Andrew Garth, general manager of the Centre for Defence Industry Capability (CDIC), joins the Defence Connect Podcast to discuss the progress the organisation has made since its launch nearly a year ago.
A key initiative of the Defence Industry Policy Statement, the CDIC has aimed to ‘open the door to Defence’ for Australian industry and truly recognise industry as a fundamental input to capability.
Garth takes us through the changes the industry has undertaken over the last decade, from when it was “a tough sell” to where it is today, the relationships with primes and SMEs, as well as the challenges the organisation will face in reaching the full operational capability of the CDIC.
Enjoy the podcast,
The Defence Connect team.
Listen to previous episodes of the Defence Connect podcast:
Episode 73: PODCAST: Building long-term capability for defence and industry through LAND 400, Brian Gathright, vice president of business development, BAE Systems Australia
Episode 72: PODCAST: Shaping the conversation in defence industry, Kate Louis, head of defence and industry policy, Australian Industry Group
Episode 71: PODCAST: Technology transfer in naval shipbuilding, Sean Costello, director, Fincantieri Australia
Episode 70: PODCAST: Taking the reins of a defence prime, Gabby Costigan, BAE Systems Australia, CEO
Episode 69: PODCAST: A smooth transition to defence industry – Colin Thorne, partner, engineering and asset management, KPMG
Episode 68: PODCAST: Leading from the front in defence industry, Warren King, chairman, Navantia Australia
Episode 67: PODCAST: From the scullery to the Senate, Rex Patrick, senator for South Australia
Episode 66: PODCAST: Finding the right signal in Defence, Livia Brady, managing director, Rojone
Episode 65: PODCAST: Manufacturing the future for defence SMEs, Medhat Wassaf, Milspec Manufacturing & AIDN NSW
Episode 64: PODCAST: Unmanned surface vessels and the future of Navy, Robert Dane, OCIUS Technology
Announcer: Welcome to the Defence Connect podcast, with your host, Phil Tarrant.
Phil Tarrant: Good day everyone, it's Phil Tarrant here, thanks for joining us on the Defence Connect podcast, pleasure to have you with us. In the studio today, I have someone who is going to give us a bit of an inside view on some of the work happening within the Centre for Defence Industry Capability, CDIC. As I'm sure all of our listeners know, this was a product of the Defence Industry Policy Statement 2016, one of the foundation vehicles to really support growth of defence industry in Australia and really recognise that as a fundamental import of capabilities.
To help me chat through all of this, I have Andrew Garth who is the general manager from the CDIC. Andrew, how are you going?
Andrew Garth: Yeah, good, thanks.
Phil Tarrant: So, we're just chatting before we come onto air, the rigour of your travel schedule, doing what you do with the CDIC. We are just coming into Pacific time, so, which is three or four days I think, in Sydney. Which is going to be pretty intense here for everyone. Primes, SMEs, right through our government. But you're on the road a lot, working with relevant people within defence industry to deliver what CDIC wants to deliver. So, I thought you could give us a bit of an inside view on ... For people that don't know what the CDIC is and does, what does it do? And just really want to get an understanding of how you guys have been tracking since its launch, which was early this year.
Andrew Garth: Yeah, no, thank you for that. And as we mentioned, at the end of the day, it's a global industry we're in, so travel is part of the territory and I think many of the businesses that we support are obviously travelling are over the place. From a CDIC perspective, it's really been great to see all the elements coming together. One of the foundational aspects to the CDIC was streamlining and aligning various services to actually support industry.
Like you said, I recently returned from the DSEI event in London, where we had the largest ever Australian delegation to actually travel overseas on record. We've got 45 businesses that exhibited at the Team Defence Australia Initiative that the CDIC runs on behalf of defence, with over 115 representatives from state and territory governments, along with, of course, the industry, which is the main reason for being there. I think from a personal perspective, I think this was really important for me.
