From The Source: Steve Ludlam, CEO and Managing Director of ASC | ADM Sep 2010
Steve Ludlam has been head of Australia’s only locally owned Defence prime since the beginning of the year but changes under his management are already plain to see.
With a focus on ‘exemplary performance’ and acknowledgement of past problems, ASC has begun to make substantive changes on numerous fronts.
He spoke with ADM Editor Katherine Ziesing on these issues.
Profile: Steve Ludlam
2010 Managing Director and Chief Executive Officer, ASC
2005 President - Submarines, Rolls Royce
2003 Executive Vice President - Naval Marine Europe, Rolls Royce
1998 Executive Vice President - Naval Marine Submarines, Rolls Royce
1996 General Manager - Reactor Test Establishment (Caithness, Northern Scotland), Rolls Royce
1992 Senior Manager - Nuclear Propulsion Systems, Rolls Royce
1987 Senior Manager - Civil Nuclear Business, Rolls Royce
1975 Joined Rolls Royce
ADM: ASC has gone through a massive restructuring process since you began with the company.
What have these changes meant for ASC?
Ludlam: Before I arrived at ASC, the company operated as several small companies working in isolation, not thinking about the customer and operating with a sense of entitlement.
So we amalgamated the businesses; we are focused on our customer and we understand our customer’s expectations.
ASC employees - across the submarine maintenance and AWD operations, Deep Blue Tech and support services - now work together as one team, with an urgency to deliver for our customer and ensure we operate efficiently.
We have employees who are realising they have capabilities that are world class, that they are surrounded by state of the art facilities and management who want employees to deliver the best possible result for our customer.
I am pleased to see that ASC employees are growing in confidence and that is translating into solutions and fantastic outcomes for our customer.
ADM: You have spoken previously of the need to fix the relationship with the customer.
How would you characterise that relationship now?
Ludlam: Let me begin my response by putting it to you that we did not have a strong relationship with our customer; I think we simply were asked to do things by the customer and then delivered to the level we thought was appropriate.
The relationship now is one where the Royal Australian Navy (RAN) is the ultimate customer.
The RAN has provided us with clear direction on their expectations and this is conducted through the Defence Materiel Organisation (DMO), so we are much closer in understanding what can be done and what can’t be done within the budget set within our commercial arrangements.
The creation of the Australian Submarine Program Office – incorporating the RAN, DMO and ASC working together as a team and co-located on our Osborne site in Adelaide - has been an incredibly powerful dynamic and we’re starting to see real results.
ADM: What hopes do you have for ASC as these changes are bedded down?
Ludlam: We’ve made a very good start but we can’t afford to make any mistakes.
This is about sustaining what I call exemplary performance and that can be very difficult.
Exemplary performance means continuing to build confidence within a team of employees that is world class, operates out of world-class facilities but has not been as efficient as it could be.
It means doing everything we do perfectly.
My role is about constantly building the confidence of this team and building the leadership qualities so employees put their hand up when they’ve made a mistake or understand the implications of a poor decision.
Leadership and accountability are critical elements in a company that is part of delivering sophisticated warships that will serve the nation’s frontline defence capability.
ASC is proud to be part of this effort and we are alive to the obligations we carry.
ADM: How effective is the AWD Alliance construct for ASC?
What are the pros and cons of that style of contract?
Ludlam: The positives are that it’s a huge program that will deliver three warships and possibly a fourth.
The Alliance structure enables this to be delivered in a methodical way.
It’s an incredibly complex program that benefits greatly from having the involvement of DMO, the customer and Raytheon Australia.
It’s a real bonus to bring those three together and in those early years of the Alliance it’s been formed very solidly and AWD is a good brand.
Team members wear lanyards and polo-shirts that represent AWD.
It’s important to create the sense that we’re all one team delivering.
I think it’s been very beneficial for ASC and I’m sure Raytheon and the DMO think it has been beneficial too; it’s the way forward.
You have to acknowledge that there will be some tough times but I think that the Alliance will work those through as a team.
ADM: How are the relationships with Navantia and Lockheed Martin developing?
Ludlam: Lockheed Martin has done a great job.
The first Aegis system is ready to go; it’s on time and on budget.
As far as the Navantia connection is concerned, we’ve got teams in Spain fairly regularly being trained by Navantia.
We’ve said to Navantia that we could do with some support, so they sent support over with teams now working at Forgacs in Newscastle, in BAE Systems in Williamstown and with ASC in Osborne.
Navantia is working with us so when we encounter an issue they might say: “Well maybe this is how you should do it or this is how we would do it back in Spain”.
I don’t think you would actually detect that they were contracted differently.
ADM: How is ASC handling the division of work between destroyer module construction (and the eventual integration) and submarine sustainment side of the business?
Ludlam: Of course, sustainment is very different to construction, however there are common skills in all of that.
As we’ve brought our one company together, we’ve created more flexibility that allows the various production trades to move across.
