Q & A: CEO of Nova Systems Jim McDowell in conversation with Defence Connect

Phil Tarrant:

Good day. Hey, gang. Phil Tarrant here, host of the Defence Connect podcast. Thanks for joining us today as we navigate defence and defence industry and coming off the back of a pretty successful AIC summit down in Canberra in Feb. I know a lot of you who are tuning into this actually got to the sellout event. And we also had... I can't remember exactly the numbers... About 1300 registrations online for people who were watching the livestream. Keen to hear about what AIC looks like for 2022. And some of these... It's going to be a lot of discussions moving forward as Australia navigates a competitive environment, operates within the Indo-Pacific. Right now, we don't really need to get too much into that today, but that's a spot in the world, how it sort of interfaces with sphere of influence, moving forward... What it means is that most people, I'd say all people inside of defence industry, want a stronger, more capable Australia. And the sort of sentiment, both from most people in politics and also Aussie industries, is that we get Aussie companies participating as much as possible in the supply chain.

And that's very much what we spoke about in Canberra at the AIC summit. Some pretty polarising views, some contrarian views. But if I had to summarise it, by and all a passionate cohort of Australian businesses and professionals that want the best for the nation and increasing Australian participation in their supply chains. The way that we're wired here in Australia, and this is the structure of how it's all worked, is that we have large primes that own the major relationships. And they're incentivized, they're requested to use SMEs as much as possible in their supply chain. And a lot of the people that listen to this, those SMEs looking to win more defence business... What we learned down in the AIC summit was that you've got to be defence-ready in order to be a strong participant inside of defence supply chain. That means not only strong rigour to your balance sheet, your funding lines, but also consciousness and adaptability in security, getting the security clearance through to your people.

These are all sort of a given to operating business. But one of the key points for me down there and the discussions that took place with our panellists was this notion around sovereignty, and what actually defines and what constitutes sovereignty in relation to defence supply chain and this raised capability to ensure its sovereignty with those companies here, to be able to buy those things. Headline for me was, sovereignty just isn't around the acquisition of stuff for the ADF. It's very much around sustainment. And this is my summary, but a lot of Australian businesses would benefit from constraining more on the sustainability side of things rather than the actual acquisition. And maybe that's where we need to play. But this notion of sovereignty, something I really want to get into over the period ahead, I'm happy to host the debate or discussion around it.

We'll get to some conclusions somewhere. And maybe it's one of those grey areas where we never know where it's going to land. But we're very fortunate in Australia that we have a very talented SME sector. And many of those Ms now have grown into large organisations who have been operating for many years. They're well regarded, well known, not only within a local supply chain servicing the ADF, but also for export potential, whether that being within a military or even a civil context.

One of them is Nova Systems. And we get the guys and girls from Nova Systems to come and have a yarn with us every now and then, just to update us on where they are. I know they're participating at this level of how it can best constitute their involvement in this notion of sovereignty, helping us work out where that lies, but they've also been doing some other stuff in the background. So I've asked them to come and have a chat, give us a bit of an update, what's been happening, and then what the future looks like. Joining me in the studio after what has been a pretty long-winded introduction, I do apologise, Jim McDowell, Nova Systems CEO. Jim, how you going?

Jim McDowell:

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I'm going very well, Phil. Thank you very much for the invitation.

Phil Tarrant:

It's great to chat. And can you give me some sense, when you get together with the board or for your senior executives, this sort of concept of sovereignty and what it means and how you sort of best build and position your business around it?

Jim McDowell:

Yeah. So I often say, "Sovereignty means whatever the person who defines it wants it to mean." And the person that defines it will define it in a way that they are in it, that they are sovereign. So I think it's a pretty broad church. However, the definition is control, really. If you have sovereignty over something, you have control over it. What is it you control? We believe that, if possible, you should control as much as possible, particularly of the industrial decision-making. And the example I tend to use for this is the motorcar industry, where for many, many, many years, we had a vibrant motorcar industry that could design, develop, produce, sell, sustain various brands of motor vehicles. Whenever somebody in Detroit and somebody else in Tokyo decided we weren't going to have one of those, we didn't have one anymore. Not because we didn't have the skills and capability, but because we didn't have the industrial control. But those decisions were being made somewhere. So if we can avoid that, I think we should. In some cases, we won't be able to. In some cases, we will.

