Thales is a strong supporter of Australian SMEs, and is committed to integrating them into the company’s extensive global supply chains.

The opportunities offered by these supply chains are significant. As a global technology leader for the aerospace and space, defence, security and transportation markets, Thales in 2009 generated revenues of $22.7 billion and operated in 50 countries.

Around 40% of global order intake is for export opportunities, so participation in the company’s global supply chains opens suppliers not only to Thales’s major home markets, but also to its customer base around the world. With at least 65% of order intake flowing through to suppliers, subcontractors and partners, the total accessible market for Thales’s global order intake is around $15 billion a year.

As with most large enterprises in an increasingly intertwined global economy, through partnerships and programs Thales also engages with a variety of global primes such as EADS, Dassault, DCNS, Boeing and Airbus. These companies also represent opportunities for Australian SMEs, with their own vast range of supply chains covering a broad spectrum of technologies.

Beyond identifying opportunities through Defence’s Global Supply Chain (GSC) program, Thales Australia is continuing to promote its existing suppliers for products the company already sells into global markets, such as the Bushmaster vehicle, various sonar and minesweeping equipment, ordnance, and many others.

Chris Jenkins, Thales Australia’s CEO, says the company has already enjoyed numerous global successes. “As a major defence industry manufacturer in Australia, we have worked extensively with suppliers to help them enter the international arena. The Bushmaster program, for example, has 120 suppliers that have benefited from export sales to Europe. In fact, the company delivered over $200 million in exports in 2009, and has exported more than $1.6 billion over the past decade.”

With major export opportunities continuing to emerge, such as the company’s Hawkei Australian light protected vehicle, Thales is looking forward to partnering with suppliers to secure contract wins and export revenues, and deliver results for industry that complement the GSC program. Given that many products such as vehicles can have 30 to 40 year lifespans, the opportunities to develop long-term income streams are significant.

Developing potential

The company’s commitment to promoting Australian SMEs is reflected in the senior global personnel currently involved in identifying international opportunities for local companies. Global backing was in fact present from the start of the program, with Alex Dorrian, Thales UK CEO and Thales Australia board member, signing the GSC Deed on behalf of the company along with local CEO Chris Jenkins in November 2009.

After the signing, Thales Australia formed an Industry Engagement Unit (IEU) to drive the GSC program domestically. The IEU is integrated into the company’s existing purchasing team, enabling a coordinated approach to the development of existing and new suppliers.

The IEU began operations with two immediate goals – to identify established, export-ready SMEs, and to mentor and develop emerging companies with real potential. The team also focused their export target areas on several large markets where Thales has extensive operations; France, Western Europe, the UK, USA and Canada.

Thales entities in these markets are aware of Australia’s GSC program, and have already been working closely with the IEU team, suggesting opportunities and enquiring about specific capabilities.

In Australia itself, the IEU team has undertaken a series of visits to companies across the country, with Thales working with them to fully analyse their capabilities, match these to global opportunities, and identify any training or technology gaps which could hinder progress.

“We’re looking for companies that are innovative, efficient and cost-effective,” Jenkins says. “These are the companies that can create benefits not only for themselves but Australia as a whole by developing technologies and securing exports. They also have the potential to help deliver savings under Defence’s Strategic Reform program, driving efficiencies across the board.”

Technological capability is just one of the criteria being assessed under the program. Another key factor is skills, with Thales backing Department of Defence efforts to upskill Australian industry.

“Training is one of the key areas where we can help SMEs develop,” Jenkins explains. “Smaller companies are a great source of innovation through their in-depth technical abilities. Complementing this with skills which enable more rapid integration into larger projects with specific process and standard requirements is a key to export success. That is why we recently opened up our extensive in-house training organisation, known as Thales Training & Consultancy (TT&C), to SMEs. So far we’ve had around 50 people from outside Thales taking a variety of courses, and we look forward to working with many other companies to help develop skills wherever they’re required.”
Building networks
In addition to working with specific companies, Thales Australia has also reached out to industry organisations such as the Australian Industry & Defence Network (AIDN) – of which Thales is a Gold Member and also active nationally – and HunterNet (a network of manufacturing, engineering and consulting SMEs in NSW’s Hunter region). Thales sees these industry associations as having a vital role to play in identifying and working with companies to secure opportunities.

Over the past few months AIDN has hosted several roadshows in conjunction with Thales, with events taking place in Sydney, Melbourne and Perth. These events attracted a high level of SME interest and gave participants useful information on AIDN’s role in developing their business, as well as Thales’s supply chain opportunities. Both AIDN and the company received excellent feedback from the SMEs.

The Defence Export Unit is also crucial, a valuable asset with its broad experience and track record in helping Australian companies succeed overseas. Additionally, Thales believes that given its long established involvement in the country’s defence industry, the academic community is well placed to support GSC initiatives.

One of the challenges for the GSC program is finding out exactly what capabilities exist in Australia. Thales is currently backing efforts to gather and categorise this information, which will require a concerted effort between the Department of Defence, industry associations and industry itself.

As Chairman of the Defence Industry Innovation Council, which is part of the federal government’s Enterprise Connect initiative, Thales Australia CEO Chris Jenkins is also helping industry foster innovation and boost competitive performance.

“The GSC scheme has given us the opportunity to broaden and deepen our relationships with other organisations to promote the SME sector,” he says. “These associations, whether industry or government based, have a huge role to play. Their experience and obvious enthusiasm for this program mean that we can take a coordinated approach to achieving supply chain integration. I personally think it is a responsibility for companies like Thales Australia to extend their involvement and participation in all relevant associations, networks and initiatives, because the rewards for collaborating are crystal clear.”

This collaboration was in evidence recently when key Defence Materiel Organisation figures joined Thales Australia representatives on a mission to Thales organisations in Europe to identify the potential for supply chain opportunities. The delegation visited Thales in France and the UK, examining manufacturing operations while gathering intelligence about the scale and requirements of the company’s supply chains, and the potential they offer for Australian SMEs.

The future

As the GSC program achieves greater momentum and opportunities grow, Thales will actively help secure export contracts for SMEs while expanding local opportunities and offering training and other forms of assistance.

“We’ve hit the ground running.” says Jenkins, “The early work has been extremely encouraging, and we are making serious progress moving towards significant new opportunities for SMEs.

“This program is important not only for business, but also because it promotes collaboration as a means to deliver defence capability more efficiently. As technology becomes more complex, we know that companies in the defence industry will increasingly be working together to deliver innovative capabilities to the Australian Defence Force and other customers – no single company can do it alone.

“We also need to focus on where our greatest advantage lies. This is where Defence’s Priority Industry Capabilities come into play, giving large and small companies guidance and a degree of investment certainty backed by greater cooperation between industry and government.

“This framework, and growing SME successes in the export market, will deliver lasting results for industry, the Department of Defence, and the Australian economy as a whole.”

APDR at a glance