Pacific 2017: Michael Lenton, Leonardo

Join executive chairman of Leonardo Australia Michael Lenton and Defence Connect host Phillip Tarrant as they explore some of the history of Leonardo and the role the business is playing in today’s evolving defence industry.

As well as a number of Australian-first innovations, such as networked data links for ship-to-ship communications, the business is actively delivering the SEA 1442 program to much effect.

Enjoy the podcast,

The Defence Connect team.

Listen to previous episodes of the Defence Connect podcast:

Episode 434: SPOTLIGHT: Mission engineering – a missing piece of the capability puzzle, with Downer’s Rachel Hatton and Nathan Rickard
Episode 433: SPOTLIGHT: Introducing the Australian Digital Defence Industry Matrix, with BenchOn’s Tim Walmsley
Episode 432: SPOTLIGHT: What does sovereignty mean in a post-DIDS industry? With Stephen Kowal, CEO of Atturra
Episode 431: PODCAST: Developing Army’s hand-to-hand combatives program, with Paul Cale
Episode 430: PODCAST: Aussie innovation supporting navies around the world, with Jeffrey Hawkins, Pivot Maritime International
Episode 429: PODCAST: Commercialisation essential to the success of space and defence industry, with Brian Lim
Episode 428: PODCAST: Firebrand topics on Ukraine, Israel, and Australian conscription, with Corporal Matthew ‘Willy’ Williams OAM
Episode 427: PODCAST: Unpacking the surface combatant review with the Honourable Kim Beazley AC
Episode 426: PODCAST: WA ready, willing and able to support defence industry opportunities – Paul Papalia CSC MLA, Minister for Defence Industry and Veterans Issues
Episode 425: PODCAST: Unpacking the independent analysis into Navy’s surface combatant fleet

Automated : Welcome to the Defence Connect podcast, with your host Phil Tarrant.

Phil Tarrant: Well good day everyone, it's Phil Tarrant here. I'm the host of Defence Connect podcast, thanks for joining us today. We're recording from Pacific and will be here on air over the next three days, bringing you all the latest in defence industry news and market intelligence. Our first guest, straight off the bat, the shows just open, is Michael Lenton who's the executive chairman of Selex ES Australia, which is a Leonardo company. Michael how you going?

Michael Lenton: I'm well thanks Phil, good to see you mate.

Phil Tarrant: So you're the first cup off the rank, it's nice to be first, it's good to be a leader. But I think back to Avalon, March this year and I think that was the first time we actually caught up and had a chat, and you think how fast things move in defence. There's a lot of talk that nothing happens quickly in defence, but I think in the market that we're in right now, it's shifting along pretty quickly isn't it?

Michael Lenton: Yeah the opportunities that this period for Australian defence is offering is extraordinary. I think we have to be as nimble and as quick as we can to bring our solutions into the ... being shown to the customer as quickly as we can, and be adaptive and able to really respond to their needs. I mean that's where we get our relevance from being credible in what we can offer, and how we can adapt to provide them with it. It's interesting 'cause that meeting that we had, the conversation that we had back at Avalon was in the context of airborne, we're now in naval and there have been a number of other events like the Police technology event that we were present at. So it just gives me the sense of how wide our offering is as Leonardo Australia for the kind of products and needs that are in Australia for security related matters.

Phil Tarrant: So for our audience, for our listeners, they might not be aware of the breadth of activities that you're involved in Australian market. I don't think they probably know that you've been in the market place since the 1800's here in Australia selling torpedoes. Can you give us a bit of an idea of this relationship with Australia over all these years?

Michael Lenton: Well I'll try and throw it onto a more humoristic approach, in fact I was thinking of this kind of trivia question. What's the connection between Leonardo and the 'Sound of Music'? Well actually it's interesting 'cause we offered, or we supplied torpedoes into Australia as far back as 1885, and these torpedoes were supplied by a company that we now own, which was called White Head Torpedoes. It was set up by the inventor in fact of the torpedo, the modern torpedo. He was an Englishmen called Robert Whitehead, and this fellow was living in Trieste, Italy, and set up the operation there. But Trieste at that time was part of the Austria-Hungarian Empire, and when he died in 1905 he left the whole operation to his granddaughter.

