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Join Michael Lenton and Defence Connect Podcast host Phillip Tarrant as they discuss the integration of a number of established defence and aerospace businesses (such as Finmeccanica and Selex ES) under the new Leonardo brand – and what that means for the company moving forward, including ambitious growth plans in the Australian market across a number of key competitive sectors.
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[music] Welcome to the Defence Connect podcast, with your host, Phil Tarrant.
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Phil Tarrant: |
Good evening, everyone. It's Phil Tarrant here, I'm the host of the Defence Connect podcast. Thanks for tuning in. Joined today, recording together with Avalon 27E, with Michael Lenton, who's the Executive Chairman of Selex ES Australia, which is part of the family of companies that fit within Leonardo. How are you going, Michael?
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Michael Lenton: |
Well, thanks, Phil. Good to talk to you, mate.
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Phil Tarrant: |
How's the second day of Avalon? I was there yesterday. It's a bit warm down here, but other than that, there's good business done?
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Michael Lenton: |
They promise it'll be cooler today, so looking forward to that. Yesterday was good despite the heat. We had some interesting meetings. We had some politicians come past. We had lots of people from the customer community, that is the Commonwealth, the Defence Department and also from industry. There were some good moves forward in the dialogue, and just raising our visibility also, here in Australia, which is one of our objectives.
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Phil Tarrant: |
That's good. There's a number of ways we could take this chat today, and we've only got a little bit of time. What I thought we could do was perhaps, and I'm still trying to frame this myself, but we could chat about your naval projects. We chatted about your rudder wing type projects that you're doing, but just give me a bit of an insight behind Leonardo. This is a relatively new name for this trading market place, which is an amalgamation of a lot of historic businesses here. Can you just run me through that?
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Michael Lenton: |
Leonardo is not a new company to the defence and aerospace sector, but what it is is a new name for a very well-established aerospace defence and security company. It was called Finmeccanica, up till recently. The name Leonardo actually reflects the concept of One Company, that is, doing away with some very strong brands that we've had in the past and that have made up Finmeccanica. When you do away with strong brands like Alenia, Agusta, Westland, Macchi, Marconi, Ferranti, all names that particularly the older guys in this industry were familiar with, replacing that with a new name means you've gotta use a similarly evocative, strong, creative brand. I think the name Leonardo, obviously referring to Leonardo da Vinci, actually does that and ticks that box.
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Phil Tarrant: |
How are you going down a path of communicating this name change to the Australian market? Do you think everyone understands who Leonardo is now and the business it traditionally represents, or is there still some way to go to make sure that everyone knows the Leonardo name?
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Michael Lenton: |
There's still a way to go. We were just talking about it earlier. We've got a sign on the side of our building in Port Melbourne, which is our headquarters here in Australia. That's a big Selex ES sign, and below it says, ‘A Finmeccanica company.’ We'll be doing away with that sign very shortly and put up a Leonardo sign with an idea of what we're inspired by, and that is Leonardo's creativity. Da Vinci's ability to think forward, to be innovative, to think of solutions ahead of his time. In fact, the motto for Leonardo now is ‘Ingenuity at Your Service.’ The idea of originality of thought, creativity and service to the customer, they're the drivers for us in this new reality and this new image.
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Phil Tarrant: |
Last time we caught up was on the back of an Italian frigate in Sydney Harbour, after the signing of a couple of MOUs with AIDN and AIG, I think it was. We had a good chat there. You're obviously looking at the frigate programme and ways that you guys might be able to get involved, but could you just give me a bit of a background on the scope of the work that you're currently engaged in Australia, and what you're looking to do into the years ahead? I imagine you're looking to chase a lot of work, you're looking to really enhance your involvement in the Australian defence industry?
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Michael Lenton: |
Let me give you a short idea of where we stand here in Australia. At the moment, Leonardo has been supplying aerospace, defence and security equipment into Australia since the '60s, so it's 50 years now. We started out supplying in the early '60s, the Macchi 326 jet trainer. We actually assembled 79 of them here in Australia, so it can be done, assembling an aircraft can actually be done in Australia. At the moment, we're supporting about one and half billion dollars worth of equipment installed already in Australia. Things like air traffic control radars, over 100 helicopters, naval guns of our own design and manufacture, the MU90 torpedoes that Australia has in its inventory, person role, radios for the Army, communication systems for civil and military activities and counter ID equipment, which is saving lives in the operations that Australia's in overseas.
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We have a really well-established installed base here in Australia, so our objective right at the moment is to support that equipment, and also expand our business here by investing and working in new areas. The naval initiatives in Australia, with the continuous naval shipbuilding strategy, is a great opportunity, because we have a very strong land and naval capability in Leonardo. We've been going after opportunities in that sector, and in fact we have won the SEA1442 programme, that's the communications upgrade programme for the Anzac frigates. That's really given us a push to establish ourselves even more here in Australia in our own right. Hence, we've got a full support and delivery operation for that contract.
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Phil Tarrant: |
Looking forward into the decade ahead, we speak often about the D efenceWhite Paper, everyone's very familiar about it. 195 billion bucks have been invested in defence spending moving forward. Leonardo, in a way a conglomerate of a lot of businesses with a lot of different capabilities, are you set and ready to go now? Are you bulked up to a position where you're gonna chase this work, chase these projects and you can move really quickly to capitalise on them?
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Michael Lenton: |
We've been bidding into all the opportunities that have presented themselves to us. The SEA1664 and particularly, SEA1180, which is currently being responded to by the down-selected ship designers. We've contributed to that in terms of a bid and, obviously, we're positioning ourselves for SEA5000. SEA5000 represents for us, as does 1180, a natural development of the capabilities that we have in Australia, particularly the communications capability, which is now established under the SEA1442 programme. We have test and evaluation and fit out and development laboratories already working here in Australia for all the SEA1442 programmes, so that makes moving into other programmes so much easier, and it makes use of the investment that the Commonwealth has already made in the SEA1442 programme. We're going after that business.
