Defence has entered into negotiations with Australian Munitions, a subsidiary of Thales Australia, over continued management and operation of its factories in Benalla and Mulwala.
Negotiations with Thales are ongoing, but the government has said it will implement a new strategic arrangement for the management and operation of the factories, with the aim of improving price competitiveness and increasing exports of Australian-manufactured ammunition and explosive products.
Defence Industry Minister Christopher Pyne said the long-term, performance-based arrangement will provide a greater degree of certainty for Thales as the principal tenant and operator of the facilities and will enable seamless transition from the current contract when it expires in mid-2020.
The future arrangement will also see underutilised areas of the facilities sub-leased as additional precincts to other munitions companies, either where Defence identifies a requirement for a particular product, or where a commercial or export opportunity exists.
"Drawing on the depth of engineering and manufacturing skills resident in these factories, the decision to commence negotiations with Thales builds on the well-established relationship between Thales and Defence," Minister Pyne said.
Minister Pyne said Defence-owned munitions factories are important for the Australian Defence Force and this announcement offers certainty for the Benalla and Mulwalla workers.
"With both facilities employing over 640 highly-skilled workers, this announcement provides certainty for workers that both factories will remain open for the long term," Minister Pyne said.
"Under the existing contract, employment across the Benalla and Mulwala sites has increased by over 80 employees in 2017, generating vital job opportunities in regional Victoria and New South Wales."
The Mulwala factory is 1,030 hectares and is the only remaining manufacturing site for propellants and high explosives in Australia.
— Chris Jenkins (@ChrisJenkins_TA) February 6, 2018
Great news @cpyne for regional jobs and our fantastic people at Benalla & Mulwala. We (@ThalesAustralia) will build on our long term investment in R&D, manufacturing & export of Australian products to maintain a key sovereign capability for Defence #AustralianMade #YourADF https://t.co/au96ftnkj7