Government urged to inject more domestic maintenance, repair and overhaul competition

Ahead of the Defence Industry Development Strategy Summit 2024, CEO and managing director Mark Burgess said Australia has the capability to provide support, maintenance, sustainment, and upgrade capabilities to the Australian Defence Force and allied forces, particularly the US.

“This part of the world is underserved by MRO for both commercial and military aircraft, but particularly military aircraft. The base capability exists today, but it’s unused by Defence,” he told Defence Connect.

“We do component MRO, but too many of the components are still sent offshore (either to the US or Europe) to be repaired and overhauled. I think we could do a lot more of that here.”

However, according to Burgess, they continue to be sent offshore because the prime contractors for those aircraft use their existing supply chains or suppliers, which are not based in Australia.

“In some cases, because the aircraft was sold to the Australians under a government-to-government deal, there are some constraints that make it easier to send parts back to the home country, typically the US,” he said.

“But you can break those open and compete with them at a lower level. It’s just that that competitive pressure doesn’t exist very much in Australia. It’s in the interests of the prime contractor to stick with their existing supply chain.”

Burgess’ comments precede his industry panel session at the summit, where he will unpack the expanding opportunities stemming from maintenance, repair, overhaul, and upgrade of Australian Defence Force aircraft.

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As part of the Defence Industry Development Strategy, the federal government has identified this as one of its seven sovereign defence industrial priorities (SDIP), arguing that growing the “nascent” capability is critical to optimising aircraft availability and ensuring that it is not compromised, especially during times of conflict.

Quickstep Group already services commercial airlines, which Burgess noted have larger volumes than the Australian military and work on tight time frames.

“We tend to have quicker turnaround times and are cost competitive because we have to be for the commercial market. But we are essentially sealed out of the defence market,” he said.

Burgess suggested that the government has an opportunity to assert the importance of sovereign capability by introducing more domestic competition to enable local companies to compete for this type of work.

“This would allow us to demonstrate that we can do it faster, better, and cheaper than their existing suppliers,” he said.

“We’re happy to compete with our overseas counterparts, but at the moment, we don’t even get that opportunity because the prime contractors maintain the integrity of their existing supply chain. If you have long turnaround times, you need more inventory. If you have more inventory, you get paid more.

“There’s a direct incentive to not necessarily optimise the supply chain, and you’ve got all of the industrial politics and vested interests of your existing supply chain that makes it better for that company to send work offshore.”

Growing MRO capabilities in Australia could generate more jobs and open doors for the younger generation to work in aerospace while increasing revenue and profit in companies and economic prosperity, Burgess said.

“More importantly, in times of crisis or conflict, you have to be able to fight with the equipment you’ve got,” he said.

“In order to do that, you need to be able to repair it and overhaul it, and you need to have those capabilities close to where your operating bases are, which is in Australia.”

Quickstep Group recently signalled that it is forging ahead with plans to build sovereign aircraft MRO capability, announcing an increase in the number of military components in support of the Royal Australian Air Force and Royal Australian Navy aircraft.

The company hosted an inspection of work undertaken on major components for the RAAF KC-30 aircraft with Northrop Grumman director of sustainment and modernisation services Deanne Barnett and head of procurement George Pesce.

“The KC-30 aircraft is essentially a commercial aircraft painted grey,” he said.

“It’s not quite that simple, but it’s an Airbus 330 in a military role. We have the capability and the approvals to do the work on the commercial aircraft, and now we’re doing that work on the military version. Similarly, there are many other aircraft in service with the Australian Defence Force that we could do the same work for. We’re trying to pursue opportunities in that space.”

Burgess concluded by urging the government to be clear about its goals around sovereign capability and becoming active participants in the market to enable it.

To hear more from Mark Burgess on Australia’s capabilities in the MROU of Australian Defence Force aircraft, come along to the Defence Industry Development Strategy Summit 2024.

It will be held on Tuesday, 6 August, at The Fullerton Hotel, Sydney.

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For more information, including agenda and speakers, click here.

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