Who then married a certain fellow called Von Trapp. The same Von Trapp of the 'Sound of Music', so it's quite bizarre, but it does remind me how far back we've been supplying Australia. So what's that piece of trivia got to do with this event? For me it's to remind maybe some of the listeners to come past our stand at 4F10 here at Pacific 2017, and say, "Hello" and maybe sing the 'Sound of Music', the; ....

Phil Tarrant: Any torpedoes there?

Michael Lenton: No, actually we are still supplying torpedoes and that's through the Euro-Torp consortium that we have with our good partners Thales and Naval Group. But together with that we're also supplying a lot of other maritime and naval solutions as well. So yes since 1885, and it's interesting to see the ledger that Robert Whitehead had of his deliveries, and there's delivery to the Navy of South Australia, the Navy of Tasmania, and the Navy of Victoria.

Phil Tarrant: That's right it was before Federation wasn't it?

Michael Lenton: Yeah, before Federation, it's quite extraordinary.

Phil Tarrant: It's probably a lot easier now, there's only the one customer. So we're here at Pacific, which is obviously a Naval conference and there's a big sea power congress underway as well, talking about the strategy for our seaborne forces over the next period of time. Before we get onto the naval component of some of the work you're doing, I thought it'd be worthwhile just covering off, just for our listeners, some of the work you're doing in maybe land and air as well. Activity across many different programmes, can you run us through them?

Michael Lenton: Well the first thing that comes to mind is Leonardo's helicopters, that's very present here in Australia. We've got, we're supporting about 90 helicopters, between Australia and New Zealand. Most of those helicopters are the AW139, which you may have seen operating in the civil context of emergency service, emergency medical transport, surveillance. Then there is our contribution to the NH90, or the MRH90 programme, and that's a significant medium transport helicopter used by the ADF. Then there's of course the executive helicopters of the 139-169 and the 109 models of the Leonardo helicopter.

So we're quite present here, we've got a well-established in country installed base. The real challenge that I see is continuing to satisfy the customers in terms of through life support of these machines. That's what we're certainly focusing more and more on, we now have a large base out of Essendon airport in Melbourne, and we're supporting them through that base and through the supply chain that we've also established here in Australia. So it's certainly building nicely, and now that gives us the credibility to also start moving where possible into the defence, the defence helicopter market as well. So we're promoting unmanned rotary wing helicopters as well, so for naval applications and ground based operations as well.

Phil Tarrant: On the land front?

Michael Lenton: On the land front we've been supplying a lot of equipment into the land forces for a long time, mainly in the form of personal role radios, or the hand held's that most Australian land soldiers use. The counter IED device called Guardian, that we supplied into the Australian forces, which have saved many, many lives in operations. Then of course the electro-optics capability that we're offering into LAND 400, for the commanders, control station and also the gunner station. So land plays a big part in our capabilities, also as an integrated element of an integrated network force. So the communications is a big part for us, communications in fact is where we're really pushing in the naval sector and maybe we can get onto that and talk.

Phil Tarrant: Yeah, well you know obviously the big marketing programme SEA 1000, SEA 5000, which is what everyone will be talking about here at Pacific for the next three days. But you guys are really got your sleeves rolled up working through SEA 1442, right now. Where are we with that right now? Can you give us an update on that programme?

Michael Lenton: [SEA] 1442 is really the major programme we're working on at the moment, it's the largest contract that we have in Australia, and we're totally focused on that because we have reached a really significant point on that. The milestone we're about to move into is the installation phase on the first ship, that will begin this month, in October. So we've come through the design phase, the acquisition of the components of the solution and now the real test is getting the solution on board the ship and respecting the milestones associated with that.

Now that means in addition to the facility we have in Port Melbourne, we've also now established ourselves in Western Australia where the installation on the ships will take place. That's an exercise that'll take over six years for the installation phase and then the through life, the support phase will follow. So it's, we're here for the long haul on that particular programme, and on every other programme that we're dealing with here in Australia.

