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The Kiwi Unicorn in the Hyatt Canberra: NZDIA attends ADM Congress 2018

Line of Defence Magazine, Autumn 2018

Hon Chris Pyne, Australian Minister for Defence Industry.Hon Chris Pyne, Australian Minister for Defence Industry.

 

NZDIA CEO Jennie Vickers writes that Australia’s Defence market presents massive opportunities but also risks for suppliers within New Zealand’s defence industry. How do we chart a course for success while avoiding the potential pitfalls?

 

Mid-February sees the annual gathering of Australian industry, defence and Government to talk about the near and far projects in the Australian defence realm.

This year was no different, with standing room only and, we suspect, a record number of delegates. Hardly surprising with projected spend with industry, of over 200 billion Australian dollars over the next decade.

NZDIA was in Canberra on a mission with NZTE, both fact finding and looking at next steps following the Australian market opportunity initiatives of 2017. The first being the extremely successful presentation by RADM Tony Dalton at the October 2017 NZDIA Forum in Wellington, and then the NZDIA/NZTE Australian Department of Defence Industry Briefing on the naval shipbuilding endeavour in Auckland in December.

As the presentations rolled out during the day in Canberra, it was easy to become blasé about multi-billion dollar spends, such is the magnitude of opportunity on the Australian horizon. Whether your focus is on Primes or SMEs there is clearly plenty for all.

However, for the Kiwis in the room who I spoke to, what was striking on that day was the almost total absence of the words “New Zealand” in the presentations. This is both a bad thing and a good thing!

At the NZDIA Forum in October, Mark Purcell (RADM Rtd) reminded us of the framework under which New Zealand companies with fewer than 200 employees performing work in New Zealand count as SMEs in Australia, thanks to the Closer Economic Relationship which is now over 30 years old. This framework is coupled with the 2015 Australian Defence Industry Policy Statement and its requirements around strengthening Australian Industry capability involvement in major projects over AUD 20 million.

Hon Christopher Pyne, Australian Minister for Defence Industry, spoke both at the ADM Opening Function and again at the AIDN National Dinner. Speaking at the dinner, Mr Pyne said a number of things of relevance for both Australian and New Zealand industry:

“This is going to be a great year for Australia, Australians and those working in and around this great defence industry,” he said.

“I’ll outline shortly what you might expect for defence industry as this year unfolds and how, as a matter of fundamental importance to the Turnbull Government, we intend to put Australian industry, particularly small to medium industry, at the greatest possible advantage.”

Back to the ADM congress, and as we read the speeches and the commentaries on the presentations, we are able to – and should – read every reference to opportunities, help and assistance for Australian SMEs as a reference in fact to ‘Australian and New Zealand SMEs’.

 

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This does beg the question as to why – when the speakers talked about opportunities for industry – did no one mention New Zealand? Was it because it is obvious that our businesses are included? Because the focus was on the majority local audience? Or because Australian Industry and International Primes had not, until recently, factored our production and services into their equations?  Maybe we have had 30+ years accepting CER as a fact of doing business and stopped looking for new areas to apply it.

If the presentations in Canberra were anything to go by, the rivalry between Australian States was hotting up as the Australian Government edged closer to announcing the Land 400 winners.

It was fascinating to see politicians advocating so strongly for the merits of industry in their own neck of the woods. New Zealand will hopefully be able to back every global industry horse in the platform races by not taking sides but still be positioned as the provider of additional capacity and innovative capability.

Over the next few months NZDIA Members will start to see the next steps in helping New Zealand industry gear up to take advantage of these opportunities. We started with the Maritime domain in December, but air and land domains are in the mix.

We are in discussion with Primes, Defence and Australian Industry bodies about opportunities for more presentations and engagement here. Talking to training providers about what is available to support our businesses, working with NZTE to add a defence context to their training and will in April be talking to as many members as possible about their level of interest and their needs.

Organisations wanting to be part of the capacity/capability team could of course get the ball rolling for themselves by identifying which Australian projects they have the closest nexus with and start gathering their thoughts on their specific solutions to the specific identified platforms.

Wise counsel reminds me on a regular basis that with great opportunities come threats. While the opportunities for New Zealand industry in delivering capability to Australia are amazing there is a looming people risk. If New Zealand industry does not step up and grab some of these chances, Australian industry might grab our people instead. That is bad for industry and bad for NZDF and MOD.

On the positive side there are plenty of people, Government departments, universities and companies in New Zealand looking at the issue of future proofing our workforce, so together we should be able to make this work for us and not against us.

And why the Unicorn? Back in 2013, venture capitalist Aileen Lee used the phrase ‘Unicorn’ for a start-up company valued at over $1 billion. The mythical animal was chosen to represent the statistical rarity of such successful ventures. With AUD 200 billion in the Australian wallet (NZD 215 billion), attracting just 0.5 percent of this in New Zealand’s direction will see the defence industry being the Unicorn delivering for NZ Inc.

That’s a lot of jobs and a lot of prosperity that can be funded with Australian public money –  and that has to be a good thing… not a mythical dream.

 

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