• The 2019 ADM Top 40/Top 20 survey uncovers some surprising results.
    The 2019 ADM Top 40/Top 20 survey uncovers some surprising results.
  • Percentage of female employees
    Percentage of female employees
  • 2019 Top ANZ SMEs
    2019 Top ANZ SMEs
  • 2019 Top 20 SMEs
    2019 Top 20 SMEs
  • 2019 table 6
    2019 table 6

Updated 1500 Tuesday 14 January

Once again, ADM’s annual Top 20 SMEs has some staggering headline figures and surprises for the Defence community.

To clarify, rankings are based purely on turnover earned during the calendar year of 2019 in Australia and/or NZ. To qualify as an SME, ADM relies on the definition used by the Australian Bureau of Statistics; a business must have 200 or less full-time equivalent staff members. An ANZ SME must meet that mark plus be owned and operated in Australia/NZ, independent of a foreign-owned parent company.

It’s worth pointing out here that the entire turnover for the Top 20 is $912 million; Top 40’s Top 5 turnover alone is $4.82 billion.

As always, there is much volatility in the Top 20 SMEs. St Hilliers nudged up to the top spot this year, taking out the ANZ SME crown as well as rank 20 in the wider list.

2019 Top 20 SMEs

“A challenge for all growing businesses is to never lose sight of what has brought the opportunities in the first place,” St Hilliers’ General Manager Brant Wood said to ADM. “At St Hilliers we recognise, even while growing, we need to maintain our personable and tailored approach to service our valued clients along the entire project.

“St Hilliers are continuing to gain knowledge around the best methods of submission, delivery and handover within the Defence framework. St Hilliers aim to utilise the valuable lessons we have learnt through our current and past projects to further enhance our offering to Defence.”

Of the responses this year, 19 companies qualified as ANZ SMEs (see Table 3).

2019 Top ANZ SMEs

“The Government’s Defence Industry Policy setting has provided the right environment for Australian companies like NIOA to invest with confidence and pursue export opportunities,” NIOA’s CEO Robert Nioa said to ADM. “Over the coming 12-months NIOA will commence construction of the artillery shell forging plant at Maryborough under our Joint Venture with Rheinmetall Waffe Munitions, expand operations at Benalla under a direct tenancy with the Commonwealth, open an office in Melbourne, deliver warshot and training munitions for the Land 400 Phase 2 Boxer family of vehicles and 81mm mortar, and continue to deliver against a series of small arms contracts for our Defence and Law Enforcement clients in Australia and NZ. NIOA has been shortlisted for the Land 159 Lethality Systems Project, so we will commence 2020 responding to a restricted tender with our strategic partners.”

There has been much rumbling from the SME community this year when it comes to access into Defence’s mega programs like the various phases of Land 400 (Rheinmetall Defence Australia for Phase 2 and Phase 3 will be undertaking a risk mitigation activity this year between Rheinmetall and Hanwha), Future Frigates (Hunter class from BAE Systems) and Future Submarine (Attack class from Naval Group) – see P92 for more on this. There have also been complaints around the balance of work on the consultancy front, with work being split between the Major Service Providers (MSPs) and the Defence Support Services (DSS), arguably in favour of the four MSP teams. As with any rebalancing of spending priorities and practices, there is a settling in period while the system realigns.

“Whilst opinion varies as to the trend for SME engagement in Defence, during 2019 it has been encouraging for SME Gateway to note that membership of our community continues to grow,” Stuart Althaus, CEO at SME Gateway, said to ADM.

“We take this to be a firm and positive indicator that SMEs remain keen to be active in Australian Defence programs, and want to operate in an environment that acknowledges their credibility, credentials and value as a Fundamental Input to Capability and a national asset.”

“Our growth helps to strengthen our supply chain,” BAE Systems Australia CEO Gabby Costigan said to ADM. “Collaboration across industry and within our supply chain is at the heart of how we do business. Today, we rely on around 1,500 Australian companies in our supply chain and our spend with those businesses is around $330 million per year.

“More than 950 Australian companies have already registered through the Industry Capability Network to supply into the Hunter program, with that number still rising. Together with our supply chain, we are collaborating to develop new, world-leading technologies that will strengthen industry, develop new sovereign capabilities and underpin the growth of high-value Australian exports.”

As ADM reported earlier this year, Australia has slipped down the rankings from the launch of the Export Strategy. Australia has become the world’s second largest weapons importer but has dropped to 25th in the export rankings.

