Defence Slump puts supplier base in jeopardy rket slump puts industry in

Defence Slump puts supplier base in jeopardy rket slump puts industry inAustralia'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 concern about the viability of remaining in the aerospace-defence market."

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"; aerostructures 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 government's determination to maintain an indigenous defence industry as a strategic capability.

Carolan says he generally supports the government's 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) but notes the industry also has 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.

Australian Airshow report: pages 20-23

Source: Flight International