Saturday 20th of April 2024

Adelaide according to Raytheon

Bear in mind when you read this that there are Raytheon people wandering around Antartica, and that the reasons that Raytheon have identified Adelaide as a hub are probably similar to those I gave in Halliburton's Adelaide.  

Reprinted from Raytheon's website, this speech explains South Australia's new military role in the world better than I can:

An address by Mr Ron Fisher, Managing Director Raytheon Australia

To

The Australia-Israel Chamber of Commerce

27 September 2005


Deputy premier, the Honourable Kevin Foley, the President of the Australia Israel Chamber Of Commerce, Mr Allan Bolaffi, distinguished guests, ladies and gentlemen.

I am grateful to the chamber for their generous invitation to address you today and express my pleasure in being here with such a notable group within the Adelaide business community.

In light of this State’s proud victory in the battle to secure the Air Warfare Destroyer I thought it timely to provide you with a defence industry perspective of South Australia. As part of this discussion, I would like to give you a very brief overview of Raytheon Australia and our position in the defence market in order for you to be able to put my remarks in context.

Raytheon Australia
We are a wholly-owner subsidiary of Raytheon Company, the fourth largest defence company in the United States.

Raytheon has operated in Australia since the 1950’s, but our permanent presence was limited to a country manager and supporting administrative staff.

Following the Federal Government’s 1998 Defence And Industry Strategic Policy Statement that was aimed at growing an indigenous defence industry Raytheon decided to invest in Australia and I was given a charter to establish and grow a local company.

While Raytheon invested financially in Australia the more important investments have been in knowledge, skills, processes, and technology. To assist our development in these areas our parent company has been a valuable resource for us.

All of our employees in Raytheon Austrtalia are Australian, but if we need deeper specialist expertise or assistance in transferring technology to this country we can call upon any number of engineers and other experts to assist. We, in Raytheon Australia, use the term “Reach Back” to describe this key asset that allows us to draw upon Raytheon’s global resources.

Raytheon Australia made its first acquisition, a small military aerospace company, towards the end of 1999. This was followed by the naval business of Boeing, which enabled us with our naval customer to correct the original Collins combat system and has proved to be an excellent example of “Reach Back” to our parent company, which has over 30 years experience working on submarine combat and weapon systems for the USN.

Since then we have grown to be over 1,000 employees with operations in all of the mainland States and Territories with an annual turnover of A$325 million. This is dynamic growth in anyone’s language, but particularly so in the defence market.

The current disposition of the company is a function of strategic acquisitions, a desire to be close to our defence customers, and the availability of highly qualified and experienced engineers and technicians.

With regard to this latter point, we had previously identified Adelaide as a hub for the growth of engineering talent and are working with the University of Adelaide to foster a relationship based on mutually beneficial research and assisting undergraduate engineers to gain practical experience.

We are involved in a number of major programs including:

  • The Air Warfare Destroyers, for which we are the Combat System – Systems Engineer;
  • The replacement combat system on the Collins Class submarines, for which we are the Systems Integration Agent;
  • The simulators for the upgraded F/A-18 Hornets;
  • Avionics support for the RAAF Maritime Patrol Group and the Aircraft Research And Development Unit at RAAF Edinburgh, and the Strike and Reconnaissance Group at RAAF Amberley;
  • In service support for the RAN Submarine Group at HMAS Stirling;
  • The Electronic Warfare Training aircraft operated out of HMAS Albatross in Nowra and
  • The Electronic Warfare Emulator Pod, which is to be fitted to the BAE Hawk aircraft.
We also provide technical support for the Joint Facility at Pine Gap, and the Deep Space Communications Complex outside Canberra.

Finally, we have a Geospatial Imagery business that takes telemetry data directly from a constellation of orbiting satellites through a dish and terminal equipment here in Adelaide to provide imagery and other value added products much faster than through the satellite operators in Europe and the USA. These satellites also have a potential role in wide area surveillance of our maritime approaches.

Nature of Defence Business
Turning to the nature of defence business in Australia, there are a number of characteristics that are probably unique and that most of you would covet for your own markets.

Firstly, our primary customer publishes a ten-year plan for capital equipment acquisition, or forward business. Although not irreversible the defence capability plan, or DCP as we call it, is proving to be surprisingly stable when compared to the process that preceded it. Because the DCP is “owned” by the Federal Government the rationale for changes is more transparent than when Defence put out its own unclassified version of internal documentation.

In the last ten years spending has varied between zero real growth to an annual increase of three per cent in real terms.

The total defence market now exceeds A$7 billion annually. This is a combination of capital equipment acquisition, minor equipment, and logistics expenditure.

