Starting as the American consul general to Sydney, Marquardt explains how he rose in the ranks to become head of AmCham, the impact of new administration in Washington and the benefits of the growing infrastructure in Australia created through “asset recycling”.
Enjoy the podcast,
The Defence Connect team.
Listen to previous episodes of the Defence Connect podcast:
Episode 184: PODCAST: Extreme ownership – John Gretton ‘Jocko’ Willink
Episode 183: PODCAST: Supporting the defence workforce – Richard Price, Defence SA
Episode 182: PODCAST: Priorities for the defence industry – Matt Keogh, shadow defence industry minister
Episode 181: PODCAST: The need for a national security strategy – Senator Jim Molan
Episode 180: PODCAST: Maintaining intellectual advantage within the cyber defence space - Matthew Wilson, Penten
Episode 179: PODCAST: The 15-year evolution of the Bushmaster – Paul Feighan, Thales
Episode 178: PODCAST: How Australian SMEs can compete on a global stage – John O’Callaghan, Defence Council Victoria
Episode 177: PODCAST: The key challenges facing naval shipbuilding in Australia – Alain Houard, Dassault Systèmes
Episode 176: PODCAST: Operations since the SEA 1442 program contract, Michael Lenton, Leonardo
Episode 175: PODCAST: Forging closer industry partnerships on the back of Type 26 – Mark Goldsack, Defence & Security Organisation, UK government
Speaker 1: Welcome to the Defence Connect Podcast, with your host Phil Tarrant.
Phil Tarrant: G'day everyone, it's Phil Tarrant here. I'm the host of the Defence Connect Podcast. Thanks for joining us today. Enjoy chatting about these issues affecting defence and defence industry at the moment, of which there are many. If you're keeping tuned in to our daily market news intelligence on defenceconnect.com.au. If you're getting the email, great, but if you're connecting with the website, you'll see that we cover a lot of issues. Primarily at the moment navel ship building is a key focus within the defence space, particularly as we gear up towards Pacific. We're expecting some announcements coming online, nothing as yet, but I'm sure that over a couple of days in October, there'll be plenty of noise about ship and ship building.
A number of different stories which have been making headlines recently is the long anticipated JORN announcement. Government's being quite quiet on who the preferred tender is right now. We also have some interesting dynamics around Land 400 and some other key programmes, future frigates included.
The interesting part about defence, and it's been a long connectivity that defence and defence industries had within the Australian market, is our relationship with our friends and cousins across the Pacific, the US. It's a longstanding relationship. The alliance between the two nations is based on one of a lot of trust and commonality in terms of what we're trying to achieve as nations, that's peace and security. One of the key dynamics in the Australian marketplace is the presence of some major US primes within Australia who are competitively tendering at the moment for some major programmes. I think of Lockheed Martin as one of them.
It's an interesting space, and the greater intelligence and insights we can get into what the Americans are doing in Australia via these primes, but also this ongoing development with the relationship with the US is key to the development of the defence and defence industry in Australia.
On that basis, I've asked someone who knows quite a lot about this stuff into the studio. Niels Marquardt, and I hope I got that right because I practised that a couple of times beforehand. Niels is from the American Chamber of Commerce in Australia. Based out of Sydney, he's a CEO. Prior to this post, which he's been in for about four years I think, he was American consul general to Sydney.
Niels, how you going?
Niels Marquardt: Hey. Great, Phil. Great to be here in your studio.
Phil Tarrant: Yes, great mate. I hope I've given some context to this relationship we have with our friends across the sea, and it's a good relationship. Sometimes it's a bit prickly and that's the nature of all relationships. But by and large, it's a very solid one. Yourself, you've got a long career within the foreign service. You've had numerous postings as ambassador right across the world. Equatorial Guinea, Madagascar, Cameroon, and most recently it's probably not a bad post, into our great city of Sydney.
Niels Marquardt: That’s right
Phil Tarrant: Nice place. You've jumped out of the foreign service and now you're in American Chamber of Commerce, AmCham.
Niels Marquardt: That's right.
Phil Tarrant: How has the transition been?
Niels Marquardt: It's pretty much dealing with the same community but just in a slightly different context. I had been in the foreign service for over 30 years and I counted up the other day, I served and ending up serving in 12 different countries. Some longer than others. But all of those countries, if they had an AmCham, because it's a global phenomenon you know, I worked with them. In three countries that I went to as ambassador there wasn't an AmCham when I arrived, and there was when I left. So it's something I really believed in and then finishing up here in 2013 as consul general, this job sort of miraculously came open, I took it, and it's been a great four years.
