Editorials: I remember when | ADM Feb 2011

Katherine Ziesing |Canberra

The RAAF celebrates its 90th anniversary this year, commemorating the people and planes that have shaped the modern organisation that provides the Australian Defence Force with its air capabilities in all their forms.

Much is made of lessons learned when looking back on the history of such an organisation. What was done well? What could have been done differently? What has changed since we last approached a project like this?

One such reflection occurred during the Queensland floods last month. Talking to contractors at RAAF Amberley, I asked a resident contractor, are you ok?What’s happened? And while he confirmed that life was all right, if a little soggy, it wouldn’t matter much if the base had gone to hell anyway. And why was that? Twenty years ago, there were hundreds more uniformed people living on base. Uniformed people that would take up the bulk of the workload should a disaster happen; sandbagging, moving stores and spares and generally preparing the base for the worst.

Now contractors, who live nearby but had their own flood related issues to attend to, predominantly operate the base. It’s hard to care about your worksite when there’s a dead cow, two fridges and a zoo-worth of snakes floating in your backyard. But when you live and work in the same place, the consideration for safety and possessions is the same.

A private contractor force, often working in tandem with the RAAF, now does so much of the sustainment and maintenance work that was formerly done in-house solely by the RAAF. Driven by cost savings, the move from a Commonwealth to a private workforce over the past two decades has seen a massive change in culture at bases.

But then again, a lot of the private workforce has done time in a uniform as well. There are pros and cons to the change in how these assets are supported but in the majority of cases, the new workforce paradigm operates very successfully.

And after all, the RAAF is in a constant state of transition. As Chief of Air Force Air Marshal Mark Binskin points out this month in our From the Source interview (P130), his organisation introduced five new platforms into service last year and is on the brink of accepting its sixth with the MRTT.

The Heron remotely piloted aircraft, Super Hornets, Wedgetail, Vigilare and the King Airs have joined the RAAF family while the F-111 and Caribous have all said goodbye in the space of barely over a year. Planning for the P-8 maritime patrol aircraft, Joint Strike Fighter and Battlefield Airlifter are all well underway. Training lessons learned from Wedgetail are being applied in the MRTT program. Support of the Super Hornet fleet will feed into JSF support structures. And industry plays a significant role in every single capability just listed.

There is a great sense of ‘I remember when . . .’ in talking to the people and companies that have been involved in the military, but there seems to be a particular passion in those who have been involved with all things aviation related.

Talking to F-111 maintainers, some of them find it hard to imagine working on anything else. ‘But I’ve always been a pig man’ was one very serious comment from a lifelong worker. It will take time to bed down a new platform but already the transition, of both with the workforce and technology advances offered by the new platform, has begun.

2011 will be a year of settling in for the RAAF one would think. A year of letting transition teams become operationally proficient in their squadrons and letting the some of the lessons learned be digested rather than sit on a shelf, accumulating, waiting for a good book opportunity to come along.

However, a formal process to capture lessons learned seems to be lacking. They tend to become lessons demonstrated, only to be re-learned in a later project. Sometimes they are re-learned through informal channels, where a program official will contact a former program official from an older project for a quick chat.

For example, the classic hornets were acquired in the 1980s. How many of those people are now involved with the JSF team, providing those organisational epiphanies once again? Yes, there are huge technological differences between the programs but the aircraft still has to be flown, supported and maintained somewhere – the people side of the equation.

The RAAF is not alone in this dilemma of passing information from one generation of procurement officials to the next. The other two services and the DMO face a similar challenge. The corporate depth that serves as the memory for many of these lessons demonstrated/learned now rests out in industry or has left the world of Defence altogether.

It remains to be seen how to best make use of grey beards and the past workforce. Think tanks, such as the Australian Strategic Policy Institute and capability specific organisations like the Submarine Institute, the Williams Foundation or even the Environmental Working Groups have a role to play. But they have to be dependable and approachable in every sense of the word.

I remember there was a time when Defence and industry worked together every day to support the men and women in uniform who are scattered around the globe at the behest of their government. Oh wait, it is that time still.

