AUKUS alliance: New jobs potential is ‘astronomical’

Thousands more jobs will be created under Australia’s new defence partnership than under the French contract.

Rowlands Metalworks owner Cameron Johnston in Adelaide: ‘The challenge of getting into a whole new supply chain – that’s all pretty exciting’. Picture: Tom Huntley

Thousands more jobs will be created under Australia’s new defence partnership than under the French contract and most existing Naval Group positions will be absorbed into ASC and other ­defence firms.

These are the predictions of defence industry experts and the South Australian government, with one former naval boss saying the biggest challenge for Australia would be meeting labour and supply demands of the submarine project under the ambitious new timeframe.

Former rear admiral Mark Purcell, who now works as a senior adviser to former treasurer Joe Hockey at Bondi Partners, says it is “impossible” to quantify the job-generating potential under the AUKUS pact and it will “far outstrip” the contract with Naval Group.

Mr Purcell, who until recently was vice-president of Italian defence giant Fincantieri, said his estimate was that the value of the projects had increased “tenfold” as a result of Thursday’s announcement.

“I don’t think the ramifications have sunk in yet for Australian companies, Australian business and Australian jobs,” he said.

“In 2016, we had an unprecedented level of capital investment in the shipbuilding pro­grams of $90bn and the industry could not keep up with that demand. Last year, we accelerated spending up to $183bn as the strategic situation was getting worse. My biggest concern is how do we find the industrial capacity in the country to deliver on all this. When I was running these programs for Defence, the most we were able to spend was about $1bn a year. We ran out of industrial capacity, we couldn’t get any more workers, we couldn’t get more supplies.

“We haven’t got 183 years to deliver this, we have got about 40 years. So we are not talking about doubling the industry base or quadrupling it, we are talking about increasing it tenfold. While the potential is astronomical, the challenge will be achieving that industrial capacity.”

Despite this challenge, Mr Purcell predicted new jobs and new industries would emerge in coming decades, including in the field of space and nuclear technology, despite Scott Morrison ruling out the creation of a domestic nuclear industry.

“We are going to have to develop more nuclear know-how,” he said. “We are going to see NASA-style spin-offs with dual-use technologies and companies transforming to take part.’’

But the announcement has derailed the plans of some firms who had been building relationships with the French program.

Sheet metal manufacturer Rowlands Metalworks is one local company that’s been gearing up for work on major defence projects, including the submarines program.

The company formed a joint venture with French supplier Probent, and business owner Cameron Johnston travelled to Cherbourg early last year as part of a broader effort to build closer ties with French industry. Mr Johnston said he was surprised by Thursday’s announcement, and was now eager to find out more about opportunities to supply into the nuclear-powered submarines program.

“We’re looking forward to an exciting new prospect – the challenge of getting into a whole new supply chain in a new industry – that’s all pretty exciting,” he said.

SA Premier Steven Marshall hosed down claims the Naval Group workforce would be decimated by the contract’s axing.

Opposition Leader Peter Malinauskas said the decision had left jobs and investment under a cloud But Mr Marshall said most Naval Group workers would be able to shift across to other shipbuilding platforms.

Additional reporting: Giuseppe Tauriello