Businesses are being urged to act now if they want a share of the $90 billion naval shipbuilding program
THE $90 billion naval shipbuilding program is huge — so huge it’ll need more than 3000 small- and medium-sized businesses to make it happen. But they’ll have to act now to share the spoils.
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MORE than 3000 small and medium-size businesses will be needed to support the delivery of the $90 billion naval shipbuilding program, and South Australian businesses are being urged to act now if they want a share of the spoils.
PwC’s CityPulse report predicts thousands of small and medium-sized enterprises (SMEs) will be needed in the construction and service supply chains across major projects, creating a “once-in-a-generation” opportunity for the state’s business community and a $2.5 billion stimulus to the local economy by 2020.
Defence Teaming Centre chief executive Margot Forster said the industry group had already fielded significant interest from a broad range of SMEs.
“Because the ecosystem supplying defence is so diverse, the types of companies coming to us are equally as diverse as are their levels of readiness,” she said. “We have companies working in the mining and exploration sector or producers of medical devices – industries where quality is as important as it is in defence. Their transition is much more seamless.
“On average, it takes about five years to be defence-ready.
“Companies like Supashock, Axiom Precision and Redarc – all of those companies made a deliberate strategic decision to make defence a part of their business and it took a number of years and significant investment to be as successful as they are.”
Ms Forster warned local businesses not to be complacent, as competition from interstate and overseas suppliers intensifies. “The work will not land on their (SA SMEs’) laps,” she said.
“They will not even get on the starting line if they don’t have the certifications and the quality, and then you need to be price-competitive.”
Next month, hundreds of senior military, defence, government, scientific and industry representatives will visit Adelaide for the Land Forces 2018 conference and exhibition. UniSA defence director Matt Opie said defence roadshows, industry briefings and other events offered an opportunity to engage and build relationships with the prime contractors.
“Typically, the large primes are the ones that will get the contracts so if you’re an SME that wants business in defence, it is important to develop relationships with the primes,” he said.
“All of the prime companies have online portals or other methods of engaging with the market and they’ve been told by the Federal Government to get to know Australian SMEs.
“The submarines and (Futrue) Frigate programs are the biggest of their type in the world currently. We have the biggest projects in the world in a small city like Adelaide, so companies can use that to their advantage by networking and building relationships.”
Mr Opie said the defence primes based their supply chain decisions on three factors – price, quality and a proven ability to deliver.
“The two biggest projects – the submarines and Future Frigates – are both amended Australian versions of overseas platforms, so those companies are going to have to replicate the majority of their supply chains in Australia,” he said.
“There’s a minimum bar for entry into the supply chain – certain levels of quality, safety and environmental accreditations, which are required if you want to prove your company is up to a certain level to win work in the industry. If you’re a local business, you can’t assume you will win work in the defence industry and attempt to eke out more profit during the bidding process, because it’s (very) competitive.”
With about one million components needed to build a submarine, PwC partner James Blackburn said the opportunities for local SMEs would be broad and varied, stressing the importance of innovation and collaboration.
“As long as the industry is competitive on capability, quality and value for money, many of the components needed could be supplied locally,” he said. “The biggest challenge for SMEs will be to grow their capabilities to meet the demands of the local shipbuilding industry and to ensure they are ‘defence-ready’.
“Private companies must find new ways of working and innovating to ensure they can be part of the defence supply chain and the related opportunities that will emerge. They must innovate or risk being left behind.”
How minnows can mix it with the big fish
UniSA defence director Matt Opie’s 10 tips for SMEs:
1. Before you start pitching for defence business, sort out your business basics.
Do you have the latest quality, safety and environmental accreditations? These sorts of accreditations are a minimum requirement if you want to engage with the defence sector.
2. Train your staff in the fundamentals of how the defence sector works.
Try to get an insight into its culture and processes. It is a complex environment and sometimes seen as a “closed shop”, so consider employing ex-defence personnel as part of your approach. Know your customer and understand all you can about how defence does business; their specific needs and requirements and their acquisition processes.
3. Think about how you will develop defence contacts.
What networking events, business networks and committees could you join to meet key defence people? Develop and maintain the relationships you’ve made and make new connections.
4. Use industry networks to improve your contacts and skills.
Organisations such as the Defence Teaming Centre and the Centre for Defence Industry Capability provide services to help Australian small and medium businesses win business within the defence sector.
5. Innovate – explore ways to improve your business practices so that they are smarter and faster.
Understand that universities are keen to support business innovation, so explore what they can offer your business in terms of research and providing graduates
6. Learn about Industry 4.0 (the fourth industrial revolution).
This new wave of improved automation, machine-to-machine and human-to-machine communication, artificial intelligence, continued technological improvements and digitisation in manufacturing will transform the way the defence industry does business. Adopting these will give you a competitive advantage.
7. Examine your production processes and supply chain.
Look at any weaknesses and consider strategic infrastructure investment.
8. Collaborate with other companies.
Look to where you can form alliances or partnerships to create a stronger bid for business.
9. Engage early with the larger defence prime companies – bigger companies with a long- standing relationship with defence.
The Federal Government’s Australian Industry Capability policy encourages companies such as BAE Systems, Raytheon and Naval Group to engage with Australian SMEs. Take advantage of grants and training. Most defence contracts are awarded to a select few large companies, so it’s important to position yourself as a tier -two or three supplier.
10. Engage with education.
It starts at school, where we need to lift STEM education, but it doesn’t stop there.
Students need to see that the defence industry offers exciting career paths and ones that often spearhead innovations that are adapted and adopted for civilian benefit.
Go back and retrain if you need to yourself – there are plenty of part-time and online options.
Support local schools and universities by offering work experience and industry placements. Support scholarships in STEM. The young people we support now will be tomorrow’s workforce leaders.