The Global Supply Chain

Foreword by The Hon Greg Combet

1st Aug 2010


Australia needs a competitive defence industry sector, not only because it contributes significantly to our self-reliance and national security, but because it is a major contributor to the national economy.

A strong and competitive Australian defence industry is therefore a priority for the Government. Many of the prime suppliers to the Australian Defence Force (ADF) are headquartered overseas, albeit with subsidiary offices and manufacturing and support facilities in Australia. It is a fact that Australia does not produce the majority of platforms that equip the ADF. Not even countries such as the United States, the largest defence market, can be completely self sufficient.
Joint development, collaboration and cost sharing to meet common requirements between countries, such as the Joint Strike Fighter and Eurocopter Tiger programs, are becoming more common.

My portfolio responsibilities include the acquisition and sustainment of defence materiel. I am therefore vitally interested in industry¹s ability to supply and support the ADF and its operations. I want to maximise the opportunities for innovative and competitive Australian companies to participate in defence acquisitions.

As I have stated on many occasions, Australia will not be returning to a mandatory offsets policy. Our experience with offsets has shown that they do not lead to continuing viable industry capabilities. Instead, we seek to bolster the ongoing commercial success of Australian companies by encouraging them to participate directly (or indirectly as sub-contractors) in our procurements and by providing opportunities for them to compete for contracts in the supply chains of the large international companies.

Because Australia’s defence market is relatively small, there is greater potential for growing Australian companies through involvement in supplying the international market. This is where Australia¹s global supply chain program allows the Government to foster and support positive engagement with the international primes. Under this program the multi-national primes survey Australian industry to identify innovative and competitive companies and their capabilities, and match these with opportunities in their own supply chains. This is mutually beneficial to the Australian companies that receive contracts and to the multi-national primes who are able to offer equipments at lower cost.

In order to succeed in the global market, Australian companies have to be internationally competitive. The Australian Government has a number of programs to assist companies with their competitiveness including the Skilling Australia’s Defence Industry program that provides grants to companies to skill, up-skill and train their technical and professional workforce. We have also established the Defence Industry Innovation Centre in conjunction with the Department of Innovation, Industry, Science and Research.

The Centre provides defence SMEs, in particular, with reviews of their business plans and prospects, and helps them to introduce the latest technologies, innovations and business efficiencies.


We have trialled the global supply chain program with Boeing, and more recently engaged Raytheon and Thales. The Government is now negotiating further deeds with a number of large multi-national companies. Since the program started in late 2007, supply chain contracts to the value of over A$65 million have been won by Australian companies. This will rise as further deeds are signed and the global defence industry reaps the benefits of this successful program.


Yours sincerely

 

Greg Combet AM MP

 

Click here to read the full Global Supply Chain report

 

APDR at a glance