry to industry and defence to industry briefings are more frequent, and in many cases, are now more useful.
The shipbuilding Valley of Death wasn’t bridged per se but it was navigated more safely than first imagined. The plan in place for continuous naval shipbuilding is not perfect but it will see a generation of shipbuilders and designers across all trades supported for years to come.
So while the traditional car manufacturing industry has passed away, there are still companies working on vehicles thanks to the ongoing support of the current fleet, the Hawkei program and Land 400. There are less of them of course but one could argue that those that are left are more efficient and productive. They have to be in order to remain in a reduced market.
Rumours of the death of Australian manufacturing are overstated; it’s smarter and more niche.
Land 400 Phase 2 will see a fleet of vehicles made here with this phase of the program looking at roughly 60 per cent of Australian Industry Capability (AIC) in the mix. Rheinmetall is in the process of developing its Military Vehicle Centre of Excellence in southeast Queensland that will act as a hub for the region. Phase 3 bids (see P26 for more on this program) will be in the box by the time this edition hits your desk or screen but you can bet that AIC will have a large role to play. Any bid that doesn’t have this squarely in their sights alongside an amazing capability will simply not stand up.
AIC has become such an important part of programs for both acquisition and sustainment. Any company, local or international, that can’t demonstrate how they’re engaging the local supply chain is just not in the running.
Northrop Grumman signed the very first AIC deed at Avalon last month for their work on the Triton program, cementing their commitment to an Australian supply chain for up to seven of the RPAs under the multi billion dollar program. Indeed, as announced at the ADMCongress last month by Minister for Defence Industry Steve Ciobo the threshold for programs requiring an AIC plan has dropped from $20 million to $4 million.
The real test will come when a program does not live up to the promised AIC plan or deed. What are the consequences for this I wonder?
This article first appeared in the March 2019 edition of ADM.