Rheinmetall Defence Australia has made headlines recently as the industry awaits the announcement of the successful LAND 400 Phase 2 competitor.
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
As one of the two contenders for the coveted contract to build 225 new combat reconnaissance vehicles (CRVs) for the Australian Army, Rheinmetall has made a commitment to not only build significant industrial capability in Queensland to manufacturer the vehicles, it has also shored up its supply chain across Australia, leveraging numerous SMEs and other organisations to deliver material, technology and manpower assets for the project.
However, Rheinmetall Australia is much more than just the looming LAND 400 Phase 2 program, managing director Gary Stewart tells Defence Connect Podcast host Phillip Tarrant.
Tune into the podcast and uncover the breadth of Rheinmetall’s Australian operations and objectives, it’s focus on building sovereign industrial capabilities related to military vehicle manufacture in Australia, why the company believes its Boxer CRV is the right choice for LAND 400 Phase 2, plus other key programs it’s involved in across defence.
Enjoy the podcast,
The Defence Connect team.
Listen to previous episodes of the Defence Connect podcast:
Episode 412: PODCAST: Unpacking the concept of the ‘Balanced Fleet’, with Jennifer Parker, ANU National Security College
Episode 411: PODCAST: Digital defence infrastructure, with former US Special Operations Command director of networks and services, Colonel (ret’d) Joseph M Pishock
Episode 410: SPOTLIGHT: Securing leading talent in the defence industry, with Shelley Willsmore and Miranda Van Hooff
Episode 409: PODCAST: Government commitment to defence based on considered, direct action, with Meryl Swanson MP
Episode 408: PODCAST: Improving ICT Hardware Sustainment essential to the future of Defence and National Security by Nick Asscher and Bill Freeman, Touchpoint
Episode 407: PODCAST: Opposition Defence team scathing of government’s commitment to Defence and defence industry
Episode 406: PODCAST: The lead up to Indo Pacific 2023
Episode 405: PODCAST: Military aircraft news around the world, with the Australian Aviation editor Adam Thorn
Episode 404: PODCAST: The lingering impact of Defence of Australia in our defence policy, with the Hon Kim Beazley AC
Episode 403: PODCAST: Facilitating defence industry innovation, with Professor Emily Hilder
Phil Tarrant: Well good day everyone, it's Phil Tarrant here, I'm the host of the Defence Connect Podcast. Thanks for joining us today. If you tuned in a couple of weeks ago, I had a really good conversation with Brian Gathright, who's heading up BAE Systems Australia's bid for the combat reconnaissance vehicles under LAND 400 Phase 2 and at that point in time, we thought that decision on who the successful contender would be was a matter of a week away, but here we are two weeks later and that decision has yet to be made. There's a lot of scuttlebutt around the industry, why that decision hasn't been handed down yet by government. But I wanted to use this gap before that decision is made to bring in the other contender of LAND 400 Phase 2, Rheinmetall, who have put together the Boxer CRV as a solution for the Australian government. 225 new CRVs, which should get into service or delivery of in 2020. Joining me in the studio today is Gary Stewart, he's the managing director of Rheinmetall Defence Australia. Gary, how're you going?
Gary Stewart: Great Phil, thanks for having me here.
Phil Tarrant: So, did you tune into the podcast with your competitor, BAE?
Gary Stewart: I did, I was in Germany at the time, so it was a nice way to spend an afternoon.
Phil Tarrant: That's very good. I enjoyed the chat with those guys and they've put together, obviously, their solution and we had a really good conversation around it, but I thought it would be handy to bring you in to chat about LAND 400 Phase 2 and I'll ask you when you think the decision's going to happen and I'm sure it'll be a non-committal response, but outside of LAND 400 Phase 2, I just really wanted to touch on Phase 3, what your views are on that and how you guys are going to approach that particular tender?
But also, I wanted to get greater understanding around your activities within Australia. I think a lot of people just associate you with the LAND 400 Phase 2 bid, that you're only tanks and trucks, but I know Rheinmetall is a lot bigger and it's been around a long time. So, I just wanted to drill down a little bit and understand a little bit more about what you're doing in Australia and where you see your future lies. If that covers off a number of different things.
Gary Stewart: It does, absolutely.
Phil Tarrant: Nice one. Just to kick off, I guess, when's the decision going to be made? Is it going to happen in ... We're recording this on a Tuesday and you're going to be listening to this on Thursday this week, so we've got two days. Hopefully it doesn't happen in the interim, because a lot of what we say might be redundant, but when's it going to happen?
Gary Stewart: Look, we hear any time from next week to month. Government has said any time in the first half of the year. We're in that zone. So.
Phil Tarrant: So no one knows.
Gary Stewart: We wait with bated breath.