Phil Tarrant:

And I think it's okay. And I think the mature way is to go, "We're okay not being able to control these particular things. It's just outside of our skill set." And that to me is the notion of sovereignty; what can be done here and why, and what can't be done here and why, and then make sure the stuff that we can't do, we shore up those supply chains as effectively as possible around it. Nova, you're big participants inside of the defence ecosystem. Semi-familiar with your business. I'm hoping to get some more information from you today. But you guys have recently gone through a bit of a brand refresh. Tell us about that, Jim.

Jim McDowell:

Yeah, so the original brand was invented by the founders of the company 21 years ago. And the company has gone from being two people providing a test evaluation services through to a company of more than a thousand people with more than $300 million in revenue, providing a whole array of professional services, not just T&E, although that's our heartland, but many... And we're a major services provider to the only one of the four who's Australian-owned. We have a number of other interests in aircraft modification and geospatial. So it just seemed to be a good time, going from two people to a thousand people to a few hundred million in revenue to no longer being an SME to being genuinely getting at the bottom end of the large players, that this was a good time to do that.

We also hadn't integrated the businesses we had acquired. So we set about creating what we call One Nova, not a series of brands. So this master brand. And the little logo is four leaves coming together, which is the four companies that currently constitute Nova. And the colour of orange is nothing to do with my sort of Irish political background, but it is the colour of flight test. It is the traditional colour of flight test. It's why black boxes are painted orange. So it's a sort of a nod to our past as well.

Phil Tarrant:

I just noticed on our particular chat, our Momentum Media logo's the colour of flight testing.

Jim McDowell:

There you go. Yeah.

Phil Tarrant:

It's quite symbolic, there we go. It's [inaudible 00:07:17] connected; test and evaluation is what we do, but we do it in the way of media. This sort of process, and going through brand refreshes and seeing it happen a lot, it's a bit like herding cats. How was it actually getting to that point to say, "Hey, this is who we are; this represents us"?

Jim McDowell:

Yeah... Look, it's very... It was really good. It was done very, very well. I've been through a number of these as well. And a number of very large companies, like BAE Systems, when I was chief executive there... These, there are fewer cats to herd in this particular case, but still some very vocal cats. So you've got to be careful and you've got to bring people along. And that's why you've got to recognise your heritage as well as pointing forward and getting people on board. And like all of these things, you'll get... 80% of people will think that's okay. 10% of people will think this is absolutely fantastic. And another 10% will think, "I kind of quite like the way we were." And if you keep the failure in that sort of ratio, you're okay. So I think we're okay.

Phil Tarrant:

Yeah. And it's good... Part of the story of Nova Systems. And it's an organisation that I think a lot of Aussie defence SMEs look to someone that they hope to emulate. You've done it smartly through good organic growth but through acquisition as well. And that's something open to all SMEs as they continue to do it. We've got to see, I think, consolidation, greater collaboration... Private equity is now coming to this space. You got to start clubbing up organisations. I believe you're going to start seeing this emergence of a bigger cohort of larger Australian businesses. But that sort of ground that you operate within now, Jim, in sort of other industries, it's not, for a lot of people, a comfortable place to play. You're either super small or small, or you are very, very large, and it doesn't leave a lot of space in the middle. I think defence industry in Australia, particularly the notion of sovereignty, is very different. This must open opportunities for Nova.

Jim McDowell:

Well, we certainly hope it does. And I think you make a very good point. It's not a very comfortable place to be. It's one of those things, good news, you've won the competition; bad news, you've won the competition. Now you got to go and deliver this. So most companies start off as SMEs and then get to where they get to. Now, for us, the question is, how does Australia now get to have one or two or maybe three I know, a small number of Australian prime contractors in control of all the discretionary decisions; these decisions being taken in Australia about finance, about acquisition, about all of those things? Because none of the big primes have that and they all have a place here.

I'm not going to... I ran... I was chief executive of the BAE for nearly 11 years. So I understand exactly where they're coming from. There's a lot of incentive for SMEs, and we benefit from that in the past. There's virtually no recognition of these couple of businesses, probably Austal and EOS being the two Australian businesses in the middle. So how do we get that next? And it seems to us that this requirement and desire for a more sovereign industry will open some doors that may not otherwise have been open because of the way the policy makers are thinking. And this curiously has been brought upon a bit by China and a bit by the geopolitical.

