The former parliamentary secretary for defence procurement discusses the plans for the former Holden engine plant site at Fishermans Bend if BAE Systems wins the LAND 400 project, the engineering capabilities in the Victorian economy that are ideal for the upcoming naval shipbuilding projects, and his ambitions for the state to be the home of the $50 million Cooperative Research Centre in Trusted Autonomous Systems.
Enjoy the podcast,
The Defence Connect team.
Listen to previous episodes of the Defence Connect podcast:
Episode 62: PODCAST: The industrial dating service, Peter Webster, Industry Capability Network NSW
Episode 61: PODCAST: Expanding UK business interests in Australian defence industry, Stephen Phipson CBE, DIT DSO
Episode 60: PODCAST: Defending the defence industry, Daniel Mendoza-Jones, Mendoza Legal and Consulting founder
Episode 59: PODCAST: Making industry a fundamental input to capability, Andrew Garth, general manager, CDIC
Episode 58: PODCAST: The shifting sands of AIC, Lee Stanley, Daronmont Technologies
Episode 57: PODCAST: Fostering the future of defence industry, Margot Forster, Defence Teaming Centre CEO
Episode 56: PODCAST: Propelling Defence through advanced automation – Andrew Seal, Siemens head of defence and marine solutions
Episode 55: PODCAST: Exports key to the future of Australia’s defence industry, Richard Marles, opposition spokesman for defence
Episode 54: PODCAST: Mining boom to defence boom – Minister Paul Papalia, WA’s Defence Issues Minister
Episode 52: PODCAST: Championing Australian defence exports, David Singleton, CEO, Austal
Announcer: Welcome to the Defence Connect Podcast, with your host, Phil Tarrant.
Phil Tarrant: G'day everyone, it's Phil Tarrant here, host of the Defence connect Podcast. Thanks for joining us today at Pacific 2017.
I've got someone back in the studio. We met with him probably about four months ago. Most of our conversation centred around Land 400 at a point in time when the two down selected tenderers were looking about where they would base their operations. One of them has subsequently said, "Victoria's the place to be," and here to have a chat with me today is Greg Combet, who is the Victoria Defence Industry advocate. You're also the Chair of the Defence Council of Victoria. Welcome back to the podcast.
Greg Combet: Thanks, Phil.
Phil Tarrant: How have you been over the last couple of months? Busy no doubt.
Greg Combet: Oh, good, good, but pretty busy, yeah. As you said in your introduction there, we were, at the last time I spoke to you, chasing both Rheinmetall and BAE to set up in Victoria, should they be successful in Land 400. Ultimately Rheinmetall's opted to partner up with the Queensland Government and BAE has partnered up with the Victorian Government, so we're obviously pretty keen on BAE winning the bid now.
Phil Tarrant: Understandably, and how did you find that dialogue with both the down selected tenderers? Obviously BAE has chosen Victoria, and for good reasons. Maybe you can explain some of those reasons why.
Greg Combet: Well, they were good, really disciplined and focused discussions. Pretty extensive, because both of them obviously were concerned to ensure that the state participated with them in getting the facilities that they need to do Phase 2 and potentially Phase 3 of Land 400, and also access suppliers and a workforce that's necessary in the infrastructure for getting vehicles in and out, so they were quite lengthy discussions. And, as I said, we've partnered up with BAE at the end of that process.
We've been offering the old General Motors, Holden engine plant site at Fishermans Bend. The State Government has bought that site and it's about 37 hectares. We're looking to develop that as an engineering and advanced manufacturing precinct and that's where BAE will set up, should they be successful in winning Land 400. They'll also consolidate a number of their other Victorian operations there as well.
Phil Tarrant: Have you got any inside mail on how that competition is going between Rheinmetall and BAE?
Greg Combet: Well, everyone says, and particularly, I mean, for national security it's a massive gossip network, as you'd know, in the defence industry area. Everyone that I've spoken to here at Pacific 2017 is observing that it's really very close. Both vehicles seemingly got through all the capability testing and risk mitigation activities that defence has been running the last 12 months or so. They're both in the contest and it'll get down to value for money, and some people think there'll be some politics in it, but heaven forbid that.
Phil Tarrant: Potentially, it wouldn't be defence industry without the politics, but just on that basis, Queensland, the Queensland Government, in regards to Land 400, what's your view on them?
Greg Combet: Well, they've been quite aggressive in going after and securing Rheinmetall, so I can understand that. Both of them, I think, have been fairly out front, haven't they, in putting the Boxer forward and touring around the state. But BAE is a little bit more in the British style and a little more understated, but nonetheless they've been getting about doing their work, showcasing the vehicle and doing a tour of many different centres.