Phil Tarrant: So, we're talking about a couple of hundred CRVs and I've been thinking about this in the context of how big that is. So, that's significant for Australia, the Australian Army. Its capabilities for decades for our soldiers. But in the context of Rheinmetall corporate, is that a big deal or is that ... Where does fit within the frame of things? Just give us some context.
Gary Stewart: So, LAND 400 Phase 2, from an Australian context, is a large program for the Australian army. It will be its largest program that it's undertaken. It's replacing the Australian Light Armoured Vehicle, another capability I'm intimately familiar with, and that was ... ASLAV was originally 257 vehicles, been replaced with 225 much more capable and potent combat reconnaissance vehicles, so, it's really uplifting the capability that the Australian army has been using for the last 20, 30 years. But in the context of Rheinmetall, LAND 400 Phase 2 is a major program.
It's one of the major capability programs that Rheinmetall has undertaken outside of Europe and it's seen as a real change within our business globally, because it's one of the programs which actually connects all of our technology divisions together and we're able to bring together a, pretty much, a Rheinmetall complete solution, both in terms of the vehicle and in the training and simulation and support space and Australia is actually at the front of the pack in terms of now looking to have both their military vehicle capability or major platform and also set up the associated support and training solution at the same time.
Typically, you get the vehicles first or the platforms first and then introduce the support and training at a later time and we see that this is a real way of being able to extract some real benefits from investing in setting up those capabilities from the start.
Phil Tarrant: And was there anything that worried Rheinmetall corporate in Germany about coming out to Australia and operating here? It's a long way from home. There's a big infrastructure process that needs to be underway in order to deliver these vehicles should you be successful. What's that for you like? Has the world got a lot smaller to you now and it doesn't really matter too much or where is the challenge?
Gary Stewart: Well, I guess it's a bit of both. Australia is a long way away. It's a long way away from everywhere. I previously worked with General Dynamics Land Systems, so large American defence prime in the combat vehicle space and Australia was equally a long way from North America. It is equally far from Europe. But with current shipping and all of the collaborative technologies that we've now got, the world is actually a smaller place and collaboration now becomes really, really important in how we execute these programs and we can use that time zone difference to really plus up the amount of capability that we can deliver within a time frame. We've also benefited from currently delivering Land 121 Phase 3 bravo, so we're building those trucks in Vienna, in Austria, shipping them to Australia and finishing them in southeast Queensland, in Wacol, with our partner Penske. And so, we've got the benefit of having the current experience and learning how to work across those time zones and across those distances to deliver complex Australian programs.
Phil Tarrant: So, if you are successful with LAND 400 Phase 2, the vehicles will be built here in Australia in Queensland, by Australian workers, that's ...
Gary Stewart: So, yes. We, with the qualifier that the initial 25 vehicles will be built in Europe.
Phil Tarrant: Okay.
Gary Stewart: And we're doing that A because we don't have a factory here yet, we have to build it, but secondly, it's an instrumental part of our technology transfer program. So, one of the key capability benefits to army and one of the key industrial benefits to the Australian economy is that we set up an enduring industrial capability in Australia that can not only manufacture this equipment, but also design and improve it over life. So, what we do is we'll do the first two variants, finish their designs in Germany, but we'll actually have Australian engineers, logisticians, manufacturing staff and procurement staff embedded in the German teams. So, they learn the product, they learn the technology, they learn how to build it, how to buy it, how to test it and then they come back.
And whilst that's happening, we're building and commissioning the Military Vehicle Centre of Excellence, we're bringing on and qualifying the Australian industrial network that will supply the material into that manufacturing and we'll transfer the tools and systems. So, at the end of the first couple of years, you'll see all of the vehicles then being manufactured and tested and delivered from the Military Vehicle Centre of Excellence in Brisbane.
Phil Tarrant: And what's the ... There's a lot of stereotypes that go back about the Germans and I probably won't go there, but Germans are well-regarded globally with their ability in engineering. They're very capable manufacturers. How do Germans view Australia as a manufacturing hub? Do they see us as capable of being able to keep the standards that the Germans expect around manufacturing and just their overall sentiments towards our ability, from a manufacturing standpoint.
Gary Stewart: If I wind back three years, because the answer changes over the journey that we've been on with LAND 400. So, three years ago, I would say that my German colleagues had a very traditional view of Australian industry, in that it didn't really think about it and it didn't really understand what Australian companies can do. One of the really positive developments of the government releasing its Defence Industry Policy Statement a couple of years ago, and more recently a Defence Export Policy is it encouraged and required the LAND 400 contenders to actually, actively go out and understand what Australian industry can do.
