21/01/2014 - 13:00

Growing defence role for WA

21/01/2014 - 13:00

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The signing of two long-term leasing deals by BAE Systems has highlighted the defence sector’s role in the state’s economy.

DOWN TO BUSINESS: The Henderson facility is a hub of activity for contractors and companies operating in the defence industry sector.

The signing of two long-term leasing deals by BAE Systems has highlighted the defence sector’s role in the state’s economy.

Three years ago, British contractor BAE Systems had fewer than 60 employees at its Henderson facility, just south of Perth.

That number has grown to more than 500 as BAE has expanded its operations in Western Australia, and is set to stay high after the company signed two long-term leases in late November 2013.

It signed a 25-year lease with LandCorp for shorefront land at its Henderson facility and a 17-year lease with the Fremantle Port Authority for the nearby seabed.

The contractor has also committed to spend more than $20 million on a new office complex, shiplift upgrades and additional rail facilities in line with its aim to diversify into new markets.

During the past 12 months, BAE has undertaken upgrades to its Henderson site by resurfacing and sealing the 14.5-hectare yard, along with upgrading and extending its dry berths.

BAE Systems Australia chief executive David Allott confirmed the significance of WA to its operations.

“In 2012, our company signed a contract to upgrade the remaining seven Anzac ships under the ASMD project,” Mr Allott said.

“This will be undertaken at our Henderson facility in WA. We also have a thriving ship repair business and are using our facilities to bid for fabrication, pre-assembly, modularisation and load-out opportunities in the resources and energy industries. To further position our Henderson operation for future growth, we will continue to invest in our infrastructure and capabilities.”

BAE has grown to become one of the major players in WA’s defence industry sector, along with firms such as Austal, Raytheon, Thales, Airflite, and Barrett Communications.

However WA’s defence sector, like those in other states, is facing a challenging period during which the national defence budget has been slashed, hurting smaller contractors in particular over the short term.

But for WA, the future of the defence industry may not be gloomy over the long term.

The state’s future defence profile can be gauged by a Defence spokesperson’s acknowledgement that total Defence Materiel Organisation (DMO) expenditure on sustainment and acquisition activity in WA from 2013-14 to 2016-17 is forecast to total $2.5 billion.

That equates to 10.9 per cent of the total DMO expenditure Australia-wide for the same period.

The Royal Australian Navy’s head of modernisation, rear admiral Mark Campbell, provided an overview of the Navy’s current and future projects in WA in an interview in September.

“At Henderson we’ve got an ANZAC Class undergoing an anti-ship missile defence upgrade at the moment, and we’ve got another one there just about to enter the program. We’ve got an Armidale Class patrol boat in the Austal yard undergoing some deeper maintenance. And we also have a Collins at Henderson as well,” he said.

“I think it’s quite a rosy picture for the WA defence industry at present. Even though there are recruitment challenges, there is plenty of work across ANZACs, the Collins, and the patrol boat maintenance at present.

“The Armidales will still be in service in five years’ time, so there’s plenty of work there. The Collins will be around for at least 15-20 years, so there’s plenty of work there too. The ANZACs are the same; they will be around for at least 15-20 years until the SEA5000 project fulfils its initial operating capability. There’s plenty of  maintenance work across those three classes of vessel.”

Rear admiral Campbell also referred to future projects, including future submarine design and construction, the future frigate, and upgrading or replacing the patrol boats, mine-hunters and hydrographic ships.

“I cannot say that all of that work will go to WA, but I’d say some will. The projects I’ve just mentioned will be worth over $50 billion,” he said.

WA is currently host to the following major sustainment projects:

• Collins Class submarine, which is maintained by ASC, Raytheon, Thales, Drivetrain Power and Propulsion, VEEM Engineering and BAE Systems;

• ANZAC frigates – serviced by Naval Ship Management-Australia, BAE Systems, Thales, Rolls Royce, and MTU Detroit Diesel;

• the DMO’s command and intelligence systems support office, with hardware and software support provided by Thales;

• wide area surveillance Jindalee Operational Radar Network (JORN) – looked after by Lockheed Martin Australia Electronic Systems; and

• the Pilatus PC-9/A military training aircraft upkeep by Perth-based Airflite.

Cumulatively, DMO claimed last September that WA’s defence sector for FY2013-14 had provided 2,600 full-time-equivalent jobs in direct support of defence acquisition and sustainment.

Similarly, based on industry sources it is estimated WA has more than 180 companies, mostly SMEs, which supply products or services in support of ADF capability.

As opportunities arise in WA, major contractors are increasingly taking note of possibilities to invest in the state.

Thales Australia announced last November it had been awarded a three-year extension to its support contract for the RAN’s Adelaide Class FFG frigate combat system.

The contract will be delivered from the company’s facilities in Sydney and Perth.

Thales Australia CEO Chris Jenkins said WA was integral to supporting the ADF, and it had always been a question of having the right skills and the right capabilities to support the west coast’s defence needs.

“This becomes even more critical as capabilities from the state potentially expand to the north as a result of the Force Posture Review, the White Paper, and the defence capability plans that evolve from that,” he said.

“WA needs security for its mineral resources and oil and gas reserves. For a company with our kind of talent and technology reserves, this is an excellent opportunity to build on for the years ahead. We are closely watching and working out the best ways to engage with WA, which is very much on our radar.”

Sergei DeSilva-Ranasinghe is a security analyst, defence writer, consultant and a non-resident fellow at the National Security Institute, University of Canberra.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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