The defence space that we want to talk about today is one that I really focused on. We created a Defence and Security Committee. In fact I just met with the Chairman yesterday in Canberra. It's based there, you mentioned the primes. We've got pretty much all of them. Certainly Boeing, Lockheed Martin, and Northrop Grumman, but other companies like Honeywell and Acomm are all members of this committee. It's really designed to ... whenever top brass come to Canberra from the United States and they want to quote unquote, meet industry, well we've got a one stop shop for them. So that's been great.
We just, in fact, I met Huntington Ingalls who are, they just moved to Canberra. They're the ones who build aircraft carriers in Newport News, Virginia, and they'll be the newest member of our committee up there.
Phil Tarrant: So for our listeners that aren't familiar with what AmCham does, how would you explain it?
Niels Marquardt: We've been around since 1961. Here in Australia we've existed longer than that in a lot of different countries. Each one is independent and takes on kind of its own character. Here is Australia, look we've got this kind of unparalleled relationship between the two countries, more investment between Australia and the US than there is between any two countries in the entire region. I mean everybody thinks it's all about China. When you're talking about investment. Nobody comes close.
When you look at the defence sector, pretty much all the players are here, and getting bigger, so it's becoming more and more important. We fancy ourselves a bridge between Australia and the United States in the business space generally. We segment ourselves by industry so that if you're an oil and gas company we've got a way to be part of AmCham. If you're in the defence space I've already talked about that committee. And then we have things that are cross cutting like tax. Lately there's been a lot of focus on immigration, with changes in the 457 visa. Generally not very well received and certainly not well understood by our members.
I just spent the week in Canberra sort of lobbying for an understanding, because the United States, our companies have created about a million private sector jobs in Australia, directly or indirectly, out of 10 million jobs in the private sector workforce. So one out of every 10 jobs is based on American investment here. We'd like to see that number even bigger. So we use that kind of ... we just came out with a report in fact that addresses this, looks at case studies. Some of them are in the defence space like Boeing, which has its biggest overseas footprint in Australia, bigger than anywhere else except the United States. So that's a real, I think a real indication of how a company like that appreciates the quality of the Australian worker, the technology, the quality of the STEM graduates from Australian universities. So they're obviously relying on Australia to contribute to their global supply chain in a huge way. And that's just one example.
So AmCham is across all of these different things that were pushed by our members, we represent our members. Again, our objective is that the business climate between Australia and Australia be as state of the art, not just good but state of the art, so that really this is the best bilateral business relationship that any two countries could enjoy.
Phil Tarrant: A double barrel question, what is it do you think that makes Australia attractive for US businesses? And how do you think that's changed over the years?
Niels Marquardt: Well, it's gotten bigger and better, it's amazing. I mentioned this report, the report shows, you wouldn't think this, but it was actually at the point of the GFC that we really started getting into cruising speed. And we've more than doubled the size of American investment just since the GFC. I mean a lot of it's, 18% of it is in resources, so companies coming here for particularly liquified natural gas, LNG, in recent years. But we've got American investment in coal, we've got American investment across the spectra. I mean I was at the Minerals Council dinner last night in Canberra, it was full of American investors in lots of different sectors. So gold miners for example, which is where it all started in 1851 we're talking about the gold rush.
But what makes Australia attractive, I think is the lifestyle, and this comes out in our report. This is a great place for, if you're ... when I was sent here from Africa after having been ambassador as consul generals, like I think I'm going to enjoy this place. Now I'm into my eighth year here, I came for three, and it has been terrific. And that's the experience of any expat that gets the privilege of spending time in Australia. So it's a great place to be transferred to, but the workforce here, the work ethic, the quality of research, the R&D. Like Boeing, you know, they work very closely with Siro and Siro is as good a scientific organisation as any country on the planet has. And so that's just one American company, there are many that have joint ventures and activities with Siro.
The quality of the universities, you go over to Sydney Uni, you look at their nano science centre. It's based on a huge investment by Microsoft who feels that this is one of the top three universities in the world for the kind of work that they're doing there. Quantum computing over at University of New South Wales. You name it and there is some university and quite often several universities in Australia that are doing world leading work in that particular field.
Our membership, it's hard to really come up with an American company that hasn't gone big in Australia. There's a few that are coming, I think everyone's got Amazon on the tip of their tongue. We know they're coming and they've appointed a CEO and will be here shortly. That's going to bring big changes and probably huge improvements for the consumer to the retail industry here for example.