And through that process, and it took about 18 months, we brought each of our technology leaders and procurement experts from Germany, got them around Australia and we saw over 600 companies in the last two and a half years and through that process, they were actually quite amazed and so, they saw that Australia has a very competent and mature manufacturing and innovation capacity and so, we were able to not only increase the amount of Australian companies involved in our LAND 400 proposal, but also we identified some companies that we could engage immediately to start providing equipment and material into our active production lines in German. So, we've now got companies like Cablex in Victoria and Milspec in New South Wales that are delivering equipment and devices into our current Boxer and Polish tank production programs and I think that's a really good testament to my German colleagues now understanding what we can actually do here in Australia.
Phil Tarrant: And I was going to touch on the Defence Export Strategy and you've tied it up nicely for me. So, you already have some Aussies as part of the Australian supply chain exporting out back into Germany with other programs you're working on. What's the Rheinmetall sentiment in general to the Export Strategy? Obviously, you're looking to embrace it, but how do you intend to do that?
Gary Stewart: I'd like to think we've been doing it for the last three years. We started with LAND 121 Phase 3 bravo, not so much from an export perspective, but really in understanding what Australian companies can do, really around the design and manufacture of modules and shelters for the logistic truck program. But then with LAND 400, we've had ... And what we've found with, particularly with Australian engineers, project managers, logisticians, they work, we work very well within the German environment. So, if you look at our bid team for LAND 400, if you look at our delivery team for the risk mitigation activity that the Commonwealth did over the last 12 months, it was a truly connected team of Australians and Germans. So, I led our bid in 2015. In response, I had a German deputy and when we got down-selected, we flipped roles. Our chief engineer on the program is an Australian. A lot of our project management and scheduling expertise is drawn from our LAND 121 Australian colleague and bringing those lessons learned and experience of delivering a current program and feeding that in to our German planning and activities.
So, we see, then, that that opens up the understanding of what Australians can do more broadly and then that provided the pathway for Australian companies to say, "hey, we've got technologies and manufacturing and know-how and we can manufacture to the quality and consistency that Germans expect and demand." And we've seen that build momentum continuously over the last two years now.
Phil Tarrant: A lot of the conversation around sovereign capabilities, industrial sovereign capabilities, for the last number of years, has been about ship building. So, Valley of Death we talk about a lot, you obviously have Submarine and Frigate Program coming online, which is going to maintain domestic shipbuilding capabilities and sovereign capabilities. There's not a lot of emphasis placed on the sovereign capabilities that are associated with military vehicles. And I know Rheinmetall Australia has created your Centre of Excellence and I think that's been put in place on the basis that you are going to be successful for LAND 400 Phase 2. But that investment extends just beyond Phase 2, this is going to be a long-term play for Rheinmetall in Australia to try and build the capabilities of our military vehicles and creation of them in Australia. How is that going to pan out, should you not be successful? Is that investment going to remain and you're going to keep pursuing these opportunities?
Gary Stewart: We'll change our focus if we're not successful and we're still delivering Land 121 Phase 3 bravo, two and a half thousand trucks and their associated modules and shelters to the Australian army and there's a follow-on phase that is currently in definition for up to another thousand trucks. So, we're going to be in Australian for the long term. That doesn't change. There's also a broad range of other opportunities outside of military vehicles that are of interest to Rheinmetall in Australia and in New Zealand, so if you look at cyber simulation and training, air defence, maritime sub-systems, protection, there's a lot of technologies that we believe are a good fit and a good response to what the Australian Defence Force will be looking for.
So, our emphasis would change, but our entire approach to the Military Vehicle Centre of Excellence has been all about creating a long-term, enduring benefit for our military vehicle sovereign capability in Australia and that's born out of experience from a number of us personally. So, when I worked for General Dynamics Land Systems in Canada, I had the benefit of being responsible for their armoured personnel carrier program and its associated through-life support program with Canada and I had a supply chain across Canada that was feeding into a design and manufacturing centre and I saw firsthand how important it was to have that national industrial capability for military vehicles, because when Canada went to Afghanistan and started to have mounting casualties, it was only because it had a national industrial capability and the investments were made with those companies that we could, together, quickly turn around protection upgrades and system upgrades so that we could improve the protection and safety of soldiers on the battlefield and I see exactly the same situation here in Australia, now.
Having looked after the ASLAV and M1 Abrams tank fleets, again with General Dynamics, one of the things that we were never successful in doing was establishing that beachhead in Australia and having that strong, domestic ability to work with the Australian army, to help turn what they required as capability improvements and access the best and brightest of capabilities in Australia and I see establishing the Military Vehicle Centre of Excellence provides that focal point for defence, for industry and for academia, so that we can bring Australian ideas together, we can provide a focal point for Australian industry to contribute to a military vehicle industry base. And then it doesn't matter whether it's a Rheinmetall vehicle or someone else's vehicle, if we look towards LAND 400 Phase 3 or Land 907 Phase 2, the military vehicle centre of excellence is geared up in size to do all of those classes of vehicles. So, it becomes a national asset and a focal point for more than just a LAND 400 Phase 2 program. And we see that as the natural extension domestically.