This expenditure is underpinned by broad public support; and although some political differences have arisen over the last decade, Defence still enjoys largely bipartisan political support at a parliamentary level.

However, on the down side, we operate in a single market and one in which demand, at least for major acquisition programs, is uneven. It can be a long time between programs of the size of the AWDs and amphibious ships.

On the other hand, defence spends over A$2.5 billion each year on smaller programs, equipment and consumables that have a predictable pattern. The nature of our marketplace is also changing. The Federal Government has undertaken a number of reforms that have proved to be of considerable benefit to defence industry.

In addition to the DCP, the market has been advantaged by improvements to defence capability planning and equipment acquisition in line with the recommendations of Malcolm Kinnaird.

There has also been a greater focus on the need to improve the quality and quantity of skills available to the defence industry. There is clearly a demand for additional engineers, specialist technicians, key trades people and project managers.

Last year the Government announced its Skilling Australia policy and the defence industry program with the commitment of A$200 million over the next decade to assist defence companies to improve and broaden the skills of their workforces. This is a welcome recognition of this important issue and I commend the Defence Materiel Organisation’s CEO, Dr Stephen Gumley for acting as a vocal champion for this cause. However we also need to ensure that our Universities are aligned/partnered with defence industry and government to make certain we have a coherent program for the development of engineering in Australia.

The government has also embarked upon a series of defence industry strategic sector plans to ensure sustainable support for the ADF. The Electronic and Aerospace Sector Plans have been approved and promulgated, with the Land and Weapons Plans nearing completion.

These plans each take a different approach reflecting the characteristics of their respective sectors. The Electronic Sector Plan is particularly forward looking, as it is not prescriptive of industry, rather it establishes benchmarks and leaves it up to industry to determine how they are to be met. The fifth plan, naval shipbuilding and repair appears to be on hold, as this sector is effectively being restructured through the competitions for the AWD and Amphibious Ships, with the sale of ASC also to come.

South Australia
This is an appropriate point to move on to our perspectives of the role of the defence industry in South Australia.

In my view, just as the Federal Government sees an important role for South Australia as a defence industry hub the State Government has a similar vision.

Indeed, the South Australian Government has been the most proactive State government in attracting companies to relocate and position to win defence business. There is recognition that the defence industry is key sector of the State’s economy and that its growth is of strategic importance. As at the federal level I believe defence industry also enjoys bi-partisan support here in South Australia.

According to the State Government, defence contributes over A$1 billion annually to the Gross State Product, employing around 17,000 people including uniformed personnel. Further it is estimated that while South Australia receives only 6 per cent of Australia’s annual defence spend, in line with its share of the national population, it accounts for approximately 30 per cent of all capital expenditure.

Against this background, the Government here has taken several steps to promote defence industry. Two years ago it established its Defence Industry Advisory Board with an ambitious aim for the state to become the dominant location for Australian defence activity. This has been supported by the Government’s Defence Unit, a Defence Teaming Centre and the common goal over the next decade to double the defence industry’s contribution to Gross State Product and to grow employment levels in the industry to 28,000 people.

Although Raytheon’s initial presence in South Australia was a function of the companies we acquired we have built on those foundations with the backing of the Government and recently centralised our operations at a new location in the technology park at Mawson Lakes.

As I mentioned earlier, we had previously decided to make Adelaide one of our centres for growing our engineering workforce and are now looking at whether there might be other parts of the company’s operations that could benefit from being moved to South Australia.

The State Government has responded well to the issues affecting our business and indeed, shared by others in the industry, namely:

  • The investment climate
  • Cost structures
  • Supporting infrastructure
  • Industrial capability, and
  • Our potential supply chain of local businesses.

For Raytheon Australia this latter point was particularly important because we took a decision early in the company’s development that we would not be highly vertically integrated. Rather we would seek capability partners, preferably among the smaller companies to provide specialist capabilities.

Of course, the availability of skilled people was a vital issue, noting that the nature of our business as a systems integrator means that we are seeking systems engineers rather than tradespeople.

By virtue of the size of the population it is inescapable that this is an issue for Adelaide. However, I am pleased by the Government’s proactive approach by challenging this issue on several fronts.

The Government has sought to establish a defence institute to focus on electronics and systems integration skills and to further these skills with a centre of excellence.

There is also the “Make The Move” campaign aimed at people in the 30-45 age brackets, which is coincident with our own target group, albeit we are looking for people with very defined skills and, preferably, experience.

Another State Government initiative I applaud is the recent agreement for the prestigious US University, Carnegie-Mellon, to establish an arm here, bringing the number of quality universities to four.

I would expect the AWD program to act as an additional lure for people to come to Adelaide; after all there will be few bigger programs to work on over the next ten years.

