Lockheed Martin marked a major milestone yesterday, with the formal announcement that the Aegis Combat System has been chosen to equip the new Australian Navy frigates to be built under the SEA 5000 program.
Join Dale Bennett, Lockheed Martin executive vice president, rotary and mission systems, and Vince Di Pietro, chief executive of Lockheed Martin Australia and New Zealand, as they discuss the company’s outlook for growth in Australia, observations on naval strategy and the evolving strategic landscape, plus the very important role people will play in supporting defence and defence industry in the period ahead.
Enjoy the podcast,
The Defence Connect team.
Listen to previous episodes of the Defence Connect podcast:
Episode 323: PODCAST: Cyber security, a legal requirement? With Clyde & Co’s Reece Corbett-Wilkins and Avryl Lattin
Episode 322: PODCAST: 45 Days – The Fight For A Nation, with Emile Ghessen
Episode 321: PODCAST: News wrap – Chapter closed: Subs program turns new page
Episode 320: SPOTLIGHT: Revolutionising the space domain, with Lockheed Martin Australia and Inovor Technologies
Episode 319: PODCAST: Supporting defence businesses, with DSTG’s Nigel McGinty and Robert Hunjet
Episode 318: PODCAST: Digitising the ADF for better and safer training, with Shane Acorn and Daniel Pace
Episode 317: PODCAST: An uncertain world, with MAJGEN (Ret’d) Mick Ryan
Episode 316: PODCAST: The worsening geostrategic environment
Episode 315: PODCAST: News wrap – Strengthening maritime capability
Episode 314: SPOTLIGHT: Unpacking the Aegis combat weapons system, with Lockheed Martin Australia’s Neale Prescott and Rob Milligan
Speaker 1: 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 the Defence Connect podcast. We are recording from Pacific 2017 in Sydney. Packed full agenda, three days here. Essentially chatting with industry around all the major programmes in the naval space at the moment. And as you all know, it is a watershed period for Australian defence, particular in Navy, with some major naval programmes underway and set for the future.
To help me today, I have a bit of a chat and navigate the naval programmes, the state of play in defence industry, I have two senior people from Lockheed Martin. I'd like to welcome Dale Bennett, who is the Lockheed Martin's Rotary Mission Systems executive vice president, and I also have Vince Di Pietro, who is the CEO of Lockheed Martin Asia-Pacific. I hope I all got that right guys.
Dale Bennett: Yeah, sounded good.
Vince Di Pietro: Lockheed Martin Australia and New Zealand.
Phil Tarrant: There we go, Lockheed Martin Australia and New Zealand. So, Dale, you've just flown in from the US.
Dale Bennett: Yeah.
Phil Tarrant: Out here for Pacific. What are you guys hoping to achieve for the next four days, with you here on ground?
Dale Bennett: Well, this is a great venue for us. We've been a partner every two years with this venue for ... It's just been a great programme for us. So, we're here in force. Got the team here. We're coming off of some really exciting news with the Air Warfare Destroyer and the Aegis sea trials. The delivery of the 24 Romeo helicopters ahead of schedule, and we're looking forward to continuing to gain momentum on the submarine programme as the combat systems integrator and really excited about the Future Frigate announcement that was made this morning.
Phil Tarrant: That's right, so, our prime minister, Malcolm Turnbull, has announced the Aegis being selected for our new frigates coming online, so you guys have been integral to the development of that. What's your thoughts on the announcement?
Dale Bennett: Oh, we're very excited and honoured, quite frankly, to be chosen for such an important role on such an important ship for the future. And I think it's really about emerging threats, I think it's about interoperability, I think it's about taking the long view and making sure we're putting on the ships of the future, a common set of integrated combat system elements so we can train and sustain here in country over the long haul. And so I think, as they announced this morning, a common Aegis system for the frigate with a tactical interface from Saab, and so, we partnered with Saab for many, many years and the CEA radar's an amazing capability. So, we're looking forward to bringing that to the fleet and then I think that also provides some commonality with the Air Warfare Destroyer going forward as we think about upgrading that ship.