But then if you look regionally, New Zealand operates the same trucks as Australia is getting now with Rheinmetall. Singapore has over 4,000 trucks and they operate the Leopard tanks that we've just upgraded for them. We've got other nations in the region that have had Leopard tank upgrades and so, all of those nations and all of that equipment is going to need upgrade and capability improvements over their life, as well. And it's much more cost effective for those nations and for Rheinmetall to do that in Australia than it is to ship things back to Germany. And so, I see that we've got this natural pivot point where we can actually create a real military vehicle industry centred around and starting with LAND 400 Phase 2.
Phil Tarrant: So, obviously, industrial sovereign capability around military vehicles is high on your radar and you're looking to achieve that via the Centre of Excellence. Is it in on anyone else's radar? Is the rest of Australian defence industry thinking this way? Or is it mainly around "It's shipbuilding, it's shipbuilding, it's shipbuilding." Where does it sit?
Gary Stewart: I think military vehicle industry has been a second cousin to a lot of the public debate and discussion in Australia and it's because it's a difficult thing. It's thousands of vehicles. It's quite fragmented and we've not had the design authority within Australia for our combat vehicles. If you look at the original Leopard tanks, if you look at the Abrams tank, ASLAV, even M113, we didn't have a domestic capability and so it was never recognised as something that could be realised and we fell into the belief, as an industry and as a defence force, that we couldn't do it. I think Thales has shown that if you've got the wherewithal and the desire with their Bushmaster and Hawkeye programs that you can, in fact, build up an industrial base and we see that you build on that and you actually create the design competence and the industrial competence to extend that in to a true Combat Fighting Vehicle and we've got all of the elements of an industrial and economic base to do that.
Phil Tarrant: And just using Thales as an example, and thanks for bringing it up, I wouldn't have drawn this parallel, but they've done ... Created the Bushmaster, great vehicle, and now the Hawkei. What would you look to borrow from their success in the Australian marketplace to apply up in Queensland with your Centre of Excellence, in terms of vehicle manufacturing?
Gary Stewart: I think it's the elements that we've started to pull together already. So, they had Bendigo was a very clear signal or focal point for those platforms and we see the Military Vehicle Centre of Excellence being the same thing for LAND 400 Phase 2, LAND 400 Phase 3 and other platforms. But they were also ... They also walked their talk about industry engagement and that's something that we've really embraced over the last three years and through that process, we've seen that it's actually ... There's actually a lot more capable companies out there, but they need mentoring or they need support to be able to, first, be competitive in the local market and then connecting the military vehicle programs together in Australia, you then create this enduring load of work, domestically, that you can then get those companies to be competitive and efficient, to be then able to win programs globally and we see that that's the natural pathway and an evolution of where we've come from.
Phil Tarrant: And my reading to your selection of Queensland as the hub to position Rheinmetall ... You're fairly agnostic, I believe, in terms of saying, "Whoever can build us and present the best solution, we'll choose that particular state," and you went to all of the states, five states, and then by memory you short-listed Queensland, Victoria, it was around this time last year and then you subsequently chose Queensland. And you'd just mentioned that there's potential for picking up some work out of Singapore and also New Zealand, so I can understand that Queensland's a nice location there, but what else puts Queensland above Victoria? Because your competitor's chosen the Victorian government, Fisherman's Bend and you're up in QLD, so we've been trading off some state rivalry, which always works well on DefenceConnect.com.au and long shall it continue.
But what's the rationale? There must be some other reasons. Other than that you also live up in Queensland.
Gary Stewart: Well, I guess the first thing was, we weren't encumbered with existing factories or facilities in Australia. We literally had a clean slate. So, when the industry policy came out and really emphasised or underlined that having an enduring industrial footprint in Australia is also important, in addition to the defence capability, we said, "Right, well, we don't have a home yet." It had already got politicised around which state could do the work and at the time, it was more of an Adelaide versus Melbourne debate or South Australia versus Victoria and we didn't want to get caught into a political maelstrom, so we went to all the states and said, "We are looking to establish a Military Vehicle Centre of Excellence that will first and foremost support the Australian customer and ensure that they continue to have the best capability that can be delivered, that will become a global design and manufacturing centre for Rheinmetall, for turrets and tactical systems."