Together with other high profile programs the Government is hoping to be won by South Australian companies, the AWD will no doubt help stem the tide of inter-state migration that has historically affected this state.


The AWD
Turning to our role in the AWD program we are naturally excited to have been selected as the Combat System – Systems Engineer for Australia’s new Air Warfare Destroyers.

We are also delighted to be working with our fellow AWD alliance partners – the Commonwealth, ASC and the recently selected platform system designer, Gibbs and Cox on a venture that will not only provide a major leap in the Royal Australian Navy’s air warfare capabilities but will also be one of the most significant shipbuilding projects ever undertaken in this country.

As to our role as part of the alliance, Raytheon Australia is to:

  • Integrate the non-Aegis elements of the combat system and conduct combat system trade studies;
  • Develop the design of the complete AWD combat system in conjunction with the Commonwealth, the US Navy and its combat system engineering agent for the Aegis system, Lockheed Martin;
  • Develop complete ship and integrated logistic support systems with ASC and Gibbs and Cox; and
  • Develop project management and systems engineering structures and deliver mission systems integration.
This is a significant role indeed and one I believe that Raytheon is suitably qualified to execute.

Our involvement in the Collins Class submarines has provided us with the opportunity to demonstrate our expertise in mission systems integration to our Australian customer.

It also demonstrated our ability to work with both the Commonwealth and the USN in the integration of US-sourced combat systems into an Australian warship.

This, of course, was supported by the strong pedigree of our American parent and our ability to “Reach Back” and tap into that reservoir of expertise.

Since 1998 Raytheon has been the electronic and weapons systems integrator for the US Navy’s latest and most advanced surface combatant programme, the DD(X). In May of this year we were awarded a follow-on us$3 billion DD(X) ship system integration and detail design contract. Raytheon has also worked as the Whole Ship Systems Integrator for the US Navy’s latest amphibious ships, the LPD – 17 San Antonio Class. We will also be taking on an important role in the next generation of aircraft carriers, the CVN-78, with Raytheon’s selection earlier in the year as the industry lead for warfare systems integration of all onboard weapons systems and electronic operations.

Experience in this area and our ability to reach back to our American parent will be extremely valuable for the AWD program, helping to ensure the necessary transfer of experience and expertise to support the development of an effective solution for the AWD combat system. We see it as part of our role to flow some of this expertise to other smaller Australian companies with whom we will work on this large program.

Conclusion
As you can see, Raytheon Australia is very optimistic about our own future in Australia’s defence industry and the contribution that our industry can make to this State.

Challenges remain but I can see that there are strong efforts at both the State and Federal level to address these concerns, particularly in the skills area.

We also recognise our own responsibility as significant players in the defence marketplace to play our own role to provide for the industry’s growth.

This is our commitment to you today as I hope that Raytheon Australia can secure for itself an important part of South Australia’s future prosperity.

Thank you very much.

----------------------------------------------------------------------

I've just found a great pair of June 2004 stories on an electronics industry news page. 

One begins "Defence Minister Hill has announced that Australia and the U.S. intend to sign a Memorandum of Understanding on co-operation in missile defence next month.

The other begins with "South Australian Premier Mike Rann announced details last week. of an aggressive plan to double the size of the defence industry in South Australia, and to increase defence employment from 16,000 to 28,000 workers by 2013.  In Washington Mr Rann met  with the leaders of Raytheon and other leading US defence contractors"


It's a beautiful piece of syncronisation (page 15 here) between the Governments and defence companies, and mostly we've been none the wiser.

EPILOGUE:

BELFAST, Northern Ireland --Police on Wednesday arrested nine protesters who broke into the Northern Ireland software center of U.S. defense contractor Raytheon Co. and smashed windows and computers.

The protesters in Londonderry, Northern Ireland's second-largest city, said they blamed Massachusetts-based Raytheon for designing missile-guidance systems and other military software being supplied by the United States to Israel in its current conflict with Hezbollah guerrillas in Lebanon.

Raytheon declined to comment.

 

Federal Government Announces ASC Sale

[extract]

Finance Minister Nick Minchin announced today that following a scoping study into the possible sale of the company, the Government had decided to put it up for a competitive tender sale.

He said the tender would most likely begin in late 2007, with a sale completed by the second half of 2008.

The sale decision had been expected.

Senator Minchin said a tender sale would protect the company's long term interests.

"It is vital that ASC continue to have access to essential technical assistance from international partners and governments," he said.

"A trade sale will allow the Government to ensure that the company's new owners are acceptable to overseas technology suppliers.

"A trade sale will also allow the Government to assess the financial strength and industrial experience that potential buyers would bring to the company.''