Phil Tarrant: And I've done a lot of reading around the announcement today and a lot of it's been contextualised by the evolving geo-political situation in Asia-Pacific, and someone up there in North Korea who is rattling some very big sabres. So, this is going to be protecting our fleet moving forward into the future in a very evolving geo-political military landscape and I'll touch on that in a second, but before I get there, and it's really to bookend or preface that, the Chief of the Navy made an address last week, I think it was 28 September at the ASPI White Ensign Dinner and he made some really interesting observations around the future for the Navy in this current geo-political landscape. And he said that the backbone or the bedrock to Navy policy was, it's about the deterrence. The lethality, the availability, the sustainability, the affordability. And this was really consistent through his speech that he delivered.
Vince, what was your views and observations towards what the Chief of the Navy had to say at that dinner?
Vince Di Pietro: I had the pleasure of announcing the chief at the dinner, because as you're aware that we sponsored it with ASPI's help to deliver the annual White Ensign address. The speech itself was really refreshing insofar as its candour spoke very clearly about the chief's aspirations for where he saw the future of the RAN, how the strategic interface for the Navy to fit into the needs of the nation and to meet the requirements of the nation, but most importantly, to meet the challenges of the evolving geo-political scenario as it's unpacking in our region.
It's fair to say that there's things unpacking in almost every region on the planet, but ours certainly is one which is attracting the lion's share of the spotlight and for all sorts of good reasons. But what this does is it allows, I think, the RAN to remain in a truly capable position with contemporary technology, utilising the existing suite and to be able to grow into the future suite of weaponry that might evolve as time goes by. It allows us to capitalise, it allows the chief to capitalise on some significant investments that have been made and, to Dale's point, the MH-60 Romeo is the most advanced combat helicopter in any inventory at the moment, and we've acquired 24 of them for the Royal Australian Navy. And to be able to capitalise on all of that, today's announcement by the prime minister and it sits very comfortably as an underpinning philosophy to what the chief saw as an aspiration for Australia's Navy and Lockheed Martin's delighted to be a part of it.
Phil Tarrant: And your view, as you're an ex-Navy man by memory. You spent many years in the service, now you're leading Lockheed Martin in the Australia and New Zealand context. From the chief's speech and discussions that you've had with him, the protection for the Navy's role moving into the next 10, 20 years, how is that going to change and evolve from where we've been from the decade past? We've got some great new kit, some great new capabilities, which are really going to hold us in a regional context, but where do you see that role is, moving forward?
Vince Di Pietro: I see it evolving in not unsurprising ways and I would not put words into the chief's mouth, but certainly from my own perspectives in a strategic context, it just makes sense that the way this is moving and the announcement this morning, the equipment that the Australian Defence Force has already invested in and what's on the horizon in the not too distant future for developmental-type work, it's keeping pace with a really rapidly changing geo-political environment in a way which is, I think, remains very sensibly affordable. Giving the Australian service personnel the best equipment possibly available and making sure that industry has a fundamental input to all of that capability. And if there was any single evolutionary high in all of this, it is the direct involvement of industry as a fundamental input to capability. That is quite different to what we were doing even five years ago.
Phil Tarrant: And your view, Dale, obviously we share a very strong relationship with our US cousins across the Pacific. It's a long alliance with ... We're together over 100 years, in many different military settings. Obviously, Lockheed Martin is a major defence contractor and your involvement here in the Australian market is something that you're definitely committed to and the conversations I've had with Vince previously is about that commitment moving forward. The technological advantages that the Australian Navy, Australian Forces can obtain through this relationship with the US. So, can you give me some context on how you see that developing, moving forward?