Because if we're successful in winning LAND 400, Australia will have the largest density of modern combat turrets and vehicles in the world and we want to create, then, an industry base that can export competitively with us. So, we went to all the states, and I've got to say all states and territories were very professional in how they approached it and we didn't mandate a location. We said, "These are the features that we're looking for. Access to resources, access to people, access to our defence customer, regional access for supporting the local region and the ability to attract and retain talent within that location."
And we had five states respond with their ideas and proposals, we did down-select to Victoria and Queensland around this time last year and we looked at them, both of them, much more closely and on balance, we decided Queensland. And it wasn't just because of location, but we looked at things like, two of the three brigades that will be operating the LAND 400 vehicles are in Queensland. You then complement that with Singapore's investment into Queensland and there's going to be this concentration of military vehicles within Queensland that will need ongoing support, maintenance and upgrade.
But we also recognised or discovered that, particularly southeast Queensland, actually has a very strong and well-established design and manufacturing for heavy vehicle, if you look at Volvo, if you look at Penske, you look at Caterpillar. They're already doing this class of vehicle for mining and other sectors. And then you overlay on top of that the strong land command, control, communications industry that's there, Raytheon, Harris, Elbert. Providing army's battle management system and communication, it's all done in Brisbane.
And then if you look at the Brisbane-Ipswich corridor, with Amberley at one and Enoggera Barracks at the other, you've got a whole aerospace sector, with the likes of Boeing, Raytheon, Northrop-Grumman, that are directly supporting complex, digital equipment. Whilst it's for predominantly aircraft platform at the moment, if you look at the technology that's in a Boxer combat reconnaissance vehicle turret, it's closer to an aircraft that it is to an ASLAV or M113 that it's replacing.
So, we actually found we had the industrial footprint in Southeast Queensland to support those activities. Then Queensland universities are well-established and they produce a large number of engineering graduates. The access to vocational training as well, at the end of the day, we have to manufacture and fabricate and assemble and test this equipment and southeast Queensland is well-positioned for that. And Brisbane's a nice place to live and work. So, net migration is in to Queensland from the southern states. So, because at the end of the day, we have to grow a business and attract and retain people that want to come and live and work, I think the Military Vehicle Centre of Excellence is something truly wonderful to work at, just given the types of equipment and facilities we'll have there. But then you've got to think about the families and the reason for people to actually establish a long-term future. And on balance, we found that Queensland, and particularly the Ipswich location, provided that footprint and access overall.
Phil Tarrant: How hungry was the Queensland government to attract you guys? I know their QueensLAND 400 campaign, which the government runs and they've been very proactive on DefenceConnect.com.au as well. How far up the chain did it go?
Gary Stewart: Look, both Victoria and Queensland were hungry for this. They both put up extraordinarily strong proposals and arguments. It went all the way to the top within the state governments and they both sent very senior delegations to Germany and that was actually one of the real turning points for us, when we saw that we weren't just looking for a state where we were going to set up a factory. We actually wanted a partner that was going to help us continue to develop and grow the next generation of workers and workforce and talent and we can't do that on our own. We have to do that in partnership with the state and it was just remarkable, the investment and commitment we saw from the Queensland government, the delegation that they sent to Germany to understand our business and to understand what the potential was, beyond LAND 400 Phase 2, that we were looking to transfer and will transfer to Australia on being successful.
Phil Tarrant: The news last week and parliamentary hearings are, there was dialogue there for a little while around the hysterics of state on state competition. What's your take on all ... There was some observations around transparency of what's being spent by state departments to get involved in these campaigns. What's the Rheinmetall position on all that?
Gary Stewart: Look, we didn't force anyone to put forward a program. The reality was, we thought long and hard about how to do this. Because we didn't have a home, we needed to find an objective and transparent way of selecting a home and so, the way that we did that was to run this solicitation process. If there are people out there that think that there was a more objective way of doing it, we'd love to hear it for the next time this comes up. But I think this is one of the challenges we've got.
Because the Defence Department and the federal government didn't mandate an industrial solution, it's up to industry to identify what's the best commercial structure and arrangement that positions us to win something like LAND 400 Phase 2, but then to maximise the return on that investment over the longer term and that's how we approached the engagement with all the states and we were open and transparent about what the immediate opportunity, represented by LAND 400 Phase 2, but also what the future opportunities and growth would represent with that investment into that state. Unfortunately, it gets interpreted as pitting states against each other, but we had to choose a home.
Phil Tarrant: Fair enough. And you mentioned a lot of the reasons why you chose Queensland, that was well observed, but you said that there's already heavy manufacturing there already. Your Volvo, Penske, et cetera. Towns that employed Australians who call Queensland home work within those businesses. Should you guys pick up the Phase 2 job, the first 20 or so is going to be built in Germany as you transition that IP into Australia. Is the work force there? Is there enough people? Because we're talking about manufacturing, it's steel, it's welding, it's ... And the high tech stuff as well. Do we have the people in Queensland?