Rheinmetall actually started their road tour in Melbourne and have been around a number of the states, and so has BAE, and they're still undertaking that and they're doing all of the necessary work you'd expect in Canberra to push the merits of their vehicle forward.
But we're there partnering with BAE, preparing to support them with the infrastructure that they'll need to successfully deliver Land 400, and I think we've got the bases covered.
Phil Tarrant: Both the organisations have announced their engagement with the SME space. I know that's very important for you-
Greg Combet: Yes.
Phil Tarrant: ... to get Victorian SMEs into this programme irrespective of-
Greg Combet: Who wins.
Phil Tarrant: ... who the winner is, which is a good sentiment to have. Chatting with SMEs down in Victoria, and particularly the area where BAE will base itself, are they pretty excited about the opportunities there?
Greg Combet: Ah, yes, and one of the things that's important from a State Government point of view is that we believe that if we have the production there, there'll be a greater benefit for the suppliers in Victoria, and that's pretty clear from the more detailed work we've done with BAE now.
But having said that, you're certainly right, if Rheinmetall wins, quite a number of suppliers in Victoria will also participate in that programme, and so there's a bit of mixed view about it, as you can imagine, in the supply community.
Phil Tarrant: What's the process, then? Should BAE win the competition and start manufacturing out of Victoria? How long is it going to take to actually equip them with the people they need in order to get going with this? Is that something that could be immediate?
Greg Combet: Yeah, I don't think that'll take too long. I think the last time we spoke, I also put it in the context of the closure of the commercial automotive manufacturing industry, and just this week Toyota closed at Altona, and, of course, Ford has closed previously, the engine plants stopped producing and the state will take ownership of that shortly from General Motors, so that industry's closing down.
It affects a lot of suppliers. A lot of trades people in particular, and people who have worked on military ... not on military, on automotive manufacturing, are in the marketplace and I don't think that's going to be an issue at all in BAE finding the skilled workforce that they need, and that can happen fairly quickly.
We're expecting a decision on Land 400 late first quarter next year and so I hope that timetable sticks. In that event, once that decision is made, and if BAE are successful, we're ready to go day one, and so is BAE, with the capital expenditure necessary for the facilities.
Phil Tarrant: And then sort of toe-to-toe, Queensland versus Victoria, would you say that Victoria's better equipped with people who have the skills to get going straightaway?
Greg Combet: I wouldn't like to reflect on that. I mean, I respect what the Queenslanders are doing and it's a pretty substantial economy in its own right. You're talking 200, 250-odd people in production. It's the supply chain of course is extremely important, and I think on that front there's clearly an advantage being in Victoria. It's a very well developed supply chain, many of whom supply military vehicle production to Thales at Bendigo.
Phil Tarrant: Well, you do have that pedigree in Victoria with the Bushmaster and the Hawkeis.
Greg Combet: Yeah, so I think we're pretty well set to help BAE deliver on Land 400 Phase 2.
The other thing that's becoming evident, not just in the military vehicle area but in the context of the emerging naval shipbuilding programme, is that the engineering capabilities in the Victorian economy are a big factor, and that is even if ships are going to be built, the platforms will be constructed in Adelaide. The engineering capability is by and large in New South Wales and Melbourne, and Melbourne turns out, or Victoria universities turn out a third of the engineering graduates in Australia. So a company like Navantia, in order to support the AWDs and the LHDs, and also potentially on the frigates, if they're successful, they've established an engineering centre in Melbourne for this reason.
Phil Tarrant: Obviously Pacific is about naval programmes here, rather than the other events we've seen each other at Avalon and the land based stuff. So moving on from Land 400 and into shipbuilding, when you think of shipbuilding, you don't normally think of Victoria. You mentioned beforehand-
Greg Combet: Well, we used to.
Phil Tarrant: ... that you're generating some good graduates in the engineering space, but what role will Victoria play in these major submarine and frigate building campaigns?
Greg Combet: Well, the first thing to note is that it's actually been a difficult thing for many people to accept that Williamstown Naval Dockyard, which has got a very, very long history and produced the Anzac frigates, will not be part of the naval shipbuilding programmes. We understand the reasoning for that. I think it is in the national interest, but it's nonetheless a decision that's been very difficult for many to accept, because a historic dockyard, it's been mothballed and it doesn't have work to look forward to in the future, so that's been difficult.
Having said that, the thing that's clearly evident is that the supply chain in Victoria, again, the manufacturing industry, will have a big role to play. The design capabilities, the engineering capabilities that are resident in Victoria will all have a big role to play, and they're going to be absolutely necessary to help deliver these platforms.