It means in addition to setting up the test, the shore test and installation facility that we have in Port Melbourne, where we're actually testing the system and making sure that it all works before it gets installed. There'll also be the training, the documentation that needs to be finalised for the training and for the support phase of the system. So it's a complex programme, and now it's the trial by fire at this stage of making sure that it's all installed properly on the first vessel and that it works. So it's the exciting part of the delivery phase, this next one.

Phil Tarrant: Interesting, and I remember when we caught up back in Avalon, what was really clear to me was the commitment for Leonardo to establish itself in Australian market as a solid pure business based on the Australian marketplace. I know you've been working pretty hard to deliver your own innovations within the Australia context. Can you tell us a little bit about those things?

Michael Lenton: Right, actually within the context of the 1442 programme, and trying to work as close as we can and being as sensitive as we can to the customer’s needs. We identified a couple of products that we were able to develop here in Australia, using local engineering and design, and that is the high data rate line of sight, data link. Which is effectively a system that allows a convoy of vessels to be able to have a network for communication and for exchange of data, video and so on, at a high data rate amongst themselves. The real benefit of that is that it avoids having to use satellites in a convoy environment. Mainly saving a lot of money, and allowing that degree of intimacy that a line of sight communication allows. It's a product that has been totally developed here in Australia, I would like to see that become the base line for fleet wide, 'cause it is a product that is really valid.

Phil Tarrant: What was the origin of that particular product? Was it a request from Navy to say this is what we want to achieve, can you go and create this for us?

Michael Lenton: It actually emerged in the dialogue with CASG and with the operation people like navy, and so on. In that context we suggested that, that might be an interesting solution and they liked that. So they supported that and we've actually come up with it. So it still has some trial activity that needs to be done, but the concept really works, and the trials that we've done so far work well.

So it's an interesting product and I think when we spoke last time I mentioned this concept of inverse innovation, where a global company develops capability out in its international subsidiaries and then feeds that solution into its distribution chain throughout the world. That's real effective promotion of capabilities locally and getting it out into a global market. That's what I see this product actually realising and doing, so it's a great step forward in terms of developing local capabilities, using skills and raising the capabilities of Australian products and getting out into a global market.

The other product that we developed, of course is the naval fifth generation U-VHF radio. Where we essentially converted an avionic radio into a ruggedize naval version. So that too is something that emerged from a need that Navy has identified and we've been able to help them to develop that. So those two products I think are the kind of thing that I'd like to see become the baseline for the fleet in Australia.

Phil Tarrant: Moving forward, what's the next five years going to look for the Leonardo business here in Australia?

Michael Lenton: Firstly really performing well on SEA1442 Phase Four, showing that we are sensitive to the customer’s needs, adaptable and able to provide them with effective solutions for them. For me that's the prime priority all the time, and that principle needs to be expanded across everything that we do. The other thing is to see how we could turn what we're doing here in Australia into an export product. We're dialoguing with New Zealand on their requirements for their Anzac upgrade programme for the communications. I must say that Australia is supporting us in that conversation, and it's great.

So the other priority that I have here is to make sure that we are representing and presenting well all the capabilities of Leonardo as a global group, and that the products that we're promoting here are ones that really respond and answer the needs and requirements in Australia. So we can't be promoting everything that ... all the products that Leonardo has, and you know we've got seven divisions of different capabilities, from airborne to land and naval, to space, to civil systems and so on. Hundreds and hundreds of products we have to focus in, focus our resources, which in every case and for everyone resources are always limited, to focus these resources in to really answer the needs of Australia, and adapt those products where necessary to best satisfy the customer.

Phil Tarrant: How would you describe the current defence industry environment within the naval programmes. There's obviously some big programmes out there for, that people are looking to secure, not only the primes themselves but the lower sort of tiers of the supply chain when these programmes come online. Is there competitive collaboration? How would you describe the friction points between all the contenders right now, is it quite civil or is it pretty dogged that these guys want to go and win this work?