Senator Minchin said the Government had flagged that ASC would not be sold until the Air Warfare Destroyer and amphibious ship contracts had been decided

ABC queries S.A. weapons in Lebanon (transcript)

Sandra Kanck, Democrat   (891ABC 8.41-8.48)   Call for a guarantee that
SA's weapons aren't being used to kill civilians in the Middle East

(Abraham: 
In South Australia we make ... weaponry and we make gizmos that make
sure they hit the targets.  We are, the Premier keeps telling us, the
defence State.  Sandra Kanck wants to know where those weapons are
going and who they're killing.  In particular she wants a ...
guarantee from the Premier that they are not being used in the bloody
attacks, using her words, upon the civilian populations of both Israel
and
Lebanon. ... Good morning to you Sandra ... Firstly, why do you want a
guarantee on this ... if we're the defence State and we make weapons
then do we not accept that weapons primary purpose are to kill people?)
Well I'm not sure that South Australians want us to be part of a death
industry.  There's a bit of a difference between a defence industry and
a death industry ... if we have any sort of weaponry; whether it's a
cog in a wheel, whether it's part of a missile delivery system that is
raining bombs on innocent civilians then South Australia ought not to
be part of that.  (Bevan: What inquiries have you made to find out
which products go where?)  I've had my own researcher working on this
... doing a lot of web searching and so on and I also had the
parliamentary library ... we could only reach dead ends.  There's
always this commercial in confidence stuff ... if we are being involved
in an attack industry then they don't want us to know who they're
selling stuff to.

We do know, however, that we are part of something called the defence
teaming
centre which the Rann Government has set up, and that has part of it's
brief ... "To increase defence technology and related exports by South
Australian companies, particularly to Asia and the Gulf
cooperation council states in the Middle East".  (Bevan:  Our phone
lines are open.  What do you think?  Should we just accept that these
industries are here ... our governments ... have made an awful lot of
effort to try and attract them to South Australia.  We have a long
history of defence indsutry here in South Australia, should we be
worried
about where those products go?  Are there protocols in place to make
sure that only the good guys get them? ... 1300 222 891)  (Abraham:
... With the uranium mining and the yellow cake exports we go to great
pains to make sure that they go to countries where they will be used for
commercial use and not for military use ... there are lot of protocols
in place.  Sandra Kanck what are you able to tell us about the protocols
that are in place to ensure... Well I don't know how you can have
weapons
that aren't going to be used as weapons.  I mean ... are we sort of in
fairyland here ...we're happy to take the jobs. We're happy to
take the sales tax and the other advantages that flow to the population
? ...)  ... that's the question I'm asking ... Are we manufacturing
weapons to kill people?  Is that our role? ... if it is, is it a role
that South Australians want to be involved in?

(Bevan: But can you draw
those distinctions ...?  You say there are good weapons and there are
bad weapons.)  I'm not ... one of the first Senators that the Democrats
had, Colin Mason, who used to say that Australia ... at the national
level, should be like a hedgehog - as prickly as can be but no real
threat to anyone but anyone who tries to touch us is sure going to get
... a bit of a hit from all those spines ... (Abraham: Well that would
be if we were defending ourselves but we know we export ... a lot of
this technology ... )  And Im asking the question - Do South Australians
want to be part of war mongering? ...  (Caller Ben:  ... Having been in
the defence force for a while, it puts a lot of money into the State's
economy ... selling these weapons of war as such but I'd like to just
see we stop doing that and how much effect that actually has on the
State's economy ... surely it would be pouring a hell of a lot of money
into it?)  (Bevan: ... It's an enormous part of the economy ... That's a
good question though, I wonder what the numbers are?)  ...

(Caller Don: ... if we were ever involved in a war ... South Australia would be the prime target for bombs and whatever ... ) 

(Abraham:
... Sandra Kanck have you formally asked the Premier or are you doing
so via the program and your press release?)  I'm doing it via the
program and the press release but I think it's likely to be a question
in parliament when we resume.  (Abraham:  Okay well he's never averse
to listening to the program and responding we can assure you.  You're
linking this to the international arms trade.  What do you mean by that
because the term, arms trade, really does carry overtones of deals done
in the night, people wearing balaclavas ...  )  Well again I'm posing a
lot of questions.  I don't have the answers and that's been my problem
... I've had the parliamentary library working on it. We've not been
able to come up with anything.  I'm looking for some reassurances.  I'd
love Mike Rann to come onto your program and say, no civilians have
been killed in Lebanon or Israel as a consequence of our industry
here.  If he cant give that guarantee then we really must ask a very
very hard question on whether or not we want to be part of an industry
that delivers death.

... (Abraham: ... we'll keep an eye on this one.)