The other thing that's also becoming clearer, and increasingly so just in my meetings here at Pacific 2017, is that the tier one suppliers for Naval group in France, or across Europe, for the potential frigate builders, they're all going to need to be coming and setting up in Australia and finding an Australian partner or partners in order to be able to deliver the frigates and the submarines. Same with the OPVs as well. Those companies need to be matched up in coming here, and, of course, for a lot of French companies, it's a bit of an unknown environment for them.
There are going to be many opportunities in the Victorian economy for suppliers to partner up with these overseas companies that will be coming, and great opportunities to expand, because the critical thing here that I congratulate and really recognise the government for is they've set the policy that there must be technology transfer, there must be industrial capability transferred from overseas into Australian industry so that we've got a sustainable continuous shipbuilding capability and the ability to sustain these vessels and upgrade them in the future.
That's the next wave of opportunity, if you like, I think, the suppliers that'll be coming to Australia looking around for partners and looking for a place to set up. That won't all be in Adelaide, and many of those opportunities will be in other states including Victoria. We're thinking about how we might assist them fine partners, including in the university sector, the engineering abilities that they're going to need to be able to access, and where physically they may be able to locate.
Phil Tarrant: So much like Land 400, then, you're in dialogue with the three tenderers for SEA 5000.
Greg Combet: Yes, we're talking of meeting all of them over this couple of days again, and also with Naval Group. These things are genuinely a national endeavour. Disputes between states about these things I don't think have much place, to be honest. We all have to work together and work together with the primes to help the Commonwealth deliver these platforms and find partners for the overseas suppliers. I mean, if we don't do that, those suppliers come here, they retain those industrial capabilities, the IP and the technologies, and we don't develop a sustainable industry.
I think that phase of the work now is about to really get underway, because when you think about it, the OPV decision is probably just weeks away, the frigates are early next year, or in the first or second quarter next year, and those companies all need to hit the ground running once the decision's made, contracts are entered into. Suppliers need to be coming here and they need to be accommodated.
Phil Tarrant: Well, it is a national endeavour. I know last time we met on the podcast you spoke about there was no need for the states to actually get involved in bickering and fighting around who's best to do whatever. I tried to pull out to you there to have a bit of a potshot at Queensland, and you refrained from that.
I think the sentiment, collectively, is the national endeavour, and we need to provide this and equip our armed forces to give them this capability, so you've taken a bit of a leadership position, from my point of view, to say, let's just get on with it, let's get on with the business. I see some of your counterparts and some other advocates within the other states are now saying the same things, even at ministerial level, which traditionally have been a bit of infighting and sniping.
I think there is a consensus now that we've actually got to concentrate as a state, each individual states, what do we do well and what don't we do so well that we don't need to worry about competing for?
Greg Combet: Let's concentrate on what we can help to do to deliver these things. The submarine, as I said the last time we spoke, it is the most complex, difficult, largest undertaking the country has ever endeavoured. It is more complex and it is financially more significant than the Snowy Mountains Scheme. It's going to take every iota of capacity we've got nationally to be able to successfully deliver that programme, and, of course, it's one that lasts for decades. It is national building.
I think that's what is increasingly recognised at a political level around the states and territories. All of the advocates in the different states and territories who are my counterparts, we're all talking together and working together well. There are areas where we compete, like Land 400 we have, but the decision'll be made on that and we'll get on with life.
But in this naval area, I think you'll see a continuing level of cooperation, certainly between the Victorian, South Australian and West Australian Governments. At the moment, there's been a good dialogue about how to support Australian industry involvement and good policy discussion, so I think there is a fair degree of consensus about it. It's good to see.
Phil Tarrant: Since we last spoke, any major wins on your side, do you feel, other than the Land 400 acknowledgment of BAE?
Greg Combet: Well, I've been working hard on the groundwork to do that. There's one other thing we're focusing on that I'm pretty keen for us to secure. Again, it's nationally focused, but it's out of the Next Generation Technologies Programme that the DST Group is running, and it's the Cooperative Research Centre in Trusted Autonomous Systems. This is something where there has to be industry leadership, so primes' involvement is critical.
Essentially it's to say, well, here's the future of warfare. What capabilities is the ADF going to need in autonomous systems that we don't have yet? What's going to give them the leading edge, the military capability edge? Let's all work together to try and deliver that. Develop it. What do we need to do? Well, we need industry in the leadership role, ADF support, and we need to mobilise the research capabilities in our unis and research organisations to do the underpinning work to deliver it.
