Ai Group statement on shipbuilding

“Australia’s naval shipbuilding program has the capacity to be transformative for Australian industry if it is delivered with our overall national interest at its core. A key need is to strengthen the Australian Industry Capability (AIC) program across all major Defence projects while ensuring that the key strategic objectives of our defence program are met,” Ai Group Chief Executive, Innes Willox, said today.

“Defence’s shipbuilding program represents the most significant investment in Australia’s naval capability since the Second World War. To be successfully delivered, it requires extraordinary levels of effort, resources and capability building, as well as a strong partnership between Defence and local and international industry.

“The Australian Industry Group is backing the Department of Defence and the Australian defence industry to deliver the naval shipbuilding program for the sake of our national security, the significant industry development opportunities, and for the spill-over benefits that emanate from Australia’s high technology manufacturing sector.

“We welcome the statement by the Department of Defence and Naval Group on 13 February 2020 that ‘Sovereign control over the Attack Class Submarine fleet and maximising Australian industry involvement throughout all phases of the Attack Class Submarine Program are contracted objectives in the Strategic Partnering Agreement between Defence and Naval Group’.

“Delivering these outcomes will require time, concerted effort and diligence to continue to develop the required business capabilities and workforce skills.

“History has demonstrated the complexity of Defence projects and the importance of maintaining deep design, engineering and manufacturing capabilities in Australia in support of key programs. The Bushmaster protected vehicle is a recent example where, despite difficulties in the program, it proved to be an outstanding success and saved many lives. The vehicle was able to be quickly and efficiently adapted and tailored to changing battlefield threats facing the Army because of the deep involvement of Australian industry in its design and manufacture. There are many other examples where the knowledge and insight of Australian industry has been absolutely crucial to the delivery of Australian defence programs.

“Similarly, over the life of the future submarine program there will be an ongoing need to tailor and adapt the platform to changing requirements and threats. Only by establishing and maintaining advanced Australian industry capability will the full warfighting capability advantage of the submarines be delivered and maintained. This will take time and effort to build and maintain the necessary requirements over what is a multi-generational project.

“In our submission to the current Senate inquiry on Shipbuilding (link), the Australian Industry Group noted that while the foundations are sound, the Australian Industry Capability (AIC) program requires a time-critical review to effectively meet the requirements of Defence projects.

“We recommended an immediate strengthening of the AIC program across major Defence projects by:

  • Improving the AIC program’s ability to identify capability, measure and enforce AIC plans in contracts.
  • Applying a methodology to capture the long-term value of AIC, including whole-of-life costs and a sovereign industrial base.

“We also commend the proposed Government review of the Centre for Defence Industry Capability to help ensure effective implementation and delivery of services.

“The naval shipbuilding plan represents an unprecedented opportunity for the Australian defence industry. We need to embrace the tremendous national opportunities presented by the program to build Australia’s advanced technology sector through a strong and trusted partnership between Defence and industry,” Mr Willox said.

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