I started out my career working at BAE Systems and GKN Aerospace and during the launch of the JSF program, spent a lot of time abroad selling Australian industry capability, back then, over a decade ago. It was a bit of a tough sell. We had some really good elements of industry, but we also had some elements and some big gaps and challenges where two businesses wouldn't present in the same room to a potential customer. So, what was really nice was actually over at this day and this time around, a decade on, and we're able to present a really comprehensive and diverse array of Australian industry.
Phil Tarrant: And how'd the Aussies go down? Were they quite popular with their global counterparts?
Andrew Garth: We were, we made sure we brought a load of Tim Tams with us, to-
Phil Tarrant: Okay, good.
Andrew Garth: Retain people on the stand. But no, I mean, in terms of the capability, we had everyone from various electronics and EW Systems, Weapon Systems, through to the likes of people like Murrain providing elements back into the Joint Strike Fighter program, amongst other things. So, we had a really diverse capability.
And the important thing is, the international delegations of either the OEMs or foreign governments came through, there was just this constant referral, it was kind of catch and don't release until they've seen everyone on the stand, so it was great to see that Australian spirit of working together.
Phil Tarrant: Yeah, it's good. A lot of the SMEs, which, from what I understand, went out to the UK for the conference. Cracking the global supply chain's always a challenge, so you've got to get out there and fly the flag. How did you find their business acumen to connect with global players to try and sell Australia's wares? Are we pretty sophisticated? Do you think we need a bit of work to really do that well?
Andrew Garth: So, actually, I'm really actually glad that you asked that one, because I guess that's one of the important elements to the CDIC, is actually bringing all those elements together. So, it's one thing to take businesses abroad and, historically, that was one aspect. We also had Defense's Global Supply Chain Program and that was a separate aspect, and then we had the Defence Industry Innovation Centre, who used to provide advisory services and none of them really connected. Whereas this time around, what we actually saw is total alignment.
So, before the team actually went abroad, they actually had, essentially, pitch assistance and some of that was actually funded and facilitated through the state and territory governments.
Phil Tarrant: Okay.
Andrew Garth: Then, when we got over there, we actually had five of the Global Supply Chain prime contractors, they were roving the floor, going out to their Tier One suppliers and other suppliers into their supply chains, making those connections for the Australians that were actually there on the stand. So, it was ... Then, of course, now that the business have come back to the country, we can actually then work with them to actually make sure that the SMEs actually capitalise on some of those connections that they made while they were over there. So, it was really good to see the parts coming together in practise.
Phil Tarrant: Interesting. And, so, for our listeners, the CDIC, as I mentioned beforehand, is a product of a lot of the work that happened, the development of the defence white paper, specifically it's part of the Defence Industry Policy Statement. So, this is when people sitting around in Canberra said, "This is what we need to do to really enhance Australian capabilities to really recognise defence industry as a fundamental input of capability," which is all very good. It's been a bit stop start, the last decade or two. I think the intent's been there to really try and drive Australian defence industry, but it's been quite disparate. So, from my understanding, the CDIC is that tool to try and corral this energy, this focus, this talent that we have, to actually give these businesses the capability to go out there and win more domestic work and win more global work. So, that's how I view the CDIC. Is that a fair summary of what the CDIC does or is there a lot more than that?
Andrew Garth: No, no. It's absolutely a fair summary. I think, at the end of the day, the fundamental is trying to use the CDIC as a catalyst to build relationships between Defence and industry. But I guess it's not as simple as that and we've got a range of services. In some ways, the support that we provide, it's a matter of almost, "How long is a piece of string?" Because the support the businesses need might be nothing more than a "How do I do this?" Well, actually, check out this bit of information that we put on our website which, by the way, is business.gov.au/CDIC, so our aim is really to include some rich information on there. And for some, that might be all that we need to do.
And so, some of it might be an introduction to someone in Defence to help foster that relationship, but in other cases we actually dive into the details of that business. What does it mean to be globally competitive and how do we actually help that? So, we've got a range of tools and diagnostics that we can facilitate that type of outcome?