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We're also going after the situational awareness capabilities that the Navy will require for these new programmes, because we manufacture our own electro-optical sensors, weapons, control systems, combat management systems, and so on. We've put those capabilities forward. We also manufacture naval weaponry, so naval guns, as I mentioned before, torpedoes, and our share in [inaudible 00:07:50] means that we're also offering missile capabilities to Australia, as well. So it's a whole variety of...
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Phil Tarrant: |
There's no shortage of...
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Michael Lenton: |
There's no shortage. There are seven divisions within Leonardo, and it spans from the manufacture of the Typhoon fighter jet, training jets and then, of course, the helicopter division, which is very much present in Australia through Leonardo Helicopters Australia.
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Phil Tarrant: |
For someone with a strong pedigree in defence and leadership roles with yourself, what is it about defence today compared to defence in the past that really gets you excited?
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Michael Lenton: |
The complexity of the solutions. What we're finding is that having a strong background in sensor manufacture and design, such as radars, electro-optical systems and electronic warfare and so on, we're generating so much data that needs to be processed and turned into what I define as information useful for decision-making. For me, that's the definition of intelligence, "What do I do with the information?" It has to be usable. Transforming that raw data into intelligence is the real challenge. I think it reaches its apex when you look at a fighting vessel like the Italian FREMM, which is the future European multi-mission frigate that just visited Australia. It left last Saturday to continue its world presentation tour. When you see a vessel like that, that combines the challenge to have an awareness of what's going on in the airspace around it, on the surface of the sea and underwater, then to take that data, decide where the threats are, identify the threats, decide what to do to counter those threats and, if necessary, engage with those threats with effectors, that for me is one of the most complex challenges given to mankind, honestly.
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Phil Tarrant: |
The mind boggles.
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Michael Lenton: |
Yeah, it does. The idea of producing a combat management system that is able to handle all that data effectively and survive a serious engagement is a true challenge, and that's what we do every day. We develop more and more this capability to integrate all that data into, in the case of the FREMM vessel, a combat management system on board. We do the same thing on board aircraft. The Typhoon is the most advanced European fighter jet, in fact, one the world's most advance fighter jets, and that integrates sensors that we build with a combat management system, a weapons management system, that we design and provide through avionics and other equipment on board the aircraft. For me, that's the real difference between decision-making in the past and decision-making today, so much more data. How do I turn that into intelligence? How do I make smart decisions on the spur of the moment that will actually be life-saving or determining for the survival.
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Phil Tarrant: |
It's an interesting world that we live in today. The complexity of data, and synthesising data and utilising that data, it's a challenge and opportunity for everyone in defence to get that right. We're running out of time, Michael, and we'll get you back on the show, because I want to go into depth on some of the work you're doing in the naval and also air stuff. Just to finish, I was just thinking about this as I was chatting, you've got Leonardo, which is a passionate Italian business full of passionate Italian people, then you have Leonardo in Australia, and Australians being Australians. Culturally, how has the Italian heritage and the Italian energy with the Australian culture, how is that meshing? Because I spent some time on the Italian frigate, and I love the passion of the Italian people and the simplicity with their relationships and the way they just get about doing stuff. How are you finding all that?
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Michael Lenton: |
I was just reading recently about Goethe's visits to Italy from Germany, and also Friedrich Nietzsche's visits to Italy. It has to do with a combination of north and south. Northern European, balanced, rational approach to life, which maybe comes from the bad weather, I don't know, when that mixes with the southern, more spirited kind of view of life, can generate some really interesting and creative results. One question though, which is a really interesting question, is, "Are we fitted for the age that we live in, as individuals, in our humanity?" We probably are. We're probably the result of this century and the age we're in. Leonardo was clearly not. He was fitted for centuries way ahead of it.
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I think that's what we take, as a company, as an inspiration. To deal with minds and try and encourage our own people to be inspired by people like Leonardo, who had this incredible vision, the courage to think totally laterally, the inspiration to do so. To transform that into equipment for our own tranquillity of life, because at the end of the day, we're talking about the good life. We're all after the good life and ultimately, security is part of that good life and that aspiration.
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Phil Tarrant: |
That's good. Michael, I've really enjoyed the chat. Keep in touch. We'll get you back on the show, and we'll go into depth, as we said. Thanks for coming along. Enjoy the rest of Avalon. To all our listeners tuning in, check out the guys -- what's your website, Michael? It's just leonardo.com, isn't it?
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Michael Lenton: |
Leonardocompany.com.au.
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Phil Tarrant: |
So you can have a look at the sort of work that you guys are doing, and for SMEs. We didn't even touch on how they get involved in your supply chain, all that sort of stuff.
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Michael Lenton: |
Absolutely, very interested in establishing and staying in touch with SMEs. We work with 150 suppliers here in Australia, just on the SEA1442 programme, then there's all the helicopter activity that we do here in Australia that has another range of suppliers that it works with locally. And then access to our global supply chain, where we've got really good stories to tell about how we're involving Australian SMEs in our activities in production manufacturing and design overseas.
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Phil Tarrant: |
That's a chat we need to have, so we'll do that. Thanks very much for tuning in. Michael, we'll see you next time. Remember to check out defence.com.au. You can follow us on all the social stuff, Facebook, Twitter, LinkedIn. Any questions for the team here, or even Michael, we can pass it on, contact
Listen to previous episodes of the Defence Connect podcast: Episode 434: SPOTLIGHT: Mission engineering – a missing piece of the capability puzzle, with Downer’s Rachel Hatton and Nathan Rickard
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