So there is clear coordination when it comes to operating sustainment and operating construction What we need to be really clear on in ASC - within the ASC part of this Alliance and within ASC overall - is that the load capacity balance is at a very detailed skill level.
So we know that skills we need at a certain stage during construction are available because we have planned for their introduction at a certain time.
What we’re doing at the moment is prioritising a little bit.
We’re getting the delivery points that we want, so it’s not affecting what the customer is looking for, but it’s a bit harder to get it right than it will be when we’ve got a system in place that gives us better tools for decision-making.
And when we’ve got slightly better tools for decision-making it’ll be a really smooth process.
ADM: Could you see an alliance construct working for Sea 1000?
Ludlam: Yes, I could see that. I have been pleased to see SEA 1000 move ahead.
Various people, federated by the Commonwealth, have undertaken the early pieces of SEA 1000 and, in its broader sense, it’s not an alliance but at least it’s a federation of information.
ADM: What do you think ASC needs to do to prepare for SEA 1000?
Ludlam: ASC needs to be part of building the national capability for SEA 1000.
We are establishing a team that is able to understand submarine design and systems design within the submarines context, design for manufacture of the submarine, design for the operating conditions of a submarine and design to support the submarine through life.
We accept that competition is fundamental to this program and ASC welcomes it.
In fact, I think competition drives efficiency.
I think we will have an indigenous level of design that’s necessary for SEA 1000 and we’ll compete against MOTS solutions from offshore.
But, I firmly believe there will be an indigenous submarine design selected given the mission that the Australian submarine will be expected to execute.
Therefore, Australia has got to generate the seeds of growth for that, wherever they are, and ASC is just one such seed.
We have 25 people already in Deep Blue Tech and we feel as though we’re on the right track.
It will need to expand quite considerably and the plans are that we increase this number to around 350 people at the height of design – that is the mission we have set for ourselves anyway.
We’ve lost our sense of entitlement under my leadership.
We will carry skills of submarine design and submarine systems integration, but for some of the more detailed aspects, like batteries for example, it’s not a skill that ASC would need to establish.
If we thought that air independent propulsion (AIP) systems were a good thing for this submarine then we’d need to be talking to people who have got those systems, almost likely an OEM, but in that stage of design we want to be more partnering with them rather than just simply buying from them.
I’m a big believer in what I call partnerships in supply.
Submarines are complex and you need to integrate them.
There’s no way you’ll get it right unless you’re talking to people with deep knowledge about some of these things.
So I think there are a variety of systems that we don’t necessarily have onshore that we might have to look elsewhere for.
ADM: What difference has ASC West made to the company’s ability to sustain and turn around the Collins-class boats in a timely way?
Ludlam: We have been operating in Western Australia since 1996, in fact ever since the submarines began operating from HMAS Stirling.
But we’ve not had the sort of facilities we’ve got today.
The Australian Marine Complex’s (AMC) Common User Facility has got a huge capability and that’s been a great bonus to ASC’s operation.
We have invested $35 million at ASC West to build a dedicated submarine maintenance facility, including a best practice submarine maintenance hall - it is a world-class facility.
We docked HMAS Farncomb, using the AMC’s floating dock, and the transfer couldn’t have been better.
It was the first time we did it and it went perfectly, so we were delighted with that.
Our facilities in ASC West now allow us to maintain submarines, and conduct a deeper level of maintenance, under protected conditions.
ADM: What links do you have into the European market at the moment?
Ludlam: Very few.
The biggest link that we have into the Europe market is Navantia, but that’s in ships and our history is with Kockums (for submarines).
There are no formal links with Kockums currently.
We are, however, observant to what the Germans, French, Spanish and the Swedish are doing in their submarine programs.
ADM: The 2009 White Paper calls for two new classes of surface ships – the Future Frigate and the Offshore Combatant Vessel.
What are ASC’s ambitions on those two particular ship classes?
Ludlam: One of the ambitions that the AWD Alliance carries is to do such a good job that we leave the nation with the will to carry on and do some other things.
Our ambition as an Alliance is to be part of the Future Frigates.
The Future Surface Combatant is something that ASC is currently looking at. DMO has called for expressions of interest, and we are weighing up our interest in this program.
ADM: What does the ASC workload look like for the next 10, 15 years?
Do you see major peaks and troughs or a more stable evolution of work?
Ludlam: The sustainment of Collins is fairly level and that will continue for 15 years.
The AWD program will require more resources for construction but we are very interested in competing for the sustainment of each AWD vessel, as would the Alliance.
So if we were awarded that then we would have a level loading in two areas – we would have sustainment of AWDs as well as the ongoing sustainment of Collins.
In addition, a role in the SEA 1000 Future Submarine might also be a possibility.
Ideally, those employees who are currently building AWDs will move to construct the future submarines and then move to future frigates.
In essence, I’m trying to create a 50 year future based around Collins sustainment, future submarine build, future submarine sustainment, AWD build, AWD sustainment, new frigate build and new frigate sustainment.
ASC’s objective is maintain its importance as a submarine and shipbuilding national capability.