And then defence and security, we are incredible partners. I mean I've, as a diplomate I served in NATO countries, France and Germany, I've served in other treaty allies, like I spent five years in Thailand. There's really nothing like what we have between the US and Australia, it's unparalleled. We have Australian generals who are in the chain of command in the Pacific. The deputy commander of the army in Hawaii is an Australian. We don't do that with anybody else. So we have this relationship that is one of, you mentioned, trust, it's really based on trust and shared values. So it leads us to do things naturally with and in Australia that we wouldn't do anywhere else.
Phil Tarrant: What is it do you think about Americans and Australians that make us such good bedfellows when it comes to business? Do we see the world the same way? I've spent quite a lot of time in America and I've only recently just flew back this week. We're fundamentally the same people but we've very different in the way we see the world and view the world and work. Why do you think it works though?
Niels Marquardt: The thing I observe is that we just really enjoy each other's company. If you're an Australian travelling in the Unites States and somebody hears your accent, as soon as they figure out you're an Australian, doors open for you in a way they don't open for me in my own country. So I'm always sort of almost envious of how well received Australians are when they rock up anywhere in the country.
You're fun, you're fun, you're good people, you're honest. We like doing business with you. I've been here, as I said, over seven years, and I'm not aware of any significant disputes that have taken place. Course you disagree on things occasionally, but they're all resolved in some sort of amicable way. Go through the business pages, you do not see unresolved disputes between Americans and Australians.
We have respect for the rule of law, that's a key thing. That is the fundamental reason why America has invested more in Australia than we have in any other country in the entire Asia-Pacific region. Because you just know, you have confidence, you have trust, you know that you can count of 50 years of return on your investment, and that kind of stability you just, you don't find it everywhere.
Phil Tarrant: When you look at the current defence climate and the Australia defence industry, you have our government has slatted enormous amount of investment over 10 years through the whitepaper 195 billion bucks. Within this period, you've seen the rapid growth of some American businesses here in the defence space. I think of Northrop Grumman under Ian Irving leadership. That's a business that grown from a tiny to a huge-
Niels Marquardt: I was just with him yesterday in his office.
Phil Tarrant: Yeah. That's a lot of growth that's taken place very quickly there. So obviously Northrop Grumman sees the benefits of investing in the Australian defence sector.
Niels Marquardt: Well they're a great example. I mean in fact I had the privilege of having dinner with their visiting global CEO Wes Bush who was here in August, and I've actually seen Wes every year for the last four years, he's come through. I remember attending one luncheon with Malcolm Turnbull when he was not yet Prime Minister, and they were talking in great detail about quantum computing. And believe me both, I mean Wes Bush I think he's got a PhD, if not he would fool you. He also has had experience living in Australia. He came to Pine Gap as a young newlywed and he's got this place in his heart for Australia, but it's not just sentimental, he sees a huge business opportunity. And under Ian's leadership they've gone from sort of zero to 60 in just a few years.
What's clear when you're talking to them is that they see many, many, many more opportunities. We talked a lot about Adelaide, you know Boeing just opened an office, I was at the opening there with Christopher Pyne. This would have been in I think April or May in Adelaide. And lot of focus on Adelaide in fact. On this trade mission that we're taking the United States, in fact we're bring the south Australian minister for defence industry with us and I think it'll be a great experience just seeing some of these ... we'll see Australian investment in the United States, we're going to Austal down in Mobile, Alabama, which is one of the great not sufficiently told stories of Australian US defence sector collaboration, but we're going to other places as well.
Phil Tarrant: Just quickly, before I move on, so you're taking a bunch of Aussies out to the US middle of October to just explore the market out there and identify where those opportunities are?
Niels Marquardt: Well, it's not really a market development per se, it's really just understanding how it's working between the US and Australia in the defence sector. I mean we'll see. And not just ... I think global companies, we'll go to Rolls Royce and we'll go to Airbus. They set up factories in the United States. Austal is the largest private sector employer in the state of Alabama. We'll go visit their facility. And 20 years ago that didn't exist. This is just in the last 20 years with the idea of a guy named John Rothman out in Perth who saw an opportunity to build fast vessels. It was a niche market that wasn't being filled in the United States, and now they have the best foreign corporate citizen in the state of Alabama. Which is very important to defence. It long has been.
So that's where we're going to end up. I'm sort of going in reverse order here, but we'll start on the 15th of October in what they call Hampton Roads, Virginia, where a company called Huntington Ingalls manufactures aircraft carriers. We'll visit the naval base in Norfolk. We'll move through Virginia, visit Rolls Royce, and then end up for a few days in Washington DC. We're still looking for participants so if anybody listening is interested, give us a call at AmCham in Sydney 8031 9000, and we'll be happy to give you the details of it.
