Australia Makes Moves to Grow its Defense Industry

By Stew Magnuson

GEELONG, Australia — Very little excites the aerospace industry and the media that covers it more than the announcement of a new jet fighter program. So when the curtain went up in a Boeing tent at Avalon — The Australian Air Show revealing a full-size model of a new robotic jet fighter, the camera flashes popped off as if it were a star on a Hollywood red carpet.

“It is a red letter day,” Australian Minister of Defence Christopher Pyne said while standing in front of the Airpower Teaming System, Boeing's name for the loyal wingman jet fighter, an unmanned aircraft intended to fly in formation with the nation's F-35A joint strike fighters and F/A-18E/F Super Hornets.

It was also an auspicious day because the unmanned system would be the first indigenously developed aircraft Australia produced since the CAC Boomerang fighter during World War II.

The program makes a statement to the world that Australia is no longer content to be merely a buyer of military equipment, but has ambitions to be a developer and exporter as well, said Pyne. “This is all testament to the fact that we are undergoing our largest buildup of our military capability in our peacetime history — $200 billion over the next 10 years.”

While Australia is still buying pricey F-35s from the United States, attack-class submarines from France and armored fighting vehicles from a European consortium, it wants a significant portion of that $200 billion to stay in the country and help it create aerospace and defense sector jobs, officials said.

The nation last year released the 2018 Defense Industrial Capability Plan spelling out how it would build a “broader and deeper defense industrial base” over the next decade.

“The government's goal by 2028 is to achieve an Australian defense industry that has the capability, posture and resilience to help meet Australia's defense needs,” the plan stated. One of its main goals is to turn the nation into an exporter of military goods rather than just an importer.

The day before the airshow, U.S. and other foreign contractors gathered in nearby Melbourne to hear from State of Victoria and Defence Ministry officials about the new ways of doing business in Australia.

Damien Chifley, executive director of the defense industry branch in the Australian Department of Defence, said the approach now is to partner. The country's defense contractors are predominantly medium to small companies who can't go it alone. They need help bringing their innovative ideas to prime contractors.

If a U.S. or other foreign company wants to vie for an Australian contract it must now submit an “industry capability plan,” which spells out exactly how they will work with local firms to bring the project to fruition, Chifley said.

“The idea is they go out the main gate with Australian industry,” he said.

These plans are not offsets, which is the mechanism used by some nations to make contractors invest a certain amount of dollars in the local economy as a condition of winning a contract. However, these industry capability plans will be weighed by the contracting authority when selecting a winning proposal, he noted.

Claire S. Willette, CEO of the Australian Defence Alliance, said in an interview that the nation's effort to bolster its aerospace and defense sector should be seen in light of its losses in manufacturing jobs — particularly the automotive industry — rather than security concerns.

Australia wants a “sovereign capability to support itself” in the defense industrial sector, she said.

“From a long-term sustainable economic perspective, you need to build something. You need to have a growth area,” said Willette, an American who served in the Pentagon for 20 years before moving to Australia.

“Because we did have this burgeoning defense industry and because we have some really niche, high-tech areas of excellence, I think that [the government] saw that this was a natural fit and something they could grow off of,” she said.

Australian government officials and locally based U.S. contractors at the airshow were eager to promote the nation as a spot where they can find the talent to develop programs.

Boeing, by far, has the largest and longest presence with more than 90 years experience doing business in the country and some 5,000 employees in its defense and commercial sectors.

It features two large research facilities — Boeing Research and Technology-Australia and Boeing Phantom Works International in Brisbane — where work on the robotic jet fighter will take place. The company invested $62 million in research and development in Australia in 2018, company officials said.

“We're going to prove that we can do big, audacious programs like this here in Australia,” said Darren Edwards, vice president and managing director of Boeing Defence Australia.

Meanwhile, Lockheed Martin and local officials touted the country's success in winning F-35 sustainment contracts.

