ADM's TOP 40 Defence Contractors

A static defence market - compounded by Defence's inability to spend all of its capital acquisition budget - is slowing overall growth in Australia's defence industry.
This year's listing of the Top 40 defence contractors tells an interesting story. Five of last year's top 10 companies have recorded either no growth at all or a decline in defence business. The order at the top of the table has changed as a result, with Tenix displacing ADI as Australia's largest defence contractor for 2004; both companies reported a drop in defence business - Tenix from last year's $605 million to $600 million and ADI from last year's record high of $655 million to $594.5 million. Serco Sodexho's defence revenue fell from $150 million to $132 million while Qantas Defence Services' fall from $137 million to $93 million has seen the firm drop out of the Top 10.

Doom and gloom? The figures are telling an ambiguous story - this year's top 10 has recorded a 13 per cent increase in combined turnover, from $3.017 billion to $3.43 billion. Altogether, this year's Top 40 have reported a combined turnover in Defence-related business of $4.7 billion. However, many of the numbers are down - Canberra-based CEA Technologies rounds out this year's Top 40 with a defence turnover of $16.84 million, compared with last year's Number 40, MTU Detroit Diesel Australia, who recorded a turnover of $18.0 million.

The Top 10's big mover is Australian Aerospace Limited as it moves along with the Tiger Armed Reconnaissance Helicopter for the Army. The company has nudged Raytheon Australia out of 4th place by reporting a turnover this year of nearly $352 million. Despite dropping a place, Raytheon Australia has had a good year, reporting an increase in turnover of $59 million. Garrison support continues to be good business for Spotless. The company has reported increased turnover of $55 million compared with last year. Boeing Australia's results have also improved, the company declaring an increase in its defence turnover of $62 million.

Submarine support is proving good business for Australian Submarine Corporation. The company's turnover has increased an impressive $97.2 million over last year. Rounding out this year's Top 10 is Serco Sodexho Defence Services at no.9 and Saab Systems at no.10 whose defence revenue has climbed dramatically from $82.4 million to $123 million.

Elsewhere in the rankings, particularly below number 20, place holders are frequently recording a lower turnover than the companies that held their position a year ago - compare Defence Maritime Services and Adacel's $45 million turnover last year, which put them in equal 25th place, with Scientific Management Associates' turnover of $36.22 million to gain the same position this year. This year Adacel is down at 29, with a turnover of $30 million, while DMS has soared to 13th spot with a turnover of $69 million, reflecting its recent success in the Armidale patrol boat contract.

Notwithstanding some important omissions - neither Forgacs nor L-3 Communications participated in this year's Top 40 survey, for example - the significant changes in some companies' fortunes reflect Defence's recent spending priorities. Projects such as Wedgetail, the Armidale-class patrol boats, Tiger helicopter and FFG frigate, AP-3C Orion and Hornet upgrades have dominated capital spending. However this year's listing also reflects Defence's recent inability to spend all of its capital equipment budget. The past two defence budgets have seen growing amounts of the capital budget parked well out to the right, to the discomfort of the industry where we continue to see prime contractors fighting with SMEs to win minor projects.

TOP 20 Defence SMEs - For the first time, we have included in the TOP 40 Defence Contractors a survey of Defence SMEs (small to medium enterprises). From their responses, we have established a list of the TOP 20 Defence SMEs in Australia.

It's worth noting that the No.1 Defence SME, Melbourne-based Rosebank Engineering, comes in at no.32 of our TOP 40 Defence Contractors, indicating the important role for SMEs in Australia's defence industry.

The Top 20 SMEs have a combined turnover of $150 million.

Following each of the TOP 40 and TOP 20 SMEs lists, we have included the companies that have supplied turnover figures but did not qualify for inclusion in the TOP 40 or TOP 20, for the interest of our readers.

In past years we have also included companies that have provided details but no turnover figures. Space does not permit us to publish this information this year.

TABLE:
ADM TOP 10 CONTRACTORS
1 Tenix Defence Pty Ltd 600
2 ADI Limited 594.5
3 BAE Systems Australia 475.0
4 Australian Aerospace Limited 351.888
5 Raytheon Australia Pty Ltd 325.0
6 Spotless Group Limited 285.0
7 The Boeing Company 2 84.0
8 Australian Submarine Corporation Pty Ltd 255.9
9 Serco Sodexho Defence Services Pty Ltd 132.0
10 Saab Systems Pty Ltd 123.0

ADM TOP 10 SMEs
1 Rosebank Engineering Pty Ltd 27.0
2 Nautronix Ltd 15.073
3 Codarra Advanced Systems 11.0
4 Owen International Pty Ltd 10.8
5 Asia Pacific Aerospace Pty Ltd 10.0
5 Frontier Group 10.0
5 Lovitt Technologies Australia 10.0
8 Xtek Pty Ltd 8.2
9 Aerostructures Technologies Pty Ltd 8.0
10 Interconnect Systems Pty Ltd 5.8

By Judy Hinz and Gregor Ferguson, Brisbane and Adelaide