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Opinion: AUKUS is more than just submarines, it’s a transformative industrial opportunity that can boost Australian manufacturing and sovereignty, if government and industry manage its risks and long horizons together, explains GME’s Christopher Rule.
The AUKUS alliance is often spoken about in terms of submarines and strategic power plays. Yet beneath the geopolitics lies a massive industrial story.
The Australian government’s recent $12 billion commitment to expand new AUKUS facilities in Western Australia, on top of the broader $48 billion pledge, isn’t just defence spending; it has the potential to reshape the country’s manufacturing ecosystem.
For Australian businesses, the pact presents both an unprecedented opportunity and a complex challenge. On one hand, AUKUS offers access to the world’s largest Defence markets and a chance to showcase Australian manufacturing excellence on a global stage.
On the other hand, such an opportunity doesn’t come without risk. Market fragmentation within the Defence sector, high entry costs and slow returns all complicate the picture, making AUKUS both a blessing and a curse for Australia’s manufacturing sector.
A catalyst for growth
At its core, AUKUS is transformative for domestic capacity building. The Australian government has earmarked $48 billion to boost shipbuilding capabilities, upskill the workforce, and create 20,000 new jobs. Separate from the eye-popping dollar figures forecast for spending, the government is developing tripartite governance frameworks to enable technology co-design, co-development and co-production among its partners.
While Pillar 1 of AUKUS nuclear-powered submarine capabilities will open up opportunities for select manufacturers, a broader range of companies may be attracted to Pillar 2 - Advanced Capabilities: cyber, autonomous systems, electronic warfare and hypersonics among others. Both pillars present a blessing to manufacturers if they can mitigate the risks of participating.
There is no shortage of AUKUS-driven government initiatives targeting Australian industry. The government is continuously investing in defence industry uplift and ensuring Australian businesses are actively engaged when it comes to AUKUS.
In January 2025, the Albanese Labor government announced an additional investment of $262 million into the industry to support new initiatives and boost support for existing programs. This includes the Defence Industry Developments Grant Program, helping local businesses scale up, become “AUKUS ready”, and competitively deliver technologies on which Defence was previously reliant on foreign providers.
Such initiatives give local firms big opportunities to have roles in major projects, expand opportunities into global markets and, in due course, expand Australia’s sovereign control over key technologies and supply chains.
The AUKUS-led investments from the government represent both a vote of confidence in the strength of Australian advanced manufacturing and recognition that diversification of industry into Defence can’t occur from a standing start.
Delivering on AUKUS objectives is not simply about growing the defence sector but about making Australian manufacturers central players in a new, strategically vital industrial defence ecosystem for the long term.
Opening doors to key defence markets
One of the clearest blessings of AUKUS to Australian businesses is preferential access to the world’s largest defence markets. Small and medium enterprises that once dreamed of selling to US and UK companies are positioning themselves inside multinational supply chains.
Government organisations, Austrade, and Team Defence Australia are linking local Australian suppliers to US and UK prime contractors and businesses. Likewise, through the government-funded Global Supply Chain Program, multinational primes are charged to engage with Australian technology firms and promote their access to global opportunities.
A “licence-free environment” under the Defence Trade Controls Amendment Act also empowers manufacturers to pursue import/export opportunities without the hurdles of security-driven bureaucratic “red tape”, misplaced within the trusted circle of the AUKUS nations.
Disentangling this “red tape” between the US, the UK and Australia is a blessing to Australian businesses seeking to collaborate with US and UK companies, where otherwise such engagements were encumbered with significant overhead.
Case in point is the GME and Owl Cyber Defense partnership under AUKUS Pillar 2, where we work together to deliver advanced cyber security products to the Australian Defence Force and Australian critical infrastructure markets.
Collaborations like this show how Australian technologists have a role to play well beyond submarines, extending into areas such as cyber, autonomous systems and artificial intelligence. Importantly, they highlight the broader opportunities for Australian firms to capture value not only in military contracts, but in adjacent commercial markets where such technologies are equally transforming.
This diversification is particularly vital in ensuring industrial sustainability, as defence-driven research and development can spill over into energy, telecommunications and other strategic sectors.
Strengthening sovereignty and deterrence through industry
Critics warn that reliance on foreign primes and businesses risks hollowing out Australia’s sovereign industrial capacity. However, one could argue that AUKUS actually strengthens Australia’s sovereignty and national security “deterrence” strategy by creating opportunities for local manufacturers to build a sustainable industrial base and establish skilled jobs.
Furthermore, integrating the industrial base of all three AUKUS nations creates a globally distributed capacity for mutual support in times of crisis. An integrated, AUKUS-wide industrial base is a more powerful deterrence still.
By positioning Australian engineers, fabricators and systems integrators inside critical defence projects, the alliance bolsters domestic resilience. Sovereignty here is not just about control of the whole product life cycle but also about ensuring Australia owns critical capabilities, skills, and IP that cannot be substituted offshore.
