Air: Chemring: more than just countermeasures | ADM February 2013

At the last Avalon Air Show, Chemring opened their new facility at Lara. The company invested $35 million in the factory that is part of the 10-year $160 million contract from the Commonwealth to produce all countermeasures for the ADF. Two years on, the facility has ramped up significantly.  With turnover jumping from $4 million to $40 million in the past six years, time has flown.

“Over the last two years we’ve been gradually commissioning and ramping up production of the facility,” Michael Flowers, Chemring Australia’s outgoing managing director said. “We hit full rate production in the manufacturing facility in the middle of 2012 and at the moment we’re currently producing at full rate countermeasures for both the Classic and the Super Hornets.

“They are a round form factor of US origin countermeasure and we’ll be shortly transitioning production to the square form factor which is the UK form factor countermeasure which are used on rotary wing and large aircraft platforms such as the C-130.”

The facility is fully up and running, said incoming managing director Mark Hender. Hender took over from Flowers last month after a transition period.

After seven years in the role, Flowers has seen the company grow from a handful of people to 85 workers with a state of the art facility just outside of Geelong. It is also a unique capability throughout the world in that it can produce both square and round form factor countermeasures using the various different manufacturing techniques.

“That allows us to make all the standard Magnesium-Teflon-Viton or MTV countermeasures for the Royal Australian Air Force,” Flowers said.

The flare production process involves both explosive and volatile compounds so the facility has been designed to be almost completely automated to minimise the risks to employees. It was designed in conjunction with Sage Automation using staff from Adelaide and Melbourne.

“There are no people in that part of the facility and that’s really driven by the overall design parameter of the facility which is the safety of our employees is the driving factor behind the facility,” Flowers said.

ADM understands that similar countermeasure facilities world-wide are looking at the Lara facility as a best practice model.

Long term investment

The massive investment that the Lara facility represents for the company could not be undertaken without the long-term contract for ADF countermeasures.

“We see this as an extremely good way of defence and industry doing business in Australia where defence is able to give long term certainty; that has allowed us to make a significant investment of around $35 million. As an ongoing means of establishing global commitment to Australian Defence Industry, it is this type of long term contractual certainty that will help forge the business case necessary for foreign companies to invest,” Flowers said.

This long-term relationship for the countermeasures contract has been seen as a ‘dry run’ by DMO’s Explosive Ordnance division for the refresh of the ammunitions contract for the Commonwealth under the Domestic Munitions Manufacturing Arrangements (DMMA). The DMMA contract will be slightly different in terms of government owned contractor operated facilities, but the long term certainty of supply and demand for product is a crucial part of the long term relationship between Defence and Defence Industry. Chemring has teamed with Raytheon Australia and Poonsang of South Korea for the contract and have been shortlisted along with four other teams.

“It’s absolutely critical to have a robust investment process embedded into the whole activity so that either the Commonwealth or the successful tenderer of the DMMA can invest in capability or improve both capability for the ADF and improve the commercial operation of those facilities,” Flowers said.

“One thing we find with the long term contract we have with Defence, that on day one some four years ago we had a list of 10 years worth of product and quantities that Defence planned to buy. Whilst that looks good on day one, on day 1,000 things change and we are continuously going through a process with Defence to change the product mix, to change the quantities so that we can ensure that what we are manufacturing and supplying to Defence always meets a current need rather than meeting a need that was identified a few years ago.

Flexibility for the Commonwealth is important to address change as needed; to be able to as operational circumstances change, change their product mix. It is important from an industry perspective that there is a long term ongoing basis of business although the specific nature might change.”

Not just the RAAF

While the RAAF is the main countermeasures customer in the ADF, the Army and Navy are also customers through the contract that the RAAF manages on behalf of the entire ADF. There is not a huge amount of difference between the products used between the three services.

“In support of Navy we supply through one of our sister companies in the UK a significant proportion of naval countermeasures that are used on the bulk of the vessels,” Flowers said. “We are engaged with the RAN at the moment looking at new types of countermeasures that could be supplied to them to give greater protection to their vessels.

“We are also in the process of developing a new launch system for countermeasures known as Centurion and we would be keen to pursue with the Royal Australian Navy the applicability of that system to their current platforms, both for standard countermeasures and potentially even the for the Nulka system. That program is being developed and funded in house by our UK parent.

“It is what we call a trainable launcher. Traditional countermeasure launchers are fixed on the ship which means they can only fire in a fixed direction. The launcher that is being developed can rotate and the launchers can adjust in angle of elevation so that rather than perhaps repositioning the direction of the ship or having a sub-optimal protection solution you can simply rotate the launcher to give you the best protection.”

The RAN has yet to show an interest as the technology is still in the early prototyping stage but the company has high hopes for the Future Frigate program.

Similarly under Ningaui JP154, the company in conjunction with sister company, NIITEK, in the US have supplied the ground penetrating radar element of that system. The significant element of the procurement was done FMS but Chemring has been providing the project office here and directly in Afghanistan with significant support with regards to field service representatives, training, and other support measures. The company also hopes to target more EW and cyber programs in Australia in the near future, drawing on its global capabilities, particularly from sister company Roke Manor of the UK. Given the nature of such programs, both Hender and Flowers were reluctant to be drawn on specific program details.

“In the CBRN defence space we are establishing a relationship with Northrop Grumman, who globally provide many of the CBRN warning and reporting and information systems that complement Chemring’s chemical and biological detection systems,” Flowers said. “We’re particularly interested in pursuing the ADF’s forthcoming JP2110.”

JSF

The biggest opportunity the company has the on cards is as a second source supplier of countermeasures for the Joint Strike Fighter program. The JSF countermeasures program is worth hundreds of millions of dollars over the life of the program and is probably in the top three of opportunities for Australian industry by dollar value, according to senior JSF sources.

“We’ve been working very closely with the New Air Combat Capability (NACC) project office and Lockheed Martin for the past six years, and we’re now working with PMA 272 – the technical and procurement organisation for the US Navy – and they have responsibility for development and supply of countermeasures for the JSF on behalf of the global community,” Flowers explained to ADM

“We are the second source supplier to the current US supplier (sister company Kilgore). We would anticipate a contract to qualify our facility and product for the JSF later this year with an ongoing production contract aligned to the needs of the user community. The current timeline we’re working to would see qualification activities in 2014/2015 and dependent upon the overall progression of the program and the numbers of aircraft flying, production contracts in 2016 through the life of the platform.”

As a second source supplier, Chemring would be guaranteed to have a minimum order of work for the international JSF fleet to maintain the facility and its capability. The current planning for countermeasure types (the JSF has three different types on board) is based on IOC dates for various partner nations but this profile will change as the jets become used in training exercises and are possibly deployed.

“Chemring as a company has shown a strong willingness to invest their own capital, effectively at risk, to build the business here. They have a strong core business in Australia and a large business overseas that they can continue to build on,” Hender said as to why he joined the company. “They have shown a willingness to bring that business into Australia and establish capabilities here to support their business.”