Defence project pipeline revives manufacturing in regional centres

The 32,000-square-metre Hanwha Armoured Vehicle Centre of Excellence near Geelong will support more than 300 advanced manufacturing jobs, providing ongoing economic benefits to the region.

Australian-owned digital-first contractor Built delivers Hanwha Defence Australia's new Armoured Vehicle Centre of Excellence

When Toyota closed its Altona plant on the outskirts of Melbourne in 2017, it marked the end of an era in Australia’s manufacturing history. Following the earlier shutdowns of Holden and Ford plants, it left 2600 workers facing uncertain futures despite efforts to provide retraining and job placement assistance.

Near Geelong, Victoria, where Ford closed its plant in 2016, a new chapter in advanced manufacturing is beginning with Hanwha Defence Australia’s (HDA’s) armoured vehicle manufacturing operations establishing a home there. The 32,000sqm Hanwha Armoured Vehicle Centre of Excellence (H-ACE) in the Avalon Airport Precinct, just a 20-minute drive from Geelong, will support all Hanwha vehicle fleets and serve as an industrial and SME base for both global and domestic operations.

Initially, H-ACE will focus on producing Hanwha’s AS9 self-propelled howitzer and AS10 armoured ammunition resupply vehicle under the $1bn LAND 8116 phase one project for the Australian Defence Force. HDA is in the final stages of planning for phase two of H-ACE to build for a second production line for the manufacturing of the Redback infantry fighting vehicle for the Australian Army.

HDA acting managing director Dean Michie says there are several reasons the site location near Geelong makes sense.

“Building on the long history of vehicle manufacturing in the region, the strong support from the Victorian state government and the closeness to our Defence customer, the Geelong region was a logical choice for us,” he says.

“Working with organisations like Deakin University and the Gordon (TAFE) for training to supplement the existing workforce has been an ongoing effort.”

Greater Geelong mayor Trent Sullivan says a key part of the council’s strategy is to promote the regional centre as “an ideal place for international business investment, particularly in priority Asian markets”.

Geelong is recognised as Australia’s only UNESCO City of Design, and Sullivan says there is “considerable advanced manufacturing and engineering history and capability” already in the region, making it “a good fit for businesses in those sectors”.

“We have strategic assets that make us an attractive location, such as Victoria’s second international airport at Avalon, one of only two refineries in Australia and the largest bulk port in the state, as well as a leading research and development university at Deakin,” he says.

Across the long term, H-ACE is expected to support more than 300 advanced manufacturing jobs, providing ongoing economic benefits to the region. During the initial build phase, the wholly Australian-owned tier-one construction firm Built, appointed to design and construct the facility, had more than 200 workers onsite at peak workforce during construction. The first stage was completed ahead of schedule in May, with 25 per cent of workers employed from Geelong and the surrounding areas.

Beyond job creation, Built exceeded its target of 24 per cent contract value spend with local suppliers, achieving 28 per cent contract expenditure in the region.

The wholly Australian-owned tier-one construction firm Built, appointed to design and construct the Hanwha Armoured Vehicle Centre of Excellence, completed the first stage ahead of schedule in May this year, with 25 per cent of workers employed from Geelong and the surrounding areas

Built Group chief executive Brett Mason says the construction industry for advanced manufacturing has been “hollowed out” in recent years and that projects such as H-ACE help create an important manufacturing base.

He says the federal government’s Future Made in Australia initiative announced in the May budget doesn’t specifically address sovereign manufacturing in the construction industry.

“Currently a lot comes from offshore,” he says, “so we’re working hard with local supply chains to help them invest in manufacturing. Preparedness doesn’t need to be a government problem. The industry stands ready to help – but we need certainty.”

Built has a $7.5bn pipeline of projects, of which Mason says about 65 per cent are government-related, and the company is motivated by accelerating national priorities such as securing a sovereign manufacturing base in Australia. Mason estimates Built’s current portfolio of projects within the defence sector at $1bn.

And with capital facilities and infrastructure projects for Defence currently worth $2bn a year but growing to $8bn a year, the Australian construction industry needs to respond by “unleashing expensive labour to do more with less”, he says.

“From a global perspective, all nations are looking inward at their supply chains,” says Mason. “The US is doing it and we’re doing it. Australia has expensive labour and a limited amount of it. When you lose manufacturing, that labour goes elsewhere and does other things, so shoring up manufacturing is an important longer-term plan.”

With Australia’s expensive labour and productivity challenges, Mason says Built’s digital-first construction approach addresses the issues. By creating fully resolved designs with digital models, Built eliminates design clashes that cause delays and fully integrates shop drawings, allowing plant and materials to be ordered before site work begins.

“We’ve been investing in it for the last 10 years, with $40m in digital systems,” Mason says.

Beyond H-ACE in Victoria, Defence-driven advanced manufacturing is underpinning a broader revival in regional centres across Australia.

In Ipswich, Queensland, Rheinmetall’s Military Vehicle Centre of Excellence has initially employed 600 people for the production of the Boxer combat reconnaissance vehicle, which former Queensland premier Annastacia Palaszczuk said would contribute more than $1bn to the state economy in its first 10 years.

Meanwhile, the Guided Weapons and Explosive Ordnance program has invested $220m in munitions factories in Mulwala, NSW, and Benalla, Victoria. These facilities produce high explosives and propellants and assemble a range of munitions for the ADF.

In regional Queensland, Australian firm NIOA’s Maryborough plant, part of a joint venture with Rheinmetall, represents a $60m investment and is manufacturing munitions including artillery shells.

As to the benefits of advanced manufacturing and the associated construction work in regional areas, Mason says, “you get a really engaged workforce that is proud of these sorts of facilities constructed in their area”. Another benefit, he says, is that it attracts workers escaping the expensive housing in capital cities, making it easier for people to relocate to the regions.