From The Source: Brian Adams, AO Managing Director, Saab Technologies Australia Pty Ltd

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.

ADM: How is Saab travelling in Australia at present?

Adams: It is still good overall but there is a small decline in Australian-based 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 the ANZAC ASMD project coming on. We hired contractors, etc, up to about 410. 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 people. Australia-based revenue is about $95 million, down from $150 million in very broad terms. But there has been a big boost in Australian contracts with Saab in Sweden which came to $100 million in 2011 and following the integration of the US Company Sensis into Saab there is a further $20 million in Australian revenue. So turnover is 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, 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 business. In that area we are looking at training, for example. We have training products in Sweden and overseas; and 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. History shows that we have very good product that is relevant to those capabilities and it’s still 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 I’d love to see decisions made early, like everyone else.
The bottom line is 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. The SRP initiatives in relation to sustainment are of interest to us.

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 AB, is certainly looking globally more intensely than it has before, shifting from a domestic Swedish focus – though that’s still vitally important to Saab – 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 also 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 the 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 send 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 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 were being looked for. I think the main attraction 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 CEA take this capability package in the future? What are the market prospects overseas?

Adams: A good question and we don’t have a complete answer which I’m able to discuss now. CEA and ourselves have a very good relationship; we get on very well and there are synergies between the companies. As a result of the sea trials we have received good publicity so there is an increase in international enquiries which shows there is good potential for the combined system. But it is a difficult global market at the moment. Through very good will, based on good shared experiences we plan to move on from where we are now. Exactly where – I wish I was in a position to 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. The Land Based Test Site in Melbourne was delivered on time. As for the LHD, we look at 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 associated 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 interesting 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, challenging capability; they will try and walk before they run. I guess it is almost limitless what you could conceivably put in. I also guess there’s difficult judgements they must make about what they put into the ships, what they spend on it matching that with how they’re realistically going to use them.
But I look back at my time in the Navy, I look back at ADF experience with all its other ships – you start off with a certain level of capability; things change in the world, technology moves ahead, and you make changes to accommodate 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: Yes I know 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 importantly, retaining them; we’ve been very successful at that. Maintaining those skills in the workforce and giving people the opportunity to develop them is important. There are various things we can do and obviously there is our Swedish connection. They have a very technically competent 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 concept involving expending more on training across the board. So the bottom line is people.

I think the other thing is being innovative - not just sticking with the one product, like for example, the current model of 9LV; but looking at what the customer wants in future, how we can respond to that. Commitment is another issue. I say that in the sense of not just trying to sell a product to the ADF and then get out. Saab hasn’t been in that business and is still not. We’re in the market and we plan to stay here. To be valued you have to make investments, 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: In my view it’s making a commitment to innovation; it’s trying to stay aligned 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 we see that the Swedish part of Saab has nurtured the mastery of technology over a very long time. And we like to think that we have brought that characteristic to Australia. They are a particularly innovative nation, they’re technologically aware and so we can develop on that. Internally, we focus on where our skills lie in systems integration and combat systems engineering – an area where we are at the forefront.

ADM: Looking at it from the other point of view, how do you see Defence as a customer coping in future with these massive jumps in technological capability and complexity that seem to accompany every new platform project or major upgrade?

Adams: Well you would have to say with difficulty, and that’s a personal view based on history. Defence in many ways is probably still a fairly conservative customer - not right across the board, but I think it’s a fair generalisation to say they are conservative.
A company such as ourselves, and we often talk about this in Saab, can’t afford to go down the path of having a marvellous solution just looking for a problem to solve. While internally we do look as far as technology can take you, we do have to calm down and just say, “Look, what are the economics of this? Is the customer going to go down this path? What internal problems do they face?”

I think you have to realistically look at the ADF, make judgements about how far they’re going to move, and not waste your time and money, and their time, in offering solutions which are just never going to fly, or are just too early to fly.

ADM: But is Australia unique in facing those sorts of problems? What about Sweden or the US for that matter?

Adams: Oh no, I think we share these problems. I was interested to hear an American observer in the defence industry saying there may not be as many new or developmental projects in the future, or you might see a decline in the number of them in America, and a focus on upgrading.
I don’t know whether that’s correct, but if it is, I guess what you could see there is the idea that you can’t always live on the edge of technology when you’re subject to budgetary restrictions. So I would say, yes you see the US dealing with that. The British, of course, are reducing their force size, they’re dealing with it. Sweden itself has had to deal with that. I don’t think it’s just a problem for us.

ADM: Looking at one specific that’s emerged quite recently, Saab has just finished the C4I Connector CTD which saw a very successful demonstration. Is this something of a silver bullet for a persistent problem I think for Defence, linking new and legacy command and control systems? It’s been a real challenge for a long time.

Adams: It has. I don’t think it’s a silver bullet but I think it’s a major step forward. Saab does pride itself on its capacity for integration. We’ve got a product called WISE – we focus on that, recognising that not every piece of equipment in the ADF inventory in all three Services is going to be at the same standard. They do come from different suppliers. Integration of legacy systems and new systems is essential. So, as I said, not a silver bullet but it’s a damn good way of maximising utilisation of what you’ve got.

ADM: I notice that the CTD integrated RAN and Army systems but not RAAF ones. Any reason for that or was that just a matter of the availability of resources that you could use to demonstrate it? The company’s made a number of forays into the export market – what do you think it takes for a smart Australian company like Saab or CEA, or any of your peers here in Australia, to succeed in what is now a global market, and a very tough one, at that?

Adams: Well you know our experience is that you’ve got to have a good product at the right price, but also you’ve got to be prepared to ‘partner-up’. Look at the Canadian market and our experience there: we’re working well with Lockheed Martin.
I think that’s one particular thing you have to do. But the basics are product, the right price, partnering up.

When we say export, it gets back to our question of what we’re good at – essentially the combat management systems with the integration focus on the 9LV. We had the product that the customer was looking for. It has the right reputation and we have very good, high quality reference customers in the Australian Defence Force. Without those things it’s very difficult to compete.

ADM: Current defence industry policy explicitly focuses on industry’s sustainment capability rather than manufacturing capability, especially with developmental systems. But how far can you maintain a sustainment capability independently of some sort of independent design and manufacturing capability as well?

Adams: I was part of the Rizzo Review into the Navy’s LPA problems. From that experience in particular I would say you cannot allow acquisition and sustainment to be disconnected. We’ve been down that path – that’s why, in part, the DMO is what it is. If you disconnect the two all your notions of through life support fail, you’re tempted to make trade-offs, favour acquisition over through life support and you can see that nobody wins out of that. You get very undesirable outcomes.