In other cases, take a startup business, it might be that we actually just work with them over time, being a mentor and a sounding board as they develop their technologies and that relationship will grow over a period of time. So, we really just work ... It's absolutely relationship based, but at the end of the day, it's fine to be friends and I describe defence industry as a community and it's a wonderful community, but the CDIC does need to actually deliver outcomes over time in terms of defence capability and industry outcomes.
Phil Tarrant: I think the intent is good and we've been very vocal in supporting the CDIC as it grows and finds its feet, and it is finding its feet. Would you say what the CDIC set out to achieve? And we're not too far down the path, so I don't want to be hard on you guys, but do you think you're getting some winds? Are you happy with where you are today?
Andrew Garth: You know, what ... Happy and spectacularly happy in some regards. I think the concept of the CDIC being one front door for defence industry to come to to provide that range of services is really striking a cord. I mean, businesses don't need to be an expert anymore on all of the different elements of defence to know where all of the opportunities are, and I think we're doing that bit in spades. We're answering the phone, we're connecting people together. What I am conscious of, though, is that what we were really set up to do was actually dive into that detail and actually drive that competitiveness and drive those outcomes.
And at the moment, while we're answering the phones and we're good friends with everyone, we're not actually getting enough time to actually embed in the businesses. That will absolutely come with time and I guess partially what we're grappling with our board and with Defence is how we actually bring scale now to the CDIC, so that we've got the resources to dive in where we need to. And that will work.
The other thing I would say is that, and a big thank you to Australian industry out there and in some ways, some of the formation of the CDIC in terms of that close partnership with industry during the policy development is paying off because we're open and honest with our industry connections and so, I think there's a degree of patience while we actually ramp up. I mean, at the end of the day, we're all in it together. CDIC needs to ramp up in just the same way that our industry base does. And while we take that approach, I think we're given a little bit of latitude to grow as we need to.
Phil Tarrant: And I think that's fine. I think the industry's giving plenty of latitude. You've had some wins along the way. What would you say is the one or two things that you're really happy about or proud about delivering to industry thus far?
Andrew Garth: I think so far, the elements I'm particularly proud of is that feedback we're getting about being connected. It's examples like DSEI, where you actually started to see how all of these elements are actually coming together to benefit industry. You're actually being able to stand there in partnership with a business and be able to explain to a foreign business, who's interested in working with that Australian company, how the government is there in partnership with our industry to help them grow. And that really struck a chord and in fact, after the event, I've been flooded with requests from businesses in the UK in terms of how we can match Australian industry into their needs. Of course, they're pitching for Australian work, but that's part and parcel of the policy which, in and around AIC.
So, I am really proud that that's coming together. Of course, the other element that I'm really proud of, too, from our perspective has got to be my team. The team has been formed from new recruits that we've brought in from the private sector, but also some of the teams that were in some of those legacy programs, who previously delivered the global supply chain initiatives and things like that. So, in many respects, we've brought together a range of disparate cultures and staff, now under a new structure. And I think the one thing that connects us all together is the passion, the passion for industry and the outcomes that we're trying to achieve. And to that extent, I'm really proud of the way that they've all grouped together, despite the immense, I guess, demand that we've got on our services. And I think industry actually sees that and responds, because they're ultimately trying to achieve the same thing.
Phil Tarrant: So, sort of snap poll, would you say that the businesses, SMEs or businesses that operate within the defence industry, are aware of the CDIC? Do you think you guys have had coverage saturation, so people understand there is a body like this that exists? They might not know what you do, but that you do exist? Would you say you've done that well?
Andrew Garth: So, I think we've done that well, and of course, well supported by Ministers Pine and Payne and Senator Sinodinos. They're promoting us all of the time. And I think, going back to that one front door concept, the fact that they don't really need to know what they do, they just need to know that if they need help as we grow, they can actually come to us and I think that message is absolutely working. I think what we need to focus on is the nuancing of that over time, so businesses realise just the extent of the support that we can provide and how that can actually help them win both domestic and export work, and that's obviously an area that will mature as our messaging matures over time.
Phil Tarrant: And, do you get phone calls, people call up and go, "Look, I just thought I'd give you a call. I don't know how you could help me, but this who we do, this is who we are, this is what we do, what can you do for us?" Do you get those sort of chats or is it all quite deliberate and formal in the way that people engage you?