Defence and Industry – shared interests, shared opportunities

Gregor Ferguson | Sydney

How big is Australia’s defence market – or, more to the point, how big is the accessible defence market? Here are a few statistics, drawn from the latest update to the Defence Capability Plan (DCP), and the 2010-11 Defence Portfolio Budget Statement (PBS) alongside ADM’s Top 40 Defence Contractors released last month.

In 2011-12 the Defence Materiel Organisation will spend $4.6 billion on sustainment and $5.1 billion on acquisition, according to the PBS. The DCP predicts that only some 54 per cent of this will be spent in Australia: $3.3 billion on sustainment (72 percent of total sustainment spending) and $2 billion on acquisition, or 39 per cent of the total acquisition budget. It’s likely these proportions will remain stable over the coming decade and beyond.

For an industry whose Top 40 companies alone turn over $7.1 billion between them, those figures are food for thought. Over the past few years the make-up of the ADM Top 40 has changed to reflect this reality: four of the top 10 companies are service providers, while the top three - BAE Systems, Thales and Raytheon - make a significant proportion of their revenue from services and sustainment. Any Australian defence manufacturing company that wants to grow significantly must win greater market share, diversify into related non-defence markets or chase export sales.

Former Tenix CEO Robert Salteri said in an ADM interview five years ago that a company can’t export unless it has products it can sell – but this may not be entirely true any more. Many of the Australian companies that have won contracts in the Joint Strike Fighter program aren’t actually ‘product’ companies: they are ‘service’ and ‘process’ companies, offering skills, quality and capacity in designing structural components (GKN) or manufacturing high-precision engine and airframe components and production tooling (Ferra, Broens, Quickstep, Production Parts, Marand, Levett and Lovitt). Firms like Micreo and Chemring Australia fill other high-technology niches.

While Boeing Australia isn’t part of the JSF program, its highly successful aerostructures business in Melbourne operates on a similar basis: its advanced composites design and manufacturing capability directly support the parent company’s civil airliner programs.

Interestingly, the only Australian prime contractor likely to win a significant share of JSF manufacturing work is BAE Systems Australia, which has also invested significantly in its advanced manufacturing capabilities in Adelaide.

The clear message is that Global Supply Chain (GSC) opportunities exist for companies offering design and manufacturing skills, quality and capacity – and also the critical mass and management ‘smarts’ necessary to satisfy an extremely demanding customer. If the JSF program delivers on the promise Lockheed Martin has dangled before Australia’s aerospace industry, this one project could be worth multiple billions of dollars to local companies. Other projects ought to follow, but will they?

Much depends on Defence itself. The department is extremely risk-averse and will avoid any market intervention which could lead to project risk or a potential cost premium. Fair enough – but a GSC represents low risk to Defence: the DMO isn’t buying from a local company; if an Australian supplier offers the best value for money to the prime contractor then the price the DMO pays for the equipment concerned isn’t affected; Priority and Strategic Industry Capabilities (PICs and SICs) are strengthened, and the national economy benefits from the high-technology jobs and export income which result.

All it takes is for the Commonwealth to support and work with local firms who have that export potential – and to the great credit of Defence, the DMO, DIISR and some forward-looking State governments, this is what has happened on the JSF program.

In a highly competitive industrial market where a prime contractor can choose between a range of hungry, cost-effective suppliers (and often carries onerous industrial offset obligations set by other customers), the vital difference has often been the advocacy and support (and subtle pressure) of the Australian government, working as part of Team Australia. Let’s be clear about one thing, however: Australian companies need to perform. They need to be hungry, smart and competitive – but the firms which have secured JSF work demonstrate that characteristic.

The nature of the global defence market means GSC opportunities are strongly linked to major defence acquisition projects. So the Commonwealth has a critical and enduring role to play in ensuring local firms get a fair chance to win GSC contracts by using its leverage at an early stage on future major capital equipment programs led by foreign prime contractors. With a new, 10-year DCP on the streets and the majority of the DMO’s capital acquisition budget now going overseas, this is a low-risk way of pursuing the enlightened self-interest of both Defence and Australia’s defence industry.