As a partner nation in the program, Australian contractors can compete globally with other F-35 customers for component maintenance contracts. They received 343 out of a possible 388 such contracts in the latest round, building on the 64 they had received in the first round. Australian contractors have received a total of $1.3 billion in F-35-related contracts so far, said Royal Australian Air Force Air Vice-Marshal Leigh Gordon, head of the joint strike fighter division.

“That is a really great example of the strength of Australian industry and its competitiveness in the global sphere,” Gordon said.

Going hand in hand with Australia's ambitions in the defense realm is its renewed focus on space.

In July 2018, it established the Australian Space Agency, which brought together about 11 different agencies spread out within the government at various ministries, said Kim Gina Ellis, senior lecturer on space industry engagement, governance and law at Swinburne University of Technology in Victoria.

The government wants a central point to coordinate and bring all the civilian activities together, she said. Again, the long-term goal is job creation, she told National Defense.

The government wants to add about 20,000 to the approximately 10,000 space sector jobs already in Australia, she said.

Meanwhile, as is the case in the United States, the nation has a growing private sector launch industry with a handful of companies building small rockets and launch facilities for small satellites, she said.

Along with telescopes and communications systems that have been positioned on the continent since the beginning of the space age, Australia features a favorable geographic location for inserting spacecraft into polar orbits, Ellis noted.

The new agency will “help build the industry and show the rest of the world that we have these amazing capabilities and that we support most of the major space exploration programs,” Ellis said.

Jeff Shockey, vice president of global sales and marketing for Boeing Defense, Space and Security, said in an interview that Australia is growing very close to investing 2 percent of its GDP in defense. “They are doing the right things. There is a lot going on down here in this region and they are at the forefront.”

Boeing has ambitions to export the Airpower Teaming System to the other “five-eye” partners: the United States, United Kingdom, Canada and New Zealand.

Shockey said Boeing is an international company and Australia is an enduring ally and partner. Building a new jet fighter outside the United States should not be seen as “off-shoring” work, he said. “We're a global company and we're doing work throughout the enterprise on this project and others, both domestically and abroad,” he said.

“There is a great high-tech talent base here,” he added. And the wide-open spaces will be a perfect proving ground for unmanned aircraft, Shockey and other company executives said.

Willette said: “We're never going to have the assembly lines for an F-18, an F-16 or a JSF, but we do have the componentry, the systems and the systems integration and the skilled engineering. Designing and fabrication and machining — and the professional services that back all that up — those are huge strengths for this country.”

The government has several new programs to spark innovation that would be recognizable to the U.S. defense industry. It is setting up grand challenges, cooperative research centers, university research networks and small business research grants. It has what would be called in the U.S. “broad agency announcements” with pots of money dedicated over the next 10 years for organizations with ideas in fields such as intelligence, reconnaissance and surveillance, electronic warfare, cybersecurity, amphibious warfare, maritime and anti-submarine warfare, and air and sealift.

The 2018 Defense Industrial Capability Plan was just one building block in a larger plan, said Willette. The Australian government is continuing to produce more policies surrounding manufacturing skills and science, technology engineering and math education.

“Having a level of sovereignty, and integrity and resiliency in your supply chain is incredibly important from a national security perspective,” Willette added.

The ideas for the new programs are based on long-established U.S. or U.K. acquisition programs, said a government official who was not authorized to speak on the record.

The Australian government is keen to partner with U.S. universities and has established the Australia-U.S. Multidisciplinary University Research Initiative Program to help Australian schools establish themselves with the Pentagon's Multidisciplinary University Research Initiative. It will provide Australian colleges with grants of up to 1 million Australian dollars per year if they can team with U.S. counterparts in the MURI program.

Willette said: “The message very clearly coming from Australia is: ‘partner with us.'”

http://www.nationaldefensemagazine.org/articles/2019/4/29/australia-makes-moves-to-grow-its-defense-industry