Michael Lenton: Any time you get a programme of this value, this size, you're going to get a lot of industries, a lot of companies, a lot of nations competing amongst themselves to try and win this. Now that's exactly what's happening on the future frigate programme, SEA 5000. I think it's a healthy exercise, I think it has to stay realistic however and I think it has to stay realistic in terms of timing. It can't blow out years and years, it can't go on for decades, I think it's something that if we have to have the capability here in Australia that is actually responsive to political developments in the Pacific, it needs to be within a reasonable time frame.

That's why I think I personally believe that the FREMM solution is a great solution. I personally believe that the capabilities that Leonardo has on the FREMM, and they are many, from I would say everything from naval, communications, weapons, sensors, anti-submarine warfare, on an established platform that is operational, has been in operational environments and proven itself very well. I think that is a very good solution for Australia, and I would support that because it's manageable in terms of risk, in terms of timing and delivery, and in terms of capability. So I am influenced by the fact that I do head up Leonardo Australia, but I also think that objectively it is a very good solution for Australia, and I would support that.

Phil Tarrant: What do you enjoy most about your role now heading up Leonardo in Australia? Is it ... What gets you out of bed in the morning? Except for trade shows like Pacific, and chatting to guys like me.

Michael Lenton: Let me say, what do I wake in fright at, screaming ... No, I think the real challenge right now is delivering 1442 in the best possible way. Establishing ourselves with the capabilities here in country for the support phase for the installation phase, and showing our customer that we really have the commitment. Ongoing commitment, long term to support this programme, and to show them that we can be a credible and supportive partner. Just convey to them that this is not a hit and run situation, it is a, we're here for the long term and this is truly an Australian company.

Then do everything right to position ourselves for SEA 5000. FREMM may win, FREMM may not win, regardless we will be here and we will continue to support whatever the Navy does and also offer our capabilities into whoever wins the SEA 5000 programme. So and then I think the other real priority for me is to correctly present all the capabilities that Leonardo has, and make sure that we are responsive and able to identify the opportunities in time and respond well, and competitively and putting the best possible offer forward. It's an amazingly exciting time, there are lots of programmes, lots of opportunities, and we're seriously interested in being an Australian operation that uses and develops skills here in Australia, and the overall naval and defence capability that Australia needs to be effective in the Pacific.

Phil Tarrant: So how's your calendar for next two days? Have you got a ... when you come to a trade show like Pacific do you have your next two, three days mapped out with meetings? Or is it more of an organic; ...

Michael Lenton: Yes, I have a sheet here and what you see from this; ...

Phil Tarrant: I'm just trying to get an insight on how you plan your time here.

Michael Lenton: The overlay of meetings is the real concern, so the secret is trying to keep meetings and conversations strictly limited to the time that's been allocated and not go over.

Phil Tarrant: Well I'm going to speed up then. But if anyone wants to grab you, they can find you at 4F10 is your stand?

Michael Lenton: 4F10 yeah.

Phil Tarrant: Okay, nice one.

Michael Lenton: You're most welcome to come over and have a chat.

Phil Tarrant: Good one, Michael appreciate your time, always enjoy getting together and hearing what you guys are up to. You've obviously got this programme underway right now, which is a major priority to deliver that, and that's excellent. Some of these innovations you ran through, in particular this high rate data link, you see that changing the way people work and making things easier for people and also cheaper, which is what everyone's always looking for.

Michael Lenton: Absolutely.

Phil Tarrant: So nice one, let's keep connected, let us know what you're up to, we'll get you back on the show again soon.

Michael Lenton: Okay.

Phil Tarrant: Nice one.

Michael Lenton: Good on you Phil, thank you.

Phil Tarrant: Remember to check out defenceconnect.com.au if you're not subscribing to our morning news and market intelligence bulletin, defenceconnect.com.au/subscribe

We're here at Pacific all week so come and say hello yourself if you want to have a chat with us or meet the team, and even potentially come on the podcast, let us know we'll be back again soon, until then bye bye.