Dale Bennett: Sure, yeah. And I think that's an important dimension of having a long-term, sustainable recapitalization project such as the submarine programme, the frigate programme, et cetera. So, we've enjoyed an over 70 year partnership between Lockheed Martin and Australian and you know, with the Joint Strike Fighter, Lightning coming, the helicopters, the shipment, aviation programmes, the submarine programmes. And I just would ... I think because we think about sovereign capability, sustainment, training, commonality, interoperability, these are all really important things. And while we have 750 active employees here in Australia, we've got over 3,000 in the supply chain, which are really good paying technical jobs.
And so, I just would submit as we look to the future and we look at the evolving threat and we bring technology to bear. These technologies do generate, I think, tremendous opportunity for us to continue to get the best and brightest ideas from around the world, to bring them to bear on all of our problems and then those technologies then spin off into the commercial marketplace in a meaningful way.
So, I think, Minister Pyne and the Navy taking the long view is the appropriate view, because industry can then invest in their technologies in ways that really has a long view towards the future. And so, we've just opened up our STELaRLab in Melbourne and it's a great investment on our part, of the corporation, to really think through, "How are we going to partner with the youth that are coming out of the universities in Australia? How are we going to bring them in and continue to thicken ourselves as a technology provider, here in Australia?"
Phil Tarrant: I guess it's always important to think about the role that defence industry plays in equipping our war fighters on the ground, in the air and on the sea. Australia has a role to play in a regional context, it has troops deployed now in many theatres, so we need to think about what this great technology is going to do to equip our war fighters to do what they do better. What's your view on the Australian Defence Force at the moment and how we can get this technology to these guys and girls on the ground to help them do what they do better? Because it's a big point for Lockheed, isn't it?
Dale Bennett: Yeah, I think certainly, we fought as two countries through the history of time and will continue to do that. I think the interoperability and being thoughtful around the emerging threat, how do we leverage each other's investments, bring that capability to the war fighter as efficiently and as quickly as we possibly can, and then recognising the sovereign capability and the sustainment dimension to make sure that we can sustain it wherever we deploy around the world. And so, we're committed to continuing that partnership and bringing that technology and I think there's a lot that the Australian technologists have to offer and that we can bring in to our solutions and export them around the as well. So, Vince?
Vince Di Pietro: Thanks, Dale. I think it's worth amplifying the really big part of sovereignty that is involved and engaged in growing capabilities in Australia, not only in the battlefield or in the equipment we use, but very importantly in the work force and the available industry, as a fundamental input to capability.
Dale mentioned a couple of numbers a short time ago, there are 750 or just over, Australian tax paying voters who work inside Lockheed Martin and wear our shirts and lanyards. But very importantly, about 3,000 people get out of bed every morning to make something in Australia, which has been asked to be made by them or their small and medium enterprises and even some of the larger companies, to be able to join the global supply chain in a number of projects.
Now, that's 3,000 people that probably wouldn't be getting out of bed quite so early if it wasn't for something that Lockheed Martin had asked them to make. The beauty of that is that all of those things being made are joining a large, global supply chain in the various projects and activities and artefacts that they contribute to. Now, we do have some practical and real knowledge of companies that have got involved in the business of making equipment for the defence industry in that way, and that that has come back to them many times over insofar as that they now export to other countries, not the same stuff obviously, but certainly are involved in having exposure and visibility by other customers to what Australia can offer.
That's how you really build sovereignty. That's how you build national capability from the ground up. One very convincing but small piece at a time, make sure that those people do stay in business. We don't need to merge and acquire them, we're very happy for them to be their own companies in their own right, but they make things that we need. And every Joint Strike Fighter fighting is going to have a little piece of Australia in it, quite a few little pieces of Australia in it. Now, they're all made in Australia, across all states.
That's a terrific success story. Now, when you think by the mid-2025 period, when the F35's in full rate production and when some other programmes that are using Australian industry to assist come to fruition, that will be about a 5 billion dollar export capability that Australia will have. We are currently at about 800 million Australian dollars, that will expand to 5 billion by 2025.
