Lockheed Martin Australia’s economic growth, resilience and SME opportunities

Lockheed Martin Australia (LMA), in collaboration with advisory firm AlphaBeta, now part of Accenture, has conducted a review into the full scale of the company’s economic impact across the Australian economy.

Joe North, Lockheed Martin Australia chief executive, told Defence Connect, “The modelling isn’t only focused on high-level economic impacts, it takes a very close look at the real and direct engagement between Lockheed Martin Australia and its local supply chain.

“Working with AlphaBeta enabled us to trace spending throughout our Australian supply chain, from our primary suppliers, through to the suppliers of our suppliers and all through the SME base giving Lockheed Martin Australia a true picture of its economic impact.”

The findings of the AlphaBeta report demonstrates the critical role of large defence primes to grow and further a vital, vibrant and sustainable sovereign defence industrial capability and a highly-skilled, high value Australian workforce – supporting Australia’s economy and future prosperity. 

One of the major catalysts for evolving Australia’s robust and resilient defence industry capability has been the F-35 Joint Strike Fighter program.

Australia’s participation in the F-35 Joint Strike Fighter program is a primary example of the growing capability of Australia’s sovereign industrial base, which saw Lockheed Martin inject $409 million in the F-35 global supply chain for production and sustainment.

Highlights from the report include:

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• In 2019, Lockheed Martin contributed $542 million to Australian gross domestic product (GDP);
• Lockheed Martin Australia’s supply chain spending has doubled to $697 million since 2017 supporting over 675 local suppliers, of which 70 per cent are small- and medium-sized enterprises; and
• Lockheed Martin’s economic impact is significant as every $1 of output generated by generates an additional $1.70 of indirect and induced impact to the economy.

As the Australian F-35 fleet continues to arrive and sustainment ramps up, analysis suggests that this figure will also continue to grow, both in metropolitan and regional Australia. 

Dr Andrew Charlton, managing director at AlphaBeta, highlighted the importance of Lockheed Martin Australia’s economic activity in building resilience in Australia’s economy, particularly through the COVID-19 pandemic.

“Our analysis shows that Lockheed Martin Australia’s operations have generated significant support for Australian industry and workers, including sovereign capability development, high-value job creation and workforce skilling, as well as investment in research and development,” Dr Charlton explained.

AlphaBeta’s report revealed LMA generated $542 million in total economic impact and supported 6,318 employees around the nation in 2019 – with 1,164 people directly employed by LMA, and an additional 5,154 jobs through supply chain and employee spending.

NSW and Victoria each benefited from $160 million of LMA’s economic impact, and account for 4,023 of the jobs supported by LMA.

The impact in Victoria is predominantly driven by large supplier spend — it captured 45 per cent or $316 million of total supplier spend in 2019, and therefore generated significant indirect impact.

North added, “We have about 1,164 actual LMA Australian employees, based on the contracts that go out, we have another 5,136 jobs around the nation in the high-technology, advanced manufacturing and next-generation technologies transforming the Australian economy.

“These jobs are across every domain, from maritime and the in-country Aegis capability, and Australia’s involvement and operating and sustaining of the F-35, C-130J and MH-60R helicopter operations also playing a key role in supporting the industrial capacity.”

Dr Charlton expanded on North’s comments, adding, “Not only is this support high value, high capability jobs, with a big impact for regional Australia, the Shoalhaven region in particular has benefitted from LMA’s investment in the whole Australian industrial base.”

South Australia benefited from $103 million of total impact and 20 per cent (1,232) of the total jobs supported.

The majority of this impact is directly contributed by LMA’s employment, with over a third of employees supporting the Future Submarine Combat System and Aegis programs.

North added, “Lockheed Martin Australia’s role as the combat systems integrator (CSI) has seen the workforce grow to over 220 people, including 36 graduates and undergraduates, they’re currently working on the coding and design of the future combat system for the Attack Class.

“This isn’t a work force that will be going anywhere, it is a truly sovereign workforce capability developing the combat system that will support the Attack class through life.” 

Queensland generated $93 million worth of economic impact and 12 per cent (743) of the total jobs supported. The remainder of the economic impact is distributed between the ACT, Western Australia and the Northern Territory.

The report details the employment impact of Lockheed Martin Australia, including:

• In 2019, Lockheed Martin supported over 6,300 Australian jobs. These jobs included direct employees and workers employed by suppliers engaged to deliver Lockheed Martin products and programs in Australia;
• Lockheed Martin Australia has grown its workforce by 28 per cent between 2017 and 2020, with 1,164 employees across every mainland state and territory delivering a wide breadth of capabilities from air superiority, sustainment to space and research and development;
• Lockheed Martin Australia is creating opportunities for high-skilled, entry level roles and offers seven early career pathways in Australia, including apprenticeships, internships, trainee programs, and the award-winning Graduate Development program; and
• Collectively, these programs employ 133 Early Career employees, or over 10 per cent of LMA’s workforce.

North added, “While the Report highlights Lockheed Martin’s economic contribution to Australia’s economy, we understand our nation, like the rest of the world, faces significant economic challenges in the wake of COVID-19.

“As Australia looks to defence as a sector key to realising a national economic recovery post-COVID, Lockheed Martin Australia is already working with its local partners to help deliver an industry-led recovery and a stronger, sustainable economic outlook for Australia.”

Headquartered in Canberra, Lockheed Martin Australia is a wholly-owned subsidiary of Lockheed Martin Corporation. The company employs more than 1,000 people in Australia working on a wide range of major programs spanning the aerospace, defence and civil sectors.

AlphaBeta’s economic impact study was conducted by measuring the direct, indirect, and induced economic impacts of Lockheed Martin Australia’s operations and supply chain.

Lockheed Martin Australia’s financial and employment data was used to capture the companies direct contribution to the economy. Using detailed supply chain procurement data, AlphaBeta had been able to examine the degree of impact Lockheed Martin Australia has on each of its suppliers and measure Lockheed Martin Australia’s indirect economic contribution.