Gary Stewart: Yes, we do.
Phil Tarrant: Okay.
Gary Stewart: That was a very important element of our assessment of the states and in reality, Victoria and Queensland were neck and neck. They both have the manufacturing capacity and expertise. But the other thing, also, is that we're not abandoning Victoria. We're not abandoning South Australia.
Phil Tarrant: Well, I was going to ask you about this, because there's some great businesses down there.
Gary Stewart: Well, there are, and the reality is whilst we would establish or will establish our Military Vehicle Centre of Excellence is Brisbane, this is a national endeavour. And we've got companies identified from Perth to Tasmania to northern Queensland and everywhere in between that have got good capabilities, good products that will contribute into the industrial network for LAND 400 Phase 2. We've got a well-established foot print in Victoria, in Melbourne, currently working on the Land 121 Phase 3 bravo program and we've got a great team of people working in Adelaide, supporting Defence Science and Technology group and managing the army's main battle tank simulators all around Australia.
So, none of that changes. And in fact, when you look at ... One of the brigades will be in Adelaide. Two of the brigades will be in Queensland. Army's training schools and its test and evaluation centres are in Victoria. We're going to have simulators in each of those states. We're going to have field service technicians and support teams in each of those regions to ensure that we can provide the closest possible support to the coal face of the army, so that they're not back loading equipment continually to a remote location and it makes sense to have your procurement and your academic research teams located with the universities and your industry partners, so that you're not unnecessarily flying around Australia to solve and work through programs.
So, we see that whilst Brisbane will be, certainly, our headquarters and major location, we're still going to have a good number of people and good jobs in those other states.
Phil Tarrant: I'm quite keen on your observations on SMEs. So, much like BAE, you went through a process as you were gearing up for the tender to engage Australia's SMEs to be part of the supply chain should you be successful. You had roadshows right across Australia, I understand. What's your view on, number one, the hunger, and I use the word again, of SMEs to be part of the Rheinmetall solution, but number two and we're very pro-SME at Defence Connect, what do the good SMEs do to make them attractive to a company like yours to stand out and be a preferred supplier.
Gary Stewart: There's probably a couple of ways to approach that. Firstly, if you look at how the LAND 400 Phase 2 industry engagement occurred, the ... And this was the first time the Commonwealth had done this as well, so it was a bit of a learning exercise for all of us. So, the first part of the industry engagement was actually back during the tender in 2015, where we did a series of road shows static in each of the cities, capital cities around Australia. And that got some interest, but at that time, it still wasn't tangible. And that got us a number of companies on our radar.
But then when we did the risk mitigation activity and you had the Commonwealth, Rheinmetall and BAE sitting in a room and, essentially, speed-dating companies coming in, they had to register, they came in, they had a set time in order to explain their credentials and how they felt they could fit in. That was important, because it raised the profile of what LAND 400 Phase 2 was. However, it was a pull exercise. The companies still had to come to a location and they had a very constrained time within which to make their case. But it served its purpose.
We then followed it up with a roadshow where we went back around Australia and up through Queensland to hit more towns and regional centres and that's where we saw the groundswell. And I think because LAND 400 had reached a profile within industry generally, more people were interested to understand how they could participate, but nothing actually beat having the vehicle there ... And sitting in a conference room and having a bunch of PowerPoint slides is useful and it helps provide some context, but then we took everyone out to the vehicle and said, "Here's what we're going to build here. If you believe that you can manufacture something or do something better than what's in this vehicle, talk to us. We've got our procurement specialists and our engineers here." And that's where we saw the real benefit. Because it was suddenly real to those companies. We were coming to them, as opposed to making them travel long distances for some of them. And we could have a very targeted conversation.
The second piece, though, is around what SMEs can do. And I think one of them is, back themselves. We've seen a lot of companies that are very capable but haven't had the forum or the ability to come forward and explain what they can do. And one of the challenges, I think, we've got in Australia is how do we create those environments where those companies can come forward and say, "Hey, I've got an idea. I believe I can add value." And then touch the right person and so, programs like the Global Supply Chain program that the Commonwealth administers and we're now part of, Team Defence Australia, the CDIC and raising its profile and access for SMEs, all of those create multiple pathways for SMEs to connect with defence primes. And I think we've just got to continue building it. We're all fresh at this, we've all been working within this new industry policy landscape only for a couple of years and I think it's on the right track. It requires constant effort and vigilance though, otherwise it'll lapse.
Phil Tarrant: So, you've got some SME partners, guys like Heuch, Cablex, Direct Edge, Precision Tooling Engineering and a lot of other ones who, I imagine, looked at this vehicle and said, "We can actually build this bit of it."