Australia previously ranked as the fourth-largest importer and 18th largest exporter. It now imports more military equipment than any other country bar Saudi Arabia and exports less than Belarus, the Czech Republic and Norway. The shift up in imports, however, is reportedly due to significant payments for the F-35 and for the Future Submarine programs rather than a wider general increase.

All eight prime company participants have had growth across their Global Supply chain programs, with the program as a whole securing over $1 billion worth of business since the program was established in 2007.

2019 table 6

“Our defence contracts continue to grow and we share a strong and mutually beneficial relationship with the ADF,” Chris Sievers, CEO at Air Affairs, said. “We have experienced a significant increase in drone exports this year, exporting our phoenix jet to five countries.”

Another big winner this year was CAE, as the company’s turnover jumped 50 per cent from the previous year, which the company attributes to export work.

“The increase in revenue from FY18 to FY19 was due primarily to milestone payments drawn from the RNZAF NH90 flight training devices procurement and an increase in the revenue provided through the export of Australian services into the Middle East/Asia Pacific region,” according to CAE’s Head of Business Development for Defence and Security Mat Sibree.


Percentage of female employees

In round figures, of all the companies that responded to the survey, it accounts for 32,202 people. This captures both their Defence and non-defence workforces across 56 companies that provided details on the workforce questions. Once again ADM asked what the percentage of females were in the workforce; many companies did not answer the question but of the 55 that did, the average works out to be 25 per cent, with Australian Defence Apparel having a staggering 82 per cent of their workforce as female (see Table 4 for female participation figures). ADM suspects this has more to do with the textiles-based nature of their business, which is a traditionally female workforce.

In Australia, the national female STEM workforce makes up on average 17 per cent of the field, according to Australia's first Women in STEM Ambassador Professor Lisa Harvey-Smith. The female participation figure for the Defence Industry was further confirmed this year by research from Rapid Context which found that in the top 20 defence industry companies less that 1 in 5 defence industry employees are women, and less than 1 in 7 defence industry managers are women. Only 1 in 14 new apprentices in the industry are women.

As always, the figures here are but a snapshot in time of what the Australian Defence Industry landscape looks like. In terms of R&D, exports and AIC figures, Tables 5 and 6 provide some context into what policy in action looks like. As Minister for Defence Industry Melissa Price confirms in her From the Source interview this month, both the CDIC and Defence Export Controls agencies are being reviewed to make sure they are fit for purpose in terms of timeliness and value for money for all parties.

Work on the updated Force Structure Review will be completed in early 2020 and hopefully, fingers crossed, this will lead to a publicly updated Integrated Investment Program (IIP). The IIP is updated within the department every six months but this is not made available to the ninth Fundamental Input to Capability; Industry. Hard to plan your capital and workforce investments when you have only vague guidance of what’s in the pipeline.

On the surface, Industry is doing well. However, as mentioned previously, there are rumblings not far below the surface. The natural tension that exists between primes, SMEs, CASG/procurement bodies, the end users and the government of the day is a never-ending point of friction. Clear and timely communication around expectations, timelines and budgets goes a long ward towards easing those friction points.

ADM will be doing online follow up coverage with more insights from the data, both from this year and longitudinally now with over 20 years of data to draw on. Keep an eye on the website for more details.

Table 6 has been updated to rectify data and formatting issues.

While every effort has been made to ensure the accuracy of the information published in ADM’s Top 40 Defence Contractors/Top 20 Defence SMEs surveys, the publishers accept no responsibility for any errors or omissions that may have occurred. ADM does conduct random informational spot checks on survey responses for veracity but relies on an honour code of truthful reporting of provided figures.
The survey is published for the interest of ADM readers and defence industry analysts. Participation is free. Companies wishing to participate in future surveys should contact the managing editor Katherine Ziesing or the associate publisher Kylie Leonard.

Copyright notice
The information contained in ADM’s Top 40 Defence Contractors/Top 20 Defence SMEs surveys is copyright and may not be republished without the permission of the copyright holder, Yaffa Media Pty Ltd. All enquiries: Katherine Ziesing, Managing Editor, e. katherineziesing@yaffa.com.au t. 02 6203 9535
Any person or organisation quoting information from these surveys must acknowledge Australian Defence Magazine, December 2019/January 2020 Top 40 Defence Contractors/Top 20 Defence SMEs surveys. ■

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