Taken together, the blessings of AUKUS provide businesses with opportunity, prestige and global exposure. However, alongside this windfall sits a set of complex challenges.
Complexity and fragmentation risks
While the AUKUS alliance opens many doors for Australian businesses, others may remain closed for the foreseeable future. Significant elements of high-value manufacturing may remain offshore in the short term. The reality is the UK and US submarine industrial bases have been developed over 50 years.
Change will come slowly.
Large modules of submarines and advanced systems are expected to be built in the US or the UK, with Australia’s role limited to portions of final construction. This modular manufacturing approach sparks concerns about whether Australian industry will be seen as a genuine partner or as a marginal player.
The long-term scale of the projects further complicates planning for Australian manufacturers considering participation in Defence. Workforce growth must be sustained over decades, not just years, meaning apprenticeships and mid-career upskilling will need consistent government backing, if they are to be sustained.
Long development horizons also risk political shifts, budget overruns or changing US and UK priorities, reducing Australia’s expected share and business confidence in assured revenues over time. Recent assurances by the US president that AUKUS is “full steam ahead” will be welcomed in government circles but may be viewed by prospective industry players as ethereal in today’s volatile political setting. Uncertainty of work remains a disincentive for some manufacturers to pivot to Defence.
The patience problem: Slow ROI
AUKUS projects move on geopolitical (sometimes geologic), not commercial, timelines. While the pact is accelerating industry engagement, the reality is that many businesses live quarter to quarter. Defence contracts typically stretch into multi-year procurement cycles, a rhythm difficult for entrepreneurial businesses to sustain and adapt from consumer markets.
This “hurry up and wait” environment provides challenges for SME boards. Businesses might have to pivot away from growth opportunities in lucrative sectors such as green energy, MedTech or quantum computing to “gamble” on a defence bet that may only pay dividends many years later.
After all, the same advanced manufacturing techniques in electronics, RF systems or precision machining may offer steadier markets in non-defence industries.
Without bridging finance, patient capital and reduced red tape, Australia’s Defence sector risks losing some of its brightest firms before they can fully integrate into the AUKUS ecosystem.
Who can survive and thrive?
AUKUS presents a whole host of opportunities for businesses to not only survive but thrive. However, not every business can or should roll the dice on AUKUS.
Likely winners of the government’s investment include medium-sized firms with diversified non-defence revenue streams that can bear the long lead times and start-ups backed by strong private capital, able to carry costs during extended pre-contract periods.
Companies with dual-use technologies, whose innovations serve both military and strong civilian markets, can also thrive in the AUKUS industrial complex.
But absent these circumstances, companies seeking to break into Defence should do so cautiously. At the heart of the problem is the ability to survive the high costs of entry, the culture shift required for unfamiliar workforces, and the long wait between taking the leap into AUKUS and securing the purchase orders necessary to stay afloat.
GME is an example of a company that has taken that leap. With a strong base in consumer radio and critical communications manufacturing, we’re positioned to leverage AUKUS and maintain broader commercial markets. This hybrid model, balancing Defence integration with diversified resilience, offers a practical blueprint for navigating these challenges.
Seize the blessings, manage the curses
To ensure AUKUS delivers more than promised, government and businesses must work together to ensure local capabilities are not sidelined but amplified. Outlined below are three key next steps to ensure AUKUS delivers on its potential:
- The government must co-invest in risk mitigation for industry. This includes extending grants, financing and early purchase orders providing certainty of Defence work and to smooth out ROI timelines.
- Industry and government must act as partners. This means the relationship must extend beyond buyer and supplier to ensure there is trust and clear pipelines of work.
- SMEs must forge alliances both domestically and internationally. The network and collaboration between local and international small businesses will strengthen our market position.
AUKUS has handed Australia’s manufacturers both a golden ticket and a gauntlet. It opens doors to new markets, global prestige and the chance to grow a sovereign industrial base. Yet it also presents complexity, cost, and risk at an order of magnitude most businesses have never faced.
The outcome that the alliance will bring for Australian manufacturing will depend less on submarines sailing out of Adelaide and more on the ability of businesses and governments to collaborate. Both parties must operate patiently, pragmatically and with a clear-eyed focus on building a resilient industry that endures beyond the current geopolitical moment.
Chris Rule is the general manager – defence, security, and resilience at GME, leading the company’s delivery of advanced solutions for Australia’s defence and security sectors. He brings extensive leadership experience from industry and 27 years in the Australian Army, including senior roles with Elbit Systems of Australia, Indec Consulting (now Egis Oceania), and Cisco.
A former Army officer with operational deployments to Iraq, Afghanistan, and East Timor, Rule continues to serve as a colonel in the Army Reserve and supports the veteran community as a non-executive director of the Certa Cito Foundation.