Gary Stewart: Yep.
Phil Tarrant: Any specifics around what some of these SMEs are going to do, should you be successful? Any cutting-edge tech they're able to provide into the Boxer?
Gary Stewart: Absolutely. So, you look at companies like Tectonica, a Melbourne-based company, they've designed a situational awareness system for the Boxer. It was actually on our vehicles during trial. It replaces the vision systems that the driver uses and that the crew in the back of the vehicle use. So, cameras all around the vehicle, visual and infrared, so as they're driving, they can see front, rear, left and right, but tactically, they can actually see if there's anyone outside before they open the ramp and get out. That's part of our solution.
Cablex, another Melbourne-based company, is building a number of electromechanical boxes, so, high-end electronic devices and cables. We've got them supplying in to our current German Boxer production program, because their quality and their workmanship is the best of the best. Heuch we've just awarded a production contract to feed into our manufacturing in Germany as well. So, we're finding these SMEs and where we can see that they can add value immediately, we're not waiting. We're taking advantage of their expertise and their quality and helping it improve our competitiveness globally.
We've then got longer range activities. So, Bisalloy is probably the best example of that, where Bisalloy and BlueScope are now on a qualification path with us to have their Australian steel, armoured steel, tested and certified to the German government's standards. Once that is achieved, that steel is not only available for the LAND 400 Boxer program, it can be used as an alternate source on our current production programs in Germany and, in fact, the German government can use it on any German government production program as well. So, working with Bisalloy and BlueScope, we suddenly create this much broader opportunity for them, even beyond Rheinmetall, and it's creating those pathways and opportunities and working with these companies to help them navigate a foreign language, completely different regulatory environment and enable them to compete successfully on the global stage.
Phil Tarrant: And we've been talking about LAND 400 Phase 2, so our combat reconnaissance vehicles. Phase 3 is just over the horizon and obviously, the conversations around, "Does whoever win Phase 2 naturally win Phase 3?" What's your take on that?
Gary Stewart: Firstly, I don't think it's a natural thought that whoever wins Phase 2 wins Phase 3. I think elements certainly become sensible to be part of the Phase 3 solution. If you look at the turret, for example, and the lethality requirements that Phase 3 has, they're very similar to the Phase 2 requirements. So, sensibly, whoever wins Phase 2, that turret should be the standard for Phase 3, at least to start with. Likewise, the training and simulation environment, it would naturally make sense that you try to maximise the investment you've made in the Phase 2 environment and build on that for Phase 3.
But the vehicle, it's a very different vehicle. LAND 400 Phase 2 is a wheeled combat vehicle, The Infantry Fighting Vehicle and its derivatives in Phase 3 is necessarily a tracked vehicle. So, it doesn't hold that whoever wins Phase 2 will naturally be front runner for Phase 3. Both of us have tracked vehicle solutions, so yes, we would absolutely be bidding for Phase 3, but I don't think it matters whether we win Phase 2 or not. What does matter is how the government chooses to define what the Phase 3 set of requirements are. It's coming very quickly on the back of ...
Potentially, if the RFT comes out in the second half of this year, it's coming very quickly on the back of the Phase 2 decision and so, some of those natural synergies that you'd be looking for, the turret, the simulation and training environment, even the manufacturing environment ... It's going to be interesting to see how the Commonwealth and Defence decide to use those obvious areas of commonality in the Phase 3 definition. And we haven't had an industry briefing yet. We're not sure how the Commonwealth is looking to take this forward, but we're ... We think that there's a lot of good ways that they can extract some further efficiencies and savings by taking a more holistic approach to the overall program.
Phil Tarrant: And as you mentioned at the start of the podcast, Gary, the decision's not yet made on LAND 400 Phase 2. Maybe the decision has been made but it hasn't been communicated. No one knows, no one knows how long it's going to take. Maybe the decision actually hasn't been made yet. I don't know, I'm not privy to that information, but we haven't spoke about the actual specifics or the capability of the Boxer, and I won't ask you to compare them with BAE's AMV35, but could you just give us a quick brief of why the Boxer? If ... Why is it the right choice for the Australian army?
Gary Stewart: Sure. So, when the tender came out, the ... It was very clear in 2015 that the army was looking for the most potent combat reconnaissance vehicle that it could acquire for LAND 400. And they prioritised protection, lethality, mobility and then the other elements. We took that to heart and said, "The Boxer vehicle itself is the most protected and mobile wheeled armoured fighting vehicle available today," and we then coupled that with our LANCE medium calibre turret. And bringing those two military off-the-shelf systems together, we had this incredibly potent combat reconnaissance vehicle.