But nearly as much by the fact we've just gone through a COVID pandemic where it turns out the supply chain for toilet rolls is really important. And [inaudible 00:10:50] said that to anybody sort of three years ago, you would've been laughed out of the place. So it turns out it's not quite as obvious as it sometimes seems. And therefore, those questions are being asked, not just by defence now, but by the whole of government. And I think that's a good thing as well, because it is a national security matter.

Phil Tarrant:

Absolutely. And timing in business can be one of those things that's transformative, not only for the organisation, but for the customers and the people that it serves. And we all know, working inside of defence industries, that the customer largely is the Commonwealth, but the beneficiaries are all Australians. So a moment in time, to capitalise on to your point, I think you've got a lot of advocates in your corner at a parliamentary and a bureaucratic level. I think this consciousness about, how do we actually motivate and manoeuvre these larger Aussie defence companies into this sort of prime standing? Do you classify yourself... Now, Jim, are you a prime? Are you happy to say, "We are prime?" Do we need another term?

Jim McDowell:

No. No, I think we need... Primes are by and large seen in the horizontal. It's ships or aeroplanes  or systems integration or whatever. All of which is very good. So we see ourselves as being a candidate, at least, to be a horizontal prime across some of our core capabilities, particularly test evaluation, certification and systems assurance. That's the position. That, and with EOS, a prime position in the guided weapons enterprise, which clearly is a new thing for Australia. I mean, we've had it in the past, we've reinvented it. So given that we're starting from top dead centre, let's make this as sovereign as we possibly can. So those are kind of the two big areas for us at the moment, but particularly... Well, not particularly in either of them, but our traditional home has been test evaluation, certification and systems assurance. And we think there's an opportunity for what I call a horizontal prime there.

Phil Tarrant:

Mm-hmm (affirmative). And do you think... And again, there's clues all through business in different industries... Some of the big mistakes people make is they go too far outside their skillset and they become a all or nothing-type approach and no real focus, jack of all trades, whereas you're saying that by concentrating on test and evaluation, is that market big enough, both here in Australia and globally, for Nova to really achieve what it wants to achieve? Can it completely own that spot and be the leader just in that area? Is it enough?

Jim McDowell:

I mean, it's never enough. If you've got shareholders, then it's never enough. And our shareholders are quite benign, actually, compared to widely-distributed and listed company shareholders with the big institutions. But we think there is a big play there around test and evaluation, because just think about it; it cuts through everything. It cuts through all the environments, land, sea, air, joint, computing, cyber... And then it goes all through the life cycle, from concept definition right through to disposal. And we think that there is plenty big chunky there. Now, it's not easy, but if you don't start, you can't finish. And my strategy people never like me saying this, but strategy is relatively easy. If you get a bunch of smart people in a room, you'll almost always come up with the right strategy or close to it, if you've got evidence.

Execution's really, really hard. Actually getting on and doing it; taking it from there to there. Taking it from concept to completion. And that's the hard bit. And that's where I think the partnership between defence and industry is really important in this space. Because this space is predominantly above the line. It's predominantly, at the moment, anyway, advising and helping the Commonwealth and helping them with their ranges and helping them with their synthetics and so on to certify, to test, evaluate both concepts and hardware and software.

Phil Tarrant:

So rather than concentrating on a specific domain where defence operates, five key domains, land, air, sea, cyber and space, your thesis is that you can operate across all those different domains, irrespective of what they are, on this specific capability, which is test and evaluation. Again, looking at clues, channelling sort of business learnings... A lot of the banking, financial services institutions sort of went down this pathway of vertical integration. They worked out 10 years later that wasn't a nice place to be.

Jim McDowell:

Yeah.

Phil Tarrant:

There was conflict at different areas. And could they service or fulfil... This whole same nation of sort of this vertical integrated being... Absolutely concentrating on one specific thing and doing it well, irrespective of it... I think it lends itself to defence, and that's where Aussie businesses should be playing.

Jim McDowell:

Yeah, I'd say... And we are saying this is horizontal. We're not talking about vertically integrating. I see the risk in vertical integration. But I see the benefit, particularly at the moment when we have a real workforce problem, of channelling the workforce into a horizontal prime, who's really a partner with the Commonwealth, to my manage the supply chain and to provide capability. And look, there's plenty of room in this. We have 320 Australian companies in our supply chain at the moment. And I'm sure we'll have more than 320 if our ambitions are realised. So it's not about putting all the capability in one place. It's a bit like saying Boeing and Lockheed and BAE all build great aeroplanes ; none of them make engines. So they have in their supply chain people who make engines. And that's exactly what we're saying in... And that's where we have a partnership between an Australian company and the department who effectively control that horizontal piece of activity, which we call test and evaluation, certification, systems assurance, and manage the supply chain as efficiently as possible to that end.