We hope to see senior leadership at Northrop Grumman, Boeing Defence, Lockheed Martin. Two of those three companies are actually headquartered right in DC. We're going to spend I think half a day in the Pentagon. I'm very hopeful that one of the ... I won't say which one, but one of the, who's an old friend of mine, one of the members of the joint chiefs of staff is going to be able to speak to us, and then get a really good tour of the Pentagon. Which is not something that every foreigner can get but when they know it's Australians, then it's like okay we're going to treat them not only as well an Americans but better.
Phil Tarrant: That's good to hear. It does sound like an interesting trip. I know whenever I go to a defence trade show, there's always quite a large presence from the American states. At the Avalon Air Show earlier this year. Oklahoma was out there in force and they've got some very good Australian businesses who have established themselves into that state.
Niels Marquardt: Is that right?
Phil Tarrant: Yeah
Niels Marquardt: You always learn a lot at those events
Phil Tarrant: You do. You do.
Niels Marquardt: Who's doing what, where.
Phil Tarrant: The interesting thing though, and I guess a question for you Niels, is for our listeners and Australian businesses, primarily SMEs and there's numerous within Australia, will they have any benefits forging greater links with AmCham to getting into American supply chain? Can that be a real keystone for generating that?
Niels Marquardt: I think it is. I mean AmCham, most of our members are SMEs, and they're actually Australian SMEs. Numerically we have about 700 corporate members, at least half of them are Australian. It's a chance for you to get easy access to decision makers and people in this sector, in the defence sector, Ian Irving, Maureen Dougherty the head of Boeing Australia is our chairman. So she comes to lots of different events. Lockheed Martin. I mean the companies I've mentioned are all members, and being part of the AmCham community you get a chance to meet these folk.
I think one of the things that strikes one at a place like Avalon when I was last there, was just the incredible efforts that the major primes are putting into bringing Australians into their supply chains and making sure that so-and-so's got a widget that would work really well in one of their systems, gets included and not overlooked. I mean there's both a business and a political imperative to involve Australians in that supply chain.
Obviously if we're going to go and see top people in Boeing Defence and Lockheed Martin and Northrop Grumman, we're not going there to pitch particular companies or products, but there are contacts that are made. That's the way business works. Once you've got your foot in the door and you've met folks, if they won't see you they certainly know who in their company should see you. We do have some smaller suppliers coming along on this. I mentioned have the minister from South Australia. There may be other states that don't want to miss this opportunity, want to come along too to sort of see how companies like Austal have developed their presence in the US. And then just we have a new, in case you haven't heard, we've got a new administration in Washington. Everybody's trying to figure that out. So half a day in the Pentagon I think will be valuable for a lot of these folks.
Phil Tarrant: How's the world changed for Americans abroad, both in an official capacity and also a non official capacity under the new administration? Is it easier to do business now or is it a little bit more difficult?
Niels Marquardt: It's hard to interpret tweets. I think everybody's having difficulty and I don't really wish I was a diplomat still trying to imagine, or trying to ... I mean nobody would ask you because we just don't know. But in terms of doing business, this is a ... Republican administrations are expected to be more business friendly. The things that we'd like to see from this administration, I mean tax reform, tax cuts, that should be the next thing out of the barrel legislatively in Washington. It's been 31 years since we had a real tax reform. You have to go back to '86 in the Reagan administration. That's probably the biggest piece.
But I'm leading a different, with ambassador Joe Hockey, a different trade mission earlier in October, In fact the previous week from the 8th to the 13th, we're going to look at infrastructure opportunities. We're going from Chicago to Indianapolis, Washington DC and then Richmond, Virginia to look at how different cities, states, and then the federal government are all looking at this. There's a clear need to invest, people like to say a trillion dollars, and there needs to be a huge amount of new investment in American infrastructure just to bring it back up to snuff. Airports, roads, bridges, rails, you name it. And Australia already has, under Joe Hockey's leadership, has already shown the new administration that the Australian experience is both relevant and recent and successful.
You look at Sydney and all this different, you know, we're maybe a little irritated with all the construction that's going on, but in a few years we'll all be benefiting from the new tunnels and train stations and light rail and the widening of the various roads and highways. That's all happened with a kind of creativity in terms of the financing, where they call asset recycling. So we want to make ... Very senior people like Wilbur Ross, the Secretary of Commerce, have already met with Australians and understand that we, I've been here long enough I can say we, have a lot to teach the Americans as they go about this renewal of American infrastructure.
Phil Tarrant: The time you spent now heading up AmCham, is there anything that's particularly frustrated you or something you think you haven't really realised yet that's still a work in progress?
