Excellence in maritime manufacturing - AIDN's Brent Clark on defence/SME engagement

Today @AuManufacturing’s editorial series Excellence in maritime manufacturing turns to the involvement of Australian owned SMEs in defence contracts. Here Peter Roberts interviews Brent Clark, CEO of our largest SME defence body, the Australian Industry & Defence Network.

@AuManufacturing: The appointment of a defence industry minister in 2016 began a more public effort by the government and defence to engage with small and medium sized enterprises. What progress has been made?

Brent Clark: There have been a number of attempts by government to work out how how them can meaningfully engage with Australian defence SMEs. We had the Centre for Defence Industry Capability (CDIC) which has now become the Office of Defence Industry Support.

But I am not sure there has really been a lot of government/SME engagement as a result. There has been assistance and attempts to provide assistance but what we really need to do is to work out how to actually engage – that’s about defence sitting down and talking to SMEs.

Unfortunately the pattern from defence has been to contract to large entities and allow them to manage the tier 2, 3 and 4 suppliers

@AuManufacturing: Has there been a cultural change within defence around how it should interact with SMEs?

Brent Clark: It is a mixed bag. There are entities in defence that are very supportive of SMEs, and generally there are a lot of people trying to do the right thing. But there are levels of defence that have little or no interest in SME companies.

Defence has a high workload and there are certainly issues with interacting with a large number of SMEs. But at the moment their contracting model doesn’t make that easy to do.”

I wouldn’t want anybody to think that defence is anti-SME. There are a large percentage of people inside defence who would like to do the right thing. Whether the organisation always does the right thing is another matter.

@AuManufacturing: What about a greater focus on SME innovation?

Brent Clark: I think we can all say that (innovation) grants have been very useful…but boosting innovation requires more than just handing companies a bunch of cash.

We are disappointed that we are seeing foreign owned companies receiving these grants as opposed to Australian owned entities. All of this should be going to Australian owned companies – why would Australian taxpayers be giving foreign owned companies this sort of money?

As for foreign multi-nationals being given grants, these companies have billions of dollars. If think what they are doing is important, then they should be self-funding that.

And there there is the question of who owns the IP? A foreign company or the Australian government?

@AuManufacturing: The federal opposition is going into the election campaign promising a more US funding model for innovation, how do you react?

Brent Clark: I think what they are trying to achieve is a good thing. It is intended to fill a hole (in policy) and I think that is a hole that needs to be filled. I think whatever party wins…they will be looking at this.

@AuManufacturing: Another aim of policy has been to increase collaboration between defence primes and SMEs is that increasing?

Brent Clark: I think there are collaborations between primes and SMEs that are doing very well. I think primes see SMEs and useful when they are a capability in an area where the prime itself is deficient.

But what we are seeing is an increase in foreign owned SMEs winning contracts and taking the higher value, higher importance work. Australian SMEs tend to be fighting for contracts at the low end of capability, at the low end of value.

We have to be careful here. We don’t want to have a defence industry eco-system that is solely created by overseas primes.

@AuManufacturing: So what does all this mean? Are we actually buying more from Australian SMEs?

Brent Clark: No is the short answer. The data indicates that the amount of purchasing orders for Australian SMEs is either static or has dropped. And the work is at the lower end of capability.

(One bright spot) are joint ventures such as the Australian Missile Corporation brought together by (munitions manufacturer) NIOA. Until we start to create large Australian prime contractors we have to handle the situation by bringing the capability (of a number of SMEs) together in this way.

Countries like South Korea, Israel, Sweden, even Turkey have grown indigenous defence industry. Australia needs to have a viable defence capacity and we just have to do the same.

We want a structure where we grow our SMEs into medium-sized defence contractors, and we grow the medium sized contractors we have. We have to do that, we can’t continue to be at the whim of foreign owned companies.

We need to face up to the fact that we have a problem in Australia that is going to require action.

@AuManufacturing’s editorial series Excellence in maritime manufacturing is brought to you with the support of BAE Systems Australia.