Defence Teaming Centre’s grim warning to government over constant reviews

An army of small-business owners are threatening to quit the defence industry completely because constant changes have made it unviable, a leading industry group says.

Some of Australia’s most established small and medium defence companies are considering abandoning the industry after the Defence Strategic Review cancelled or scaled back several projects and plunged others into doubt, the Adelaide-based Defence Teaming Centre says.

The national defence industry association also warned the lack of short-term manufacturing opportunities would prevent businesses from retaining skilled staff.

The most significant of the cuts announced in the government’s blueprint released on Monday is the slashing of planned infantry fighting vehicles from 450 to 129.

While the project will be centred in either Victoria or Queensland, many SA companies were set to benefit from opportunities within the supply chain.

More than 30 defence projects in total will be either scaled back, delayed or scrapped to save $7.8bn, while a new review will shake up the navy’s surface fleet, likely resulting in drastic changes to the $45bn Hunter-class frigate program at Adelaide’s Osborne shipyard.

The federal government will cut the number of planned infantry fighting vehicles from 450 to 129.

Defence Teaming Centre acting chief executive Tim Dore said many longstanding companies that formed the backbone of the country’s defence supply chain were bleeding money.

“We understand why the significant overhaul was needed,” Mr Dore said of the review.

“However, there are numerous businesses that have lost out on work and that have lost hundreds of thousands of dollars in investments they had made to upskill their workforce and equipment based on Defence’s previous requirements, only to see the government’s direction once again change.”

Mr Dore said the industry remained “agile and responsive” to changing capabilities in an increasingly unstable geopolitical environment, but warned it wouldn’t stop small businesses downing tools on defence work in favour of more stable industries, like mining.

“Speaking with our members, we know that the DSR announcement may result in many established and mature small-to-medium enterprises choosing to either reduce their involvement or exit the defence sector entirely, because it is no longer financially viable and less attractive to other buoyant sectors,” Mr Dore said.

Defence Industry Minister Pat Conroy said there would be “strong future orders” for local defence industry businesses and workers. Picture: NCA NewsWire / Martin Ollman

Defence Industry Minister Pat Conroy told reporters on Monday the Defence Strategic Review was a “vote of confidence” in the local defence sector.

“Around 100,000 Australians rely on the defence industry for their employment – they’re a critical part of our national defence effort, and we expect strong future orders for them, particularly in advanced manufacturing,” Mr Conroy said.

Defence Minister Richard Marles said the review made “really clear the need for Australia to maintain a continuous shipbuilding capability”.

Responding to the review, the federal government vowed to streamline defence acquisitions by slashing unnecessary red tape for small businesses.

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Originally published as Defence Teaming Centre’s grim warning to government over constant reviews