Phil Tarrant:

And one thing that everyone inside of defence is very familiar with is acronyms. That sort of fills everyone's days, SICPs being one of them.

Jim McDowell:

Yeah. Being [crosstalk 00:16:56]-

Phil Tarrant:

Sovereign Industrial Capability Priority, of which I think there is 10 now, last count.

Jim McDowell:

Well, they've just added another three, but I'm not quite certain how far they've gone in defining those. But there's... You're right. The initial lot was... Were those three years ago? That was three years ago. And test evaluation was one of them. And we just need to make better progress in this than where we've gotten to in three years.

Phil Tarrant:

Mm. So where do you think we are, sort of three years on? It's recognised as somewhere there needs to be... We need to prioritise building a sovereign capability around it.

Jim McDowell:

Yeah, [crosstalk 00:17:30].

Phil Tarrant:

How would you score it? What's been good and what's been indifferent.

Jim McDowell:

I think if you start off with 10, you're giving yourself a fairly big handful; more than, you're giving yourself two handfuls to deal with. So it might have been a smaller subset, having said, which is probably not all of them. There's probably more to come. So I think we've probably had to spread our effort a bit thin and that shows. And so you wind up... We've got some plans and the plans are really descriptions of the problem space and the test evaluation. One, for example, it's a description of what good might look like, and really, it's eliciting industry response. And these are the sorts of... This is our industrial response to that, is with regard to horizontal prime.

Phil Tarrant:

Mm. And to your point, you've been at this for a little while, at the helm of BAE for many years, probably a different master, no doubt; you spoke about the shareholder relationship and the ways in which an organisation like that operates versus a Nova Systems, which could you spend some time... Premier and Cabinet over there in SA, now you're back at Nova. If you think back at this whole notion of SICPs or whatever the current acronym is that we want to use, compared to your time at BAE to where it is today, is it that different to how it used to be?

Jim McDowell:

Yeah, yeah.

Phil Tarrant:

Is the bureaucratic restriction still there? Or do you think we're moving faster?

Jim McDowell:

I think... I don't know if we're moving faster, but we've certainly got our eye on a different goal. And there's... Look, it's to say timing's really important. So whenever I was chief executive at BAE here, before I went to Saudi, the mantra was really, "Still the cheapest pencil." So you compete for everything. You do it project-by-project and you buy the cheapest pencil or very close to it. I think that the notion of sovereign capabilities gives you a different policy lens to that. There's no point in it being the cheapest if you can't assure the supply. So what's the balance? And in this case, in these 10 things that we have listed, we're saying that the sovereignty is very, very important. So it's not just about the price, it should be about value. So I just think that the policy argument has moved away from offset through AIC... And AIC is very useful; it's about jobs... To sovereignty, which is about control.

And as I say, there'll be different levels and elements of control, depending where you are in the life cycle of each particular industrial output. And the other thing is, the First Principles Review, which I was a member of... So it was the first document endorsed by the government that said that industrial output was a fundamental input to capability. So it should be tightly wound in with the other fundamental inputs to capability. And that's a really important philosophical and policy statement, which you've got to move from policy to action at some point.

Phil Tarrant:

Yeah, absolutely. And that was probably one of the catalysts for... Whatever you want to call it... The industry 2.0, when industry was considered a fundamental input to capability, that was the mark that actually got government thinking about it differently. Got the DOD thinking about it differently, people in uniform, outside of uniform, they go, "Hang on a second. We've got to cultivate a better relationship with industry." Moving forward four, five years from that, this notion around sovereignty and what sovereignty means is absolutely critical. And talking about timing for defence industry, timing for how it can better support the defence and Australia's national security... still got to be sold to the Australian public.

We're sort of going into an election year and you're, no doubt, Jim, following the way that's played out up until this point. It's more sort of schoolyard antics rather than policy-type stuff. But do you think Australians are more accepting or would be more accepting... Someone's got to pay for this stuff, right? To your point, it's not the cheapest pencil in the room. Having that sovereign capability is now something that needs to be considered at a fundamental level, which could cost more money. Is Australians ready for that?

