At a conference in Canberra, Phillips stressed that the industry needs to commit to education, research and development to create and secure talent within the industry.
"With the pipeline of work ahead of us, it is becoming increasingly obvious that we must continue to invest in the skills and education needed to deliver on the Defence plans in front of us," Phillips said.
"To achieve this, I believe there are two key responsibilities that industry must commit to.
"The first is to ensure our work and collaboration with academia is such that we are able to attract and develop talent into defence careers."
Collaboration with academic institutions is something BAE Systems has done to achieve this.
"Companies like BAE Systems are doing this today. We recently launched our Joint Open Innovation Network, a collaboration with universities where we are aligning talent and research and development to meet Defence’s strategic needs," said Phillips.
"Bringing industry and academia together to engage on current and future defence challenges, and allowing the incubation of new technology innovations and ideas – must be part of the solution."
Changing the thinking within the manufacturing industry is also something that must be done if Australia hopes to remain competitive in a market dominated by low-cost foreign manufacturers.
"The challenge with low-cost manufacturing from foreign producers is shining a limelight on our manufacturing industry. Our success in manufacturing must come from doing things smarter," said Phillips.
"We must continue to grow our experience and ability to deliver advanced manufacturing.
"We want Australia to be known as having leading-edge technical knowledge and expertise, and a reputation of creating products, systems, platforms and technologies that deliver economic growth domestically, and careers for our people.
"For Australia to develop and maintain a technologically advanced and agile defence industry, it must be populated by people with advanced education, training and experience. Having the right levels of training and skills in Australia’s defence industry is essential for the efficient delivery and sustainment of increasingly complex defence capability."