So, when you look at the protection, it's been designed from the ground up to provide scalable and layered protection. First and foremost, protect the soldiers, protect the people that are inside it. Then, protect the equipment that they're operating and then protect the vehicle. And so, we have this layered approach to survivability, which provides protection against all contemporary threats. Mine blast, ballistic, IED, RPGs. But also, reduces the visual and thermal signatures of the vehicle as well. So, actually reduces the ability to be detected so that you don't actually get shot at. So, that was a natural starting point.
Lethality-wise, though, we then have the LANCE 30 millimetre digital turret and this is a turret that's been designed so it can be a crewed turret, so, commander and gunner, or can be converted into an un-crewed turret and put the soldiers down and that provides a very strong pathway from Phase 2 to Phase 3 if the army decides that it wants an un-crewed turret. And because the turret is the brain and the heart of the vehicle, we have a lot of technology in there which improves the ability for the commander and gunner to fight. Automatic target detection, automatic target recognition. So that the commander can more quickly identify and prioritise targets, can very easily hand them off to the gunner and in the mean time, he's got or she's got the commander's Remote Control Weapon Station, which allows them to prosecute other targets whilst the gunner is looking after the primary threat.
It's all operated through a common user interface. So, the commander and gunner can change roles and with the same set of controls and interface, they can use the main gun, they can use the missile launcher, they can use the commander's weapon station, they can use non-lethal weapons. So, it's a quite adaptable system.
And then there's the modularity, and this is something which has not been well recognised and is a truly unique feature of the Boxer vehicle. So, the Boxer actually comes in two parts. A drive module, which when you look at it on its own, it looks like a very well-protected ute. And then there's a mission module which goes on to the back, and it's connected through a common interface, mechanically, and you can change that mission module over in an hour. And what that means is, you can take a combat reconnaissance vehicle that's configured for recon, so it's got the turret and configured to be a fighting vehicle, and in an hour, you can re-roll it and convert it into an ambulance or a surveillance vehicle and you can use that with the equipment that the Australian army has in service today.
So, suddenly they've got this operational flexibility that they never had before and it means also that you can scale up and scale down the capacity and configuration of the vehicle. So, the Boxer has been designed to operate alongside the Leopard 2 main battle tank. So, from a mobility perspective, it's got fantastic mobility at up to 38 and a half tonnes. But what that means is, it's got eight tonne of capacity and that eight tonne can be used for armour, it can be used for a turret, it can be used for different mission systems or different roles and by doing that within the mission module, we can very quickly adapt and change the role depending on changing threats or new requirements. And it means that you can have a training configuration or you can reduce the number of vehicles and still achieve the same overall operational availability.
Because the drive module is common across all seven variants, you don't need to deploy an entire vehicle. Where if a drive module gets damaged, you don't need to send an entire vehicle back for repair, you can just separate the mission module and drive module and ship the drive module back. Put that mission module on to another one and you're good to go.
So, suddenly there's this much broader spectrum of life-cycle cost savings, training benefits and operational flexibility that the army hasn't really had before in a modern combat vehicle. And then you connect that with the simulation and training system of ... That we're delivering under the support system and that allows for reduced use of the vehicles in training. Have a fully immersive training environment and that can be easily adapted and expanded on for LAND 400 Phase 3 or for new roles that will come out of the natural evolution of capability with the Australian army.
Phil Tarrant: Gary, having spoken to yourself and also your competitors over at BAE, two very solid propositions which have been put forward and obviously this decision is nearing. Which vehicle is the right vehicle for the Australian army? That's not my position to make those observations. But what I would observe about this is that irrespective of the decision that's made, it sounds as though the army's going to be equipped with something which is going to be highly capable and serve its purpose for many years to come. I'd also observe that irrespective of who the winning contender is, the opportunities for Australian industry are considerable and that's a great thing for defence industry.
So, good luck.
Gary Stewart: Thank you.
Phil Tarrant: We'll see what happens. We'll get you back on the show once we know what the answer is and I think you've pointed out that if you aren't successful with LAND 400 Phase 2, your commitment to the Australian market is considerable and you guys are a lot more than just tanks and trucks. So, keep in touch and let us know how you're getting on.
Gary Stewart: Absolutely. Thanks, Phil.
Phil Tarrant: Thank you. And remember to check out DefenceConnect.com.au. If you're not yet subscribing to our morning market intelligence daily news, DefenceConnect.com.au/Subscribe. If you like your info on social media, we're very active, just search Defence Connect, you'll track us down. Like us, follow us. We'll be back again next time. Hopefully we'll know who the winning contender is of LAND 400 Phase 2 and then we can get in to Phase 3 and many of the other programs which are underway as well. So, thanks for tuning in, we'll be back again soon. Until then, bye.
Comments powered by CComment