Australia's defence industry is facing significant problems that will lead to companies abandoning the market and a further round of rationalisation, according to a survey produced by the Association of Australian Aerospace Industries (AAAI).
Tony Carolan, AAAI chairman and group manager programmes and business development Boeing Hawker de Havilland (HdH), says: "There is strong concern about the viability of remaining in the aerospace-defence market." This could lead to some companies pulling out of military work, a strategy already pursued by HdH.
He adds that although some aerospace capabilities are viable, others are suffering. Aircraft assembly and test work is "terminal"; subsystems maintenance "is going into decline"; aerostrucutres design and manufacture is "reasonably healthy but suboptimal", while simulation and systems integration are "variable".
The problems will probably drive further rationalisation of the industry, says Carolan, noting that recently many companies have amalgamated and/or been acquired by giants such as BAE Systems, Boeing and EADS. Such moves could defeat the Australian Government's determination to maintain an indigenous defence industry as a strategic capability.
Carolan - who surveyed AAAI members for the Royal Australian Air Force/AAAI 2001 Aerospace Conference in Melbourne last week - says he generally supports the government's recent statement that it "will not intervene and shape the market through subsidies and preconceived solutions".
He says the AAAI welcomes acquisition reforms within the Department of Defence (DoD) and acknowledges that industry will also have to change. He recommends that the DoD reverse a trend of raising the number of suppliers - up by 80% from 1995 to 9,000 today. This will require larger companies to better support small-medium enterprises, however, which traditionally have been a source of innovation, he says.
Source: Flight International