Andrew Garth: No, it's almost the opposite of formal and in some respects, that's part of one of our challenges that we've actually got, is that the team's out and about, whether it's the Naval shipbuilding road shows we've been on, the SEA 1000 road show, participating with LAND 400 or various JSF collaborations around the country. So, we're out and about, we're seen and people connect with us. And so, we actually in many respects are starting to provide services.
You take Pacific next week, for example. We'll have a large number of our team there, because we use it as a springboard for connecting Australian industry together, connecting the SMEs to the opportunities that might be in the primes and vice versa. So, it's actually the informal service delivery that's actually part of our challenge, because on top of that then you do get the people who dutifully jump onto the website and fill in an application form, but that's probably not the majority of where our support is actually going at the moment. So, it's a double edged sword because it's hard to actually capture those informal engagements, despite the value that they're offering.
Phil Tarrant: And when your board meets in a year's time or whenever it gets together or the powers that be within industry, how are they working out whether or not you guys are going a good job? Whether it's working? What's those benchmarks that you can peg the work you're doing against outcomes or tangible outcomes?
Andrew Garth: Yeah, I mean, that's a really good question. Because it is a really complicated initiative in terms of the different elements we're trying to pull together. And the other thing is that the CDIC, in many respects, can only influence one part of it. We don't have the chequebooks, we can't directly influence the primes, so we can work through influence but not authority. So, what does success look like? Well, the objectives that we're trying to actually measure. Has Australian industry achieved better outcomes? Has ... And, by way of industry growth and competitiveness, have we actually helped Australian industry deliver to defence capability and has that relationship improved in a sustainable fashion?
So, what the board's grappling with at the moment is, which aspects do we measure? And if we're actually measuring stuff, making sure that that's not through just another survey to industry. So, how do we make sure that through the advisory services and other elements that we're delivering that we're capturing the right information, subtly, so it's not a burden on industry but does enable us to actually measure our success in the longer term.
Phil Tarrant: What worries you the most in your role? So, your tasked with growing the CDIC and working with a talented body of advisor ... and I must admit, whenever I go to an industry event, I always run into someone from the CDIC, so you're on the ground, which is good. But what is it that really worries you when you sit there, giving yourself a hard time going, "Are we doing this well? Am I doing this well?" What is it that worries you the most?
Andrew Garth: I guess it is that longer-term element. And per what I was saying before, it's fine to be out there and meeting people, which is great and being that person to actually call, but unless we translate that into actual outcomes, then in some ways, people will look back in a couple of years time and say, "You know, they were a friendly bunch of guys and gals but they haven't actually done much for me." And so, that's the risk. We need to actually now transition those relationships into outcomes.
The other one that we're working closely with, with the board is how we ensure that we're actually relevant to Defence. So, for instance, the Defence major projects. I mean, when you look at the scale of investment that Defence is putting in through acquisition and sustainment and then you look at our workforce, which is circa 40 odd people distributed nationally, including all administration, everything else, it's actually a relatively small team, given the challenge that we've got. So, partially what we're trying to do is work with each of those Defence major projects to tailor and expand our service offering to meet their needs.
And for instance, we're working with SEA 1000, SEA 5000 and Joint Strike Fighter at the moment to actually create statements of work to sort of say, "Well, let's build on what we've got in the CDIC." But then fund some additional resources to actually tailor our services to meet their needs. So, that's how we're trying to address one of our challenges.
Phil Tarrant: And how accommodating have the primes been? Have they embraced you guys, or is it just really, it's a relationship that works?
Andrew Garth: There's two elements that have been a real pleasant surprise, and I'll start with the primes, given that's the question you asked. Yes, they have embraced us, and in some ways, who's the direct beneficiary of the CDIC services? Well, our primary interface is with the SMEs, but having said that, ultimately by making the SMEs more productive, it actually means that the primes on their supply chain become more productive, and then when they ... In terms of bidding and then delivering against an AIC plan, we're all working together in unison. So, part of what we're doing is building that relationship with the primes, so that when we're actually helping the SMEs develop, it's in areas that the primes actually value. And so, that relationship with the primes is actually exceptionally good and I've been really pleasantly surprised by the level of engagement.