Niels Marquardt: We came out with this report that talks about the one million jobs out of 10 million that are created by American investment. I find it a bit frustrating that more people don't realise that.
Phil Tarrant: I didn't know it.
Niels Marquardt: Sometimes you ask ... We're living in the Asian century, so called Asian century, all the political signals are that China is the future and it's very important to take advantage of business opportunities in Asia. All that's true and I wouldn't take anything away from that, but it does not follow that there's less business to be done with America or that Americans are doing less investment. In fact, Americans are investing here like never before.
There are some people who think that, I mean I went to an event the other night and people were saying, "America's a country in decline." I don't agree. We were talking earlier about the youthfulness of America as a nation. I think we're going to be around for a long time. And I think as people have said, those who bet against America have usually regretted it, and I think that remains true. We're here, we're strong, we want to invest in Australia, we love doing business with Australia. We love Australians investing in the United States, which you guys do massively as well. So it's really a balanced two way relationship in which everybody's winning.
Phil Tarrant: For you personally, is this now home? Are you ever going to head back to the States?
Niels Marquardt: Well you know we all have ... I'll probably head back to the States at some point. We have ageing parents and children living there and other family reasons why we do so, but what I will say is whenever I leave Australia and don't live here anymore, I'll be back often and soon.
Phil Tarrant: It's not a bad place, but I can understand why a lot of people would like to live in Australia and we're recording here from Sydney but we obviously cover a lot of ground, it is a great place.
Just looking, and we're running out of time Niels, but I'm quite interested on some of your observations about a career spent in the foreign service and postings within Africa primarily. What's the best thing you ever accomplished do you think in your career in the service?
Niels Marquardt: Look, I'm a big believer in people to people contact. Australia, it's pretty hard to meet an Australian who hasn't been to the United States and doesn't have ... many have even owned property in the United States. They have a set of friends in the United States. All these great stories that I hear from Australians about how well received they were in the United States, I love hearing that.
There are a lot of countries where that's not the case. I mean I was ambassador to Madagascar for three years and I was a peace corp volunteer in Rwanda and the Congo, I've had very often the experience of being the first American that anybody's ever met. Whether you're formally the US ambassador or you're just informally an ambassador of the United States because you are the first American somebody's ever met, I mean it's a powerful opportunity to shape impressions.
I always try to be modest person. I mean I naturally am I think. America's sort of strutting on the global stage as an indispensable nation or the sole superpower. I think that needs to be kind of balanced with a humility that shows that we are just human beings like everybody else. We sometimes have these special burdens of leadership. You can see it today with North Korea. No matter who is in the White House, there would be a huge burden of American leadership to deal with something that is damn hard to figure out. Those kinds of burdens of leadership I think fall on America just about on every issue.
Sometimes people think we're pushing too hard, sometimes people think we're not leading strongly enough. But I think through all of that, all you can do as an individual is be respectful, be humble, don't think you're better than anybody else, see what you can learn. 10 years I lived in Africa, some of the poorest countries on earth, and I have to say, it's precisely in those really poor countries that I experienced hospitality that was deeper and richer and more sincere than anywhere else I've ever lived. That's a real learning. You don't have to have much to be a generous human being. I've seen lots and lots and lots of people who had nothing and were terrific.
Phil Tarrant: It's good Niels. Thanks for coming to the studio. I've really enjoyed chatting. What's come through pretty loud and clear to me is not only the ongoing development of US interest into the Australian marketplace particularly in the defence space, but I didn't realise that the American investment was responsible for creating so many jobs in Australia. it's obviously a fundamental part of our economy and one that looks set to grow over time, but if I was a defence business, particularly an SME, I'd be looking to see how I could widen my reach within those US organisations looking to invest in Australia. Fortunate there is a tool, AmCham can make that happen. So if they're not a member they probably should give you guys a call.
Niels Marquardt: Talk to me any time, I'd love to have you join or I'd love to take you on this mission to the United States from the 16th to the 20th of October.
Phil Tarrant: Nice one. Niels, we'll get you back in. Thanks for joining us everyone, it's always a pleasure to have you. Remember to check out defenceconnect.com.au as I mentioned beforehand if you're not subscribing to our daily market intelligence newsletter comes out every morning, so you're the first to know what's happening in defence. Please do, defenceconnect.com.au/subscribe. We're going to be at Pacific as well so come and say hello. I don't know what stand we're on but come and see us, we'll be recording podcasts live from there so come and meet us, come and say hello and have a chat.
We'll be back again next week. Until then, bye bye.