So, that's just an incredible ... I think it's an incredibly good news story insofar as that you bring the best that technology can deliver and we have to leverage very heavily off the United States and companies like ours, to be able to bring that sort of equipment to good use in Australia. But if we can then enjoy the ability of Australian companies to contribute and participate in that, insofar as is possible and it makes sense, that's a really huge win for both.
Phil Tarrant: So, when you think about defence industry as a fundamental import of capabilities, we go down this path for achieving sovereign capabilities. The ship building, for example. What really concerns you about this? Do you think, as a nation, and with the people we have here, we're equipped to actually achieve that? Or is there some hurdles ahead of us that we're going to have to jump over?
Vince Di Pietro: I'm going to use a little bit of a metaphor. Our ships and submarines and Joint Strike Fighters will be flown, fixed, sailed and repaired by people whose parents haven't yet met. That's the length of the journey. It's not something that we need to be holding our heads in concern about, saying, "My goodness, we can't get to a particular target of the right skillsets today." We've just got to make sure we put it into the context of time and the rollout of these programmes and how the various stages of construction are occurring and making sure that we meet the targets that we need to meet to be able to slowly but surely build the capabilities up.
Now, have we got the right answers just now? No, not really, but I think we've got the right picture of what the demand is going to look like. The supply to that, through the primary, secondary, tertiary school systems, through apprenticeships and that sort of endeavour. That, too, is something we're getting involved in almost daily with the National Youth Science Forum, STEM [Science, Technology, Engineering and Maths] Activities, VSSEC [Victorian Space Science Education Centre] at Strathmore College in Melbourne, the Women In Aviation Aerospace Foundation for the Women's Leadership Summits.
So, we are trying to focus as much of our attention as we possibly can into growing the very supply that we need to meet the demand of the future in terms of technical capabilities and workforce. So, it's not something which is a desperate problem, and it's kind of easy to look at things through a single snapshot window, but it's a very, very long term project. All of those things are very, very long term acquisitions and it's because, a bit like the old home handyman, you measure twice, cut once. That's what we're about.
Phil Tarrant: And when you look at the Australian business for Lockheed, so, you have a very large domestic US business and you have interests in other parts of the world including Australia, when you look at Vince's business here in Australia, what is it that you're most proud of what you've been able to achieve here from a corporate perspective?
Dale Bennett: Well, I think first of all we're very proud of that we've delivered on our commitments over the past, with the helicopters, with the Air Warfare Destroyer. I was involved as a system's engineer on the ANZAC programme and the FFG [Guided Missile Frigate] upgrade programme, so, I'm really proud of our performance and delivering product and capability, value for money, on time and on schedule and these are complex programmes and we don't take that lightly, that's really important to us. So, looking to the future, we're really pleased with these decisions that have been made because it gives us the long view.
And as Vince talked about, the talent and reaching in around STEM education and getting kids excited about engineering jobs, this gives us the long view, so it gives us the comfort to make the right investments with that long view in mind, whether it's the submarine programme, whether it's the frigate programme, the upgrade to the Air Warfare Programme and the continuing sustainment of the helicopters. So, I just couldn't be more happy with these long-view decisions that are being made and it gives business clarity on where we would make our investments and how we would continue to bolster Vince's team down here and really make these investments.
Phil Tarrant: And moving forward five years from now, Vince, how's Lockheed going to look any different here in Australia, compared to today?
Vince Di Pietro: I hope with a bigger fundamental input into capability footprint in terms of the number of companies that we're going to bring online through the SEA 1000 Submarine Combat System Program. Clearly, the announcement this morning is going to also mean that we've got to understand exactly what we can and should be doing in terms of getting that on the rails really smoothly. I think in about five years, it'll look pretty solid. And because if we stay on a trajectory which really does emphasise the need to be able to have the new things being able to communicate and integrate with the stuff that we already own, as a defence force, and for us to be able to contribute to that aim, then the future for Lockheed Martin Australia and Lockheed Martin in Australia can only be brighter and offer more of those opportunities to Australia and Australian industry.