I'm currently concentrating on that with a number of primes and SMEs and the university sector in Victoria, but it will be national in focus. Our objective as a State government is to host the headquarters of that CRC in Victoria. We do so, I think, in partnership with the Defence Science Institute that the State Government funds; we've just renewed the funding for it, and also to have a test and evaluation facility for land, air and sea autonomous systems to be evaluated, and that's quite a big thing. It's about 50-odd million in funding over, I think, seven years that the DST Group would provide.
But the primes and the state would also bring some things to the party and that'll provide, I reckon, a great basis if we can secure that for manufacturing off the back of it, advanced manufacturing and IT capabilities, systems capabilities. That's where the real, as you'd appreciate, future value in defence industry really is, not in welding as much as the systems that go into all these platforms. That's what we're also concentrating on, so I'm hopeful of winning that. That decision's by Christmas time.
Phil Tarrant: What's the morale of the manufacturing community down in Victoria at the moment with the closure, the last rolling off of all these cars?
Greg Combet: If you're a supplier to Toyota, Ford or Holden, it's pretty tough. They've known it's coming for a long period of time, but nonetheless it's a heavy blow to business and obviously will commercially impact many of them pretty hard. But there has been a decent transition period now and the State Government's had programmes to support them.
I don't know if you're aware, but I used to work in South Australia as well on this specific issue, transitioning the auto sector. I caught up with my successor this morning and he says it's gone pretty well over there too, I mean, if you can say an industry shutting down is going well.
But the most important thing is to support the suppliers, help them diversify their businesses and to support the workers affected and their local communities. A lot of effort's gone into that. I hope that we won't see the impact in Victoria or South Australia that we all feared a couple of years back when this was first announced. A lot of companies are pretty adaptable.
Phil Tarrant: That's one of the beauties of Australians. Typically, we get on with it, irrespective of the challenges that are put in front of them.
Greg Combet: Yeah, and that's why it's important, from my point of view, that we do everything we can to win Land 400 and expand the military vehicle supply chain and we win a number of these other things, so that there are opportunities for manufacturers. As a former Trade Union official, the wellbeing of the employees is a pretty big issue for me.
Phil Tarrant: How can you as a state actually influence the decision on the Land 400 competition? Is it just an advocacy piece? How does that work?
Greg Combet: I think there's a bit of advocacy in it, but the fundamental is the capability of the vehicles, of course, and the value for money assessment by defence. Really, these are matters for BAE and Rheinmetall. What I'm trying to do to assure the Commonwealth is that we really help mitigate risk. That is the State Government will really help mitigate risk should BAE be selected, because we will ensure the facilities are ready on time and work with BAE to ensure that it's set up, the supply chain is humming appropriately and will just help to de-risk the project as much as possible.
Phil Tarrant: Makes sense. And just to finish up, what are you enjoying most about your role at the moment advocating defence within Victoria?
Greg Combet: Getting around seeing people. That's always the best thing. Seeing what people are doing.
Phil Tarrant: And you're read on that? Are most people optimistic about the future?
Greg Combet: Oh, very much so, because when you consider the expenditure that's committed, 195 bil over many years in the defence capabilities that are to be developed, it's a lot of money and there's a lot of great opportunities for businesses that are agile, to borrow the Prime Minister's wording. You can really grow your business if you're an SME. You can sense that around the place.
It's now starting to become more of a reality and you can see it in the primes, just talking to them the last couple of days. The eyes are starting to look slightly more tense thinking a decision is imminent.
Phil Tarrant: Here we go.
Greg Combet: We might have to press a button and are these suppliers lined up, are they ready? We've got all the capabilities we need.
Phil Tarrant: That's good.
Greg Combet: It's getting good.
Phil Tarrant: Well, let's catch up again after the-
Greg Combet: Ripper. Okay.
Phil Tarrant: ... Land 400 announcement, I think, and let's see how we go. It might be a-
Greg Combet: Depends if I'm in tears or not.
Phil Tarrant: Well, no one knows how it's going to play out. I think in terms of the competition it is pretty tight in my navigating defence industry and chatting with both of those stakeholders. They both seem very capable vehicles. I'm happy I'm not the person making that decision because it's going to be a tough one.
But thanks for your time, Greg. I do appreciate it.
Greg Combet: No worries. Thanks, Phil.
Phil Tarrant: Nice one. Remember to check out defenceconnect.com.au. If you're not yet subscribing to our daily news and market intelligence, please do: defenceconnect.com.au/subscribe.
We'll be back again soon. Until then, bye bye.