The other one that I would love to talk about is just the engagement from within Defence, what we've actually seen, and it probably caught us out, actually, is just a massively proactive engagement from Defence, both from a capability manager and a project manager perspective, saying, "Actually, why would I want to be an expert on industry and engagement across the country? Why don't I leverage what the CDIC's got and actually build on that?" And that's been another area that's been brilliant to work with.
Phil Tarrant: Yeah, it's good. And what would you say the biggest gripe ... So, you travel around Australia, dealing and working with SMEs who are either looking to boost their export potential or secure more domestic work. What's the biggest gripes, working with defence or working within defence at the moment? Is it the same old stuff or has it changed over the years?
Andrew Garth: I think it's changed. I think probably the biggest gripe at the moment is there's been a lot of promotion around, obviously, the billions of dollars worth of opportunity, but then not actually understanding, particularly for the newcomers to the defence landscape, not actually understanding how and when those opportunities will present themselves to an SME. And so, that's a lot of the work that the CDIC does, is that translation between defence opportunity, needs of the primes, expectation of the SME and actually trying to match those together.
And in some respects, our answer to ... Might be an SME with a brilliant technology is actually, "You know what? Don't pursue defence for the next two or three years. Pursue it strategically, because realistically, SEA1000 in five years' time, this will be your time to shine. But in the mean time, let's help you find an adjacent market." And that's where we can work, then with the broader Department of Industry programs and things like the growth centres initiatives to help find those adjacent markets, to tide the business over while we then work on the strategy to pursue that longer-term defence outcome.
Phil Tarrant: Do you feel that because of the level of investment going into defence of the next decade, and it's a significant investment, some major programs coming online. Obviously, a lot of business who aren't traditional defence industry businesses are looking at the defence industry as a place to generate new revenue streams or diversify, whatever they want to ... They want to capture a bit of this. Do you think there's too many business now looking to get into defence?
Andrew Garth: No, I don't think there's too many businesses. I actually think that's part and parcel of the whole background to the Defence Industry Policy Statement and what we're all trying to do. I mean, at the end of the day, I think what we're trying to say these days is this is Australian industry supporting the needs of defence, as opposed to the narrow view that was actually taken in the past. The challenge is for a lot of players that are coming in from other areas. Take automotive transition. There's a lot of great businesses out there, a lot of them have, historically, worked in high volume, low variability markets, and then they're faced with the opposite challenge, which is the lower volume and high variability.
Or you take the oil and gas sector and energy, who have had different business drivers and they're trying to tackle defence. In many respects, from a defence perspective, if we can harness this, this is great. Because we not only bring scale and capacity to industry, but we bring alternate ways of thinking and driving business. But it is, and this is where the demand in the CDIC comes from, actually joining these bits of the puzzle and meeting and translating those expectations is that real challenge.
Phil Tarrant: Yeah. So, the CDIC today and the CDIC in a year's time or two year's time, how's it going to look?
Andrew Garth: So, it would be bigger.
Phil Tarrant: Yep. People?
Andrew Garth: People-wise. I think the other thing we need to do is actually, in some ways, I'd describe the CDIC, despite being part of the Department of Industry at the moment, in many respects we're almost like an SME startup that's been spun out of a corporate entity, whether it was a university or something like that. So, part of our challenge at the moment is actually trying to find the right balance between investing in our internal processes to do some capturing the knowledge of industrial capability and streamline the way that we provide our services, versus being out and about and engaging with industry.
So, in a year's time, I guess the full operational capability of CDIC, we'd be actually looking at really having a more rigorous process of engagement and actually working businesses through and making sure that we can measure the outcomes of the business so that they're improving their defence business maturity over time as well as the technical capabilities that they're delivering to defence.
