From the Source: Brian Adams - Managing Director, Saab Technologies Australia | ADM November 2011 (Part 1)
Rear Admiral (Ret) Brian Adams, AO, spent 37 years in the RAN, much of that time as a specialist in Joint and Amphibious warfare and some of it instructing, both in Australia and the UK. He spoke to Editor at Large Gregor Ferguson.
PROFILE
1968 Joined RAN
1980-81 Exchange posting with Royal Navy
1988-89 CO, HMAS Tobruk
1990-92 Director, Defence Force Resource Policy
1993-94 Commandant, RAN College
1995-96 Director, Naval Warfare,
Maritime HQ
1998-00 Commandant, Australian Defence
Force Academy
2000-02 Deputy Chief of Navy
2002-05 Head, Defence Personnel Executive
2009-11 Appointed to main board, Saab
Systems Pty Ltd
2011 Managing Director, Saab
Technologies Australia
ADM: How is Saab travelling in Australia at present?
Adams: It is still good overall, as a generalisation, but there is a small decline in revenue and part of that is associated with the fact that we went through a peak of activity a year or so ago. We had the LHD and another project coming on. We hired contractors, etc, up to about 450. Now that that work is behind us we’re on the down side a little bit; there’s been a small decrease in revenue, and we’re down to about 350-370 people.
Revenue is about $130 million, down from $150 million in very broad terms. But turnover is still good. I think it would be no news to you that, like every other company in Australia, we’re finding times are not easy. We’re working very hard to protect our current business and seeking ways to expand. At present, as I said, we are travelling fairly well.
ADM: Where do you see growth in the future for Saab here in Australia?
Adams: Well, again it will be no news that a year or two ago we moved into what we were calling then the civil security market, with some early success. That success is continuing, essentially for civilian clients, both federal and state – the prison service, for example. We’re planning to continue to stay in that business and to seek further business in that area. So that’s the key new area.
In terms of defence, though, we don’t intend to reduce our defence business. In that area we are looking at training, for example. We have training products in Sweden and overseas; we have some of it out here and we are looking very intently at how we might expand the business in that area.
ADM: What about the Future Frigate, the Future Submarine and the Offshore Combatant Vessel? I’m assuming that Saab can see opportunities in all of those projects, albeit quite some way down the track.
Adams: Absolutely. That’d be no surprise to hear me say that, and a number of other companies would say the same. History shows that we have very good product that is relevant to those capabilities and it’s developing, we continue that development and that will be relevant to those capabilities when we get around to making decisions. I see what the AIG says and I see what other companies say and we would, of course, like decisions made quicker; we’ve got workforces to maintain, and that requires us to generate constant business, and so yes, well I’d love to see decisions made early, like everyone else.
The bottom line is, yes, we are acutely aware of what’s in the White Paper. We believe we have a role to play in those projects and we certainly intend to be there and to play that role.
ADM: What about the SRP? The Strategic Reform Program’s obviously affecting every part of Defence business. What impact is it having on your approach to Defence and what sort of opportunities is it throwing up?
Adams: In a very broad sense initiatives such as the group maintenance of naval ships, for example, is an SRP initiative which we are very interested in, both from our own perspective, but also joining with others in partnerships to be involved in that. The SRP initiatives in relation to sustainment are of interest to us. Other than that, I couldn’t point to a specific things that’s having either a detrimental or beneficial impact.
ADM: Going on to Saab Australia’s role on the global stage, Saab is a multi-domestic company, if you like. Is Saab in Australia viewed within the parent company as a centre of excellence for specific areas? And if so, what are your responsibilities and what are the benefits of this?
Adams: Our parent company, Saab, is certainly looking globally more intensely than it has before, shifting from a domestic Swedish focus – though that’s still vitally important – and looking further afield. Saab has moved into the United States very purposefully and recently acquired a very good company by the name of Sensis, so there is a company now called Saab-Sensis. Saab is cooperating and looking very carefully at business prospects within India. It’s had a significant interest in South Africa for many years, which it is continuing to focus on.
And in Australia Saab’s been here for many years in various forms, selling munitions, particularly army munitions, for example. Then it changed pace dramatically when Saab became involved very successfully in the Anzac frigate project. Saab in Australia focused on the 9LV combat management system, we were successful in heading the development stage. And in Sweden in particular we are recognised as having very specific capability in that combat management system field.
We’ve been able to take what was a Swedish technology, bring it into Australia, apply it very successfully, develop it further using Saab’s Australian resources and then sending that back to the parent company where it has been, for example, successfully moved into the Canadian market. So we are very strongly valued for that; Saab has been a consistently good performer and Saab Sweden and Saab globally recognises Australia for that.
ADM: How much of the company’s local product base, for example, command support systems like the 9LV Mk 3E and BCSS are the results of local development? And how much of this are you actually deriving still from your parent and your sister companies overseas?
Adams: Well originally there was a technology transfer from Sweden into Australia, particularly in the case of the 9LV. And as time has gone by Australians in Australia have developed that basic 9LV product into different versions. If you take the new Situational Awareness Terminal (SAT), which is a derivative of the 9LV, that’s very much an indigenous development.
ADM: Talking of the most recent application of the 9LV, the ANZAC ASMD has been extremely successful - somewhat against the run of play in Australian Defence projects. To what do you attribute this?
Adams: I guess there’s lots of ways you could respond to that. At its heart it is a good product - good engineering work by us and others, high technology on the cutting edge at a time when innovative solutions are being looked for. I think the main attraction, in the case of the military, was what it offered a relatively small ship. If you look at what’s in that relatively small hull, in comparison with larger cruisers and destroyers, you’ve got a marvellous capability - the capability it offers now is fantastic and, given the miniaturisation which CAE has achieved with phased array radar, you’ve got a product that has much to offer.