That said, it's also really important to put into context that Lockheed Martin has invested a significant amount of effort and money and time into establishing things like the STELaRLab, into the very serious programmes we do not only with veterans and the Australian War Memorial on one end of the scale, but also the STEM and the growing and nurturing of youth and engineering talent. So, that investment is not made lightly and it's certainly not made just to get us favour. It's because we see that the growth path and your window of five years is going to rely on kids who are in year 11 and 12 today, pretty well just pulling out of their master's degrees at about that time and looking for opportunities.
So, I really hope that we're going to be a part of that, and so far I can prove that I think we are not far from that.
Phil Tarrant: And what do you think we need to do as a collective industry to make sure that defence is an attractive career path for people who are in school and moving into university, now to university, it's something that we're all invested in to make sure that we get this talent in, because there's some large projects coming online. And as you said, some of these kids aren't even born yet, so it's a ... The competition for this talent is fierce.
Vince Di Pietro: I think keeping a really good open window on what is available and is happening. We've just come out of a week at the IAC, the International Astronautical Congress and to see the level of enthusiasm when people started talking about going to Mars, I'm very proud of our company, because our company actually makes a big deal of getting the astronauts back. It's important.
Dale Bennett: We want a round-trip offer.
Vince Di Pietro: Yes, we'd like to invest in the return journey. But to see the level of enthusiasm there and to see the whole emphasis being not so much on, "How are we, on Earth, going to do this?" But, "No, let's do this." I think it's pretty exciting times ahead and as for kids joining the workforce, I only joined the Navy originally for 6 years and got out after 40 because I just forgot to get out in the meantime. It was a great deal of fun.
But more importantly, now, seeing it from this end, which is actually being able to provide all those young women and men in the Australian Defence Force with the best that they can possibly use and operate, from a company like Lockheed Martin, and I know you'd say "Of course you're going to say that, because you're a company man." But I wouldn't be doing it if I didn't believe in it. And when I see what the F35 is capable of, having personal experience of what the MH-60 Romeo does ... We've got five of those machines at sea now on the back of ships. As Dale said, in fact, Dale was quite incorrect. He said they were all delivered on time, in fact, they were all delivered ahead of schedule, Dale.
Dale Bennett: I'll take that.
Vince Di Pietro: At a former job, it made life challenging. But we are delivering and we do make and we do upgrade and we do sustain the most competent, technically advanced equipment available. And if I can be a part of that for the young women and men of the defence force, and if I can be a part of that as a part of a collegiate industry approach, so let's keep that going. We ... Count me in.
Phil Tarrant: And what's Lockheed doing to become an attraction business to ... Whether it's people coming out of service into defence industry or people coming out of universities, what's Lockheed doing so they choose you over some of your large competitors as a potential place for work?
Vince Di Pietro: We really approach the workforce and the work space and the employment market with a very level hand. We advertise for positions, we go to market. We do have companies that assist us do that, consultancies that help us do that, and then we go through a fairly standard recruiting process. Our target's about 45 days to get someone on board, we're doing that in about 38.
Phil Tarrant: Okay.
Vince Di Pietro: And so when the need is there we can go faster. If it's just a routine refill, then we'll just use normal marketplace penetrations and cycles and businesses to help us do that.
Phil Tarrant: That's great. Well, we've run out of time, guys. Dale, I appreciate you coming on, I know that you're busy here at Pacific, you've got a full calendar, so thanks for giving us a little bit of time. And Vince, look, let's keep chatting, there's 1,000 other questions I'd like to ask you.
Vince Di Pietro: Always a pleasure.
Phil Tarrant: And I'm sure we can get around to them eventually. But thanks for joining us today, I do appreciate it.
Dale Bennett: Thank you very much.
Vince Di Pietro: Thank you.
Phil Tarrant: Thank you. Remember to check out DefenceConnect.com.au. If you're not yet subscribing to our daily market intelligence and news, DefenceConnect.com.au/Subscribe. We'll be here at Pacific all week, some please come and say good day. We'll be back again soon. Until then, bye.