Phil Tarrant: Yeah. And you touched on it really quickly, you spoke about the cultural shift of centralising a number of different activities that have been taking place over the numerous decades and some of those people into the CDIC and how that's evolved its own culture. The culture of defence industry has changed rapidly as well, over the last decade, driven by and large with leadership coming out of the defence white paper and an ambitious plan for equipping us for the future in terms of defence capabilities. Do you think that defence industry is navigating this cultural shift well? Do you think people are embracing change or is there still a lot of naysayers out there saying, "Let's just keep doing what we've been doing?"
Andrew Garth: Defence industry or Defence?
Phil Tarrant: Defence industry, Defence ...
Andrew Garth: It is interesting. I do genuinely think that the change is coming. I think there's a few really important elements that have come together at once. I think the actually defence industry policy, I believe that despite some of our implementation challenges and scale and stuff, I think it's got all of the key elements right, which is fantastic. But I think that is also matched with that enthusiasm which is coming for government, whether it's Ministers Pyne or Payne, or, I had the opportunity to brief the back-bench committee a few weeks ago, and just the level of engagement and enthusiasm, I think, combined with the policy, actually means that we're seeing an environment created that is actually driving positivity across government and across industry. So, a lot of the naysayers are starting to go ... They're actually testing their own logic and just, "Actually, no, I'm not seeing some of the things of the past. I am seeing some improvement."
The other thing, and I was reflecting, obviously, prior to coming along today on the cultural shift in defence. And apart from the policy, I think the other thing that's been really pleasantly surprising for me is that we've actually seen the defence capability managers having seen Australian industry capabilities in action, and whether that's, over the last decade or so, whether that's Bushmaster tried and tested in the field, whether that is Project Red Wing with the counter-IED devices or just the diverse array of Australian capability that's entered into supply chains, we've seen our war fighters literally protected, sometimes literally standing in front of or behind Australian industry capabilities. And I think that has also brought confidence from Defence to actually say, "You know what? I am Australian, I'm proud to actually engage with Australian industry."
So, all of the elements have come together. So, I genuinely think, I know it's a bit cliché, but we are seeing that once in a generation opportunity to drive a change and actually leave a lasting legacy.
Phil Tarrant: And you think with the right people helping to drive it, so guys like yourself and your peer group, it is a chance for a generational change. We can really shape the way in which defence and defence industry evolves into the decades ahead.
Are we getting the best people into defence industry, do you think, at the moment?
Andrew Garth: Yeah, we are, and I guess this is a really important focus for government in general. I think obviously there's been a significant recruiting drive over the years into defence and I think there's a lot of the individuals coming through Defence ranks at the moment, I think are really supportive and obviously we covered that. From defence industry's perspective, it hasn't seen that growth in some respects over the last decade or so while there hasn't been that cash flow through the industry. And so, in some respects, there's a degree of needing to build on that and if you're looking at things like Future Submarine, the CEOs of some of these businesses that will be delivering capability on the final ships aren't even in school yet.
And so, the other agenda that I know Minister Pine is keen to see us actually prosecute is what does the STEM and skills needs and how do we develop that over time to actually develop those future leaders for industry. So, I guess, sort of, "Watch this space," in terms of some of those new policy developments coming down the line.
Phil Tarrant: It's good, Andrew. I've enjoyed chatting, mate. It's come through pretty loud and clear that the CDIC is open for business, get in touch with you guys. Is that the message?
Andrew Garth: Absolutely. We are definitely open for business. Make sure you check out that website, business.gov.au/CDIC. Engage with our advisory team. Yes, we are busy at the moment but in some respects, the outcomes that businesses will get from our support are only limited by the amount of effort that the business puts in engaging with us and so, hassle us, get the most out of my advisory team, make sure you keep them extremely busy and I'm looking forward to seeing where this goes over time.
Phil Tarrant: Yeah, it's good. So, you heard it. Get in touch and hassle them and make sure you extract whatever you can out of these guys, because they're out there to, CDIC is out there to support Australian industry, particularly our SME structure. So, keep up the good work, Andrew.
Andrew Garth: Awesome. Thank you for the opportunity.