But I think the short answer to your question is it’s an innovative solution at a time when such solutions are being sought. The thing works very well indeed and we’ve got a very happy customer.
ADM: To what extent are the resources of your parent company utilised in ASMD, if at all? It looked to me as if the 9LV Mk 3E was driven very much from Australia.
Adams: That’s true but I think that’s one of the benefits of Saab; we do have a smallish company with a good reputation and we have worked very hard to employ Australians and have an indigenous capability, and we’ve been successful at that. But on the other hand one of our advantages is we do have reach back into a very large and very capable organisation back in Sweden and throughout the world.
ADM: Aside from applying the ASMD across the rest of the ANZAC fleet, where do Saab and CAE take this capability package in the future? What are the market prospects overseas?
Adams: A good question, well asked, and we don’t have a complete answer which I’m able to discuss now. CAE and ourselves have a very good relationship; we get on very well; there are synergies between the company and both of us are talking now and saying “Well, where do we go?” We’re very keen to maintain the relationship. There are clearly answers to be found - it is a difficult global markets, so what are the opportunities? But I guess the best way I can answer that is that it’s a work in progress right now through very good will, based on good experiences and we plan to move from where we are now. Exactly where - I wish I could tell you.
ADM: Three or four years ago Blohm + Voss, the designers of the MEKO family of frigates, wanted to make the CEAFAR and 9LV almost the baseline option for the sensors and combat system for the new generation of ships. Now I think that idea has receded but it certainly suggested that there was huge export potential in the future for this capability.
Adams: Yes, and certainly we, including our Swedish parent, have looked around the world. We’re seeing opportunities, but to be fair, the Global Financial Crisis has dampened demand down a little bit. So I think that the once rosy picture that, for example, Blohm + Voss saw, and perhaps others, is proving a little bit more difficult. Of course there will be opportunities, we’re just not going to achieve them as quickly as we would hope.
ADM: Shifting sideways from the ANZAC frigates into the LHD program, what’s the current status of the LHD combat system for which you’re the contractor?
Adams: In broad terms it’s about 70 per cent complete. We see delivery on time. The Land Based Test Site in Melbourne was delivered on time. We’re talking March next year. The LHD, we look that and see it’s a new capability being introduced into Australia, we look at the way that both Navy and Army are looking at the capability, how they’re recognising the potential it offers the ADF and the challenges, and from our perspective we’re asking ourselves the question: we’ll get a capability into service, but where might that go in future and what might be a Saab role in that capability?
From my perspective the LHD is a very new thing; the challenges are enormous but they should be met and all of us should be saying, “Well how we can contribute to achieving the full potential of that capability?” and that is certainly what we’re doing in Saab.
ADM: My observation is that the ADF is just starting now to understand the potential of the LHD and the scale of the C2 challenges that it’s going to have to address in making the best use of that capability. So how far can the combat system you are developing be scaled up to accommodate what I suspect will be inevitable growth in demand?
Adams: I can’t talk on behalf of the ADF, but I guess from their perspective it is a big, intelligent capability; they will try and walk before they run. I guess it is almost limitless what you could conceivably put in. I guess there’s difficult judgements they must make about matching what they put into the ship, what they spend on it with how they’re realistically going to use it. I imagine it could become a vast black hole of money, and they don’t want to do that.
But I look back at my time in the Navy, I look back at our experience of all the other ships - you start off with a certain level of capability; things change in the world, technology moves ahead, and you make changes to it. Getting back to your question, where does Saab see itself in all that? As a cooperative supplier and partner in that process, if we can. I look forward to that.
ADM: How does a company like Saab, which is very technology driven, maintain its skills and capability base in a market that’s as small and fragmented as Australia’s?
Adams: Yeah, I mean it is almost becoming clichéd but it in fact does depend on the people. For us that’s recruiting the right people, further educating and training them, and most important, retaining them; we’ve been very successful at that. Maintaining those skills in the workforce and giving them the opportunity to develop them - there are various things we can do and obviously the Swedish connection, the very technically competent nation and the workforce which we have access to.
Saab globally is making a significant investment in the forthcoming calendar year in this very thing. They’re calling it the Saab Academy, which is not bricks and mortar, it’s a notion of having to expend more on training across the board. So the bottom line I guess is people.
I think the other thing is being innovative, not just sticking with the one product, for example, the current model of 9LV; looking at what the customer wants in future, how we can respond to that. I guess the other thing too is commitment. I say that in the sense of, well, are you in it just to sell a product to the ADF and then get out? Well Saab hasn’t been in that business and is not; we’re in the market and we plan to stay here, and to be valued you have to make investments, and that’s in people and also commitments to through life support, for example.
ADM: You depend on your technical mastery as well as your business skills, so in a very cyclical market how do you grow your technical mastery when the technology boundary is advancing every year? It’s an issue for the industry as a whole, I think, in this country. How do you grow your technical mastery?
Adams: We won’t revisit the people area. I guess it is making a commitment to the innovation; it’s trying to stay in line with the customer, with their expectations and keeping abreast of what is possible, but more importantly, what the customer is willing to pay and how you might be able to offer much more at the correct price.
In terms of mastery in a technical and engineering sense, in a way in Australia we will keep abreast of that partly by reaching back into Sweden. They are a particularly innovative nation, they’re technologically aware and so we can develop on that. Internally, well we focus where our skills lie – systems integration, combat engineering – we stick to our knitting and just make sure we are at the forefront.