Budget 2020: Weapons firm promises bang for your buck

Canberra defence company Electro Optics Systems will arm the next generation of Australian Army vehicles and will next year commercialise a directed-energy weapon that can shoot down drones.

From left, Aaron Clark, Daniel They and Eamon Gray with a weapons system at the EOS factory in Canberra. Picture: Sean Davey

Canberra defence company Electro Optics Systems will arm the next generation of Australian Army vehicles and will next year commercialise a directed-energy weapon that can shoot down drones.

The company’s defence division CEO, Grant Sanderson, said the certainty that Australia’s defence funding would continue to rise over the next decade would help the company develop space and weapons systems for the Australian and international markets. “That does give us a lot more flexibility, and a lot more confidence to invest aggressively in the research and development that we need to do,” he said.

“Some of the more high-technology stuff, the space communications and directed-energy systems for shooting down drones, for example, require a lot more investment in electro-­optics and software.”

The budget confirms the government’s July 1 pledge to pour $270bn into new defence capabilities over the next decade to prepare for what Scott Morrison has described as a “poorer, more dangerous and more disorderly” world.

Since that announcement, EOS has signed a $94m contract to supply 251 remote weapons stations for the army’s Hawkei and Bushmaster protected vehicles, allowing gunners to engage the enemy while inside the ­vehicle. Mr Sanderson said EOS, which has about 380 Australia-based employees, made about 90 per cent of its revenue from exports.

But the ASX-listed company anticipates an increase in its domestic sales as Defence ramps up its hi-tech capabilities, including space tracking and sovereign satellite systems.

“Our core technologies are in optical sensors, lasers, and the software control and stabilisation to use those systems at very long ranges, to find and track very challenging targets,” Mr Sanderson said. “What I have been saying to the investor community is that whilst we have always had 5-10 per cent of our revenue from Australian sales, there is now ­optimism that number could grow considerably.”

The government’s recent move to position the defence industry as a key pillar in its COVID manufacturing recovery strategy is also welcomed by the company, which has suffered supply chain disruptions and a slump in export volumes during the pandemic. The government’s 2020 Force Structure Plan commits to the acquisition of new space tracking systems and next-generation capabilities to counter unmanned aerial vehicles.