Jim McDowell:

Yeah, it has already been ready for it. Because we have made some pretty good decisions and some pretty poor decisions on the way through. And I could argue quite validly that part of that's because we didn't do the [inaudible 00:21:47] test evaluation at the concept stage. So the proposal that I'm talking about is a savings measure over time. Because it more... Whenever we did the First Principles Review, what became clear to us at the time was that the ADF was a very effective fighting force, but we were quite inefficient in how we made them effective. So how do we turn that bit, that kind of big forward bit, and to be more effective? And I would suggest this is one way to do it. The Australian public, I think, is much more... Not necessarily about defence, but also about defence, but not...

The whole COVID thing has woken us up to, we're an island on the edge of the world. Regardless of how good the technology is, that you and I can talk to each other, eventually, we're going to get stuff here if it's somewhere else. And their supply chains are really, really important. And that's toilet rolls or face masks or surgical gowns or missile systems or whatever. So I think that argument is much more readily accepted by the Australian public about securing supply chains. And I think on the defence side, the emphasis on defending the Indo-Pacific from another superpower and alliance with the United States and our other allies has brought that into great relief as well.

Phil Tarrant:

Yeah. I think all Australians now, as a result of COVID, to your point, now know what it means to not have that ready supply chain. It's happening even today. It's costing us 20, 30% more to actually get a house built at the moment because we can't get the stuff here. There's an argument to say, "Well, we should be building more of that stuff here." Who knows? But everyone's invested in making that happen.

Jim McDowell:

Yeah. And most other countries have some mechanisms by which they assure their national security with regards to their industrial base. So they have either laws or regulations or conventions or something in place to assure that. Not to protect the industry, per se, but to assure national security. The US does it, France does it, Britain does it. All our near allies to it. We don't, other than a very good AIC policy. But that's about jobs. It's not about control.

Phil Tarrant:

Well, the jobs are important. And one of the... If you can call it a positive out of COVID, very tough for many, many people, but I think more Australians will choose to call Australia home rather than sort of heading offshore to find work or further their career. And I think we should be able to track some really good talent in Australia moving forward as and when borders open up. But how are you guys, Jim, going?

Jim McDowell:

Yeah, look, there's the biggest single issue. That is the biggest single issue. So our biggest single issue is getting more people. It used to be it was winning more work or the defence budget or... Now on the demand side's very, very good, but we... So we have a thousand... At any given day, we'll have 80 or 90 agencies. And of course, that generates quite a lot of movement in the market, too, because people can move and push the price up on all that sort of stuff. So that's why... If not the most important thing... Because you won't be able to deliver the capability without the people. It's the efficient use of the workforce.

And we've had the borders closed for bit over two years now. It's not likely to really reopen for another, let's say, year or so. So there's whatever that is, 900,000 people we don't have, not going to all be in the workforce. So we're going to have to do better with less until we can start that again. And there's nothing wrong with being efficient and we need to look at more efficient ways of deploying the current workforce. And that's another reason why we're talking about this horizontal prime.

Phil Tarrant:

You consider your role through defence over a number of decades and the role you're in right now. What gets your sort of pulse racing now? What do you really like to get your teeth into, which is maybe different from your experience up until this point?

Jim McDowell:

Yeah. There's different things motivators at different times in our lives. So I had spent 30 years in the industry running around BAE Saudi Arabia, which is a $7 billion business. A big business. And came back here, did a bunch of other things, which was... Bit of giving back. So I was chancellor of one of the universities on the board, chairman of ANSTO, and a few other things. Then the public service thing came up, which was very interesting at the time. Never having been a public servant, to be head of a public service was challenging and interesting. And then COVID and bush fires and... What a fantastic time, not for the people infected, but to actually get to do a job like that.

Then what really attracted me about this is this sovereign debate, which says, the guys in Nova have done a fantastic job in pretty neutral policy settings to get to where they've got to. Can you imagine, if we translated some of these positive policy settings around sovereignty into action, how much better they could do? So that we do have one or two or three big companies, and "big" needs to be at least a billion dollars or more. And even that's not big in most industries, but it would be for an Australian defence company. We know we have no reason why two or three of us can't get there.

Phil Tarrant:

And for someone like me, who I guess is environmentally charged with hosting or navigating the debate around sovereignty amongst a number of different voices and someone whose counsel no doubt will be considered... How do you think I should be approaching this discussion around sovereignty? Because we've got to get this right.

Jim McDowell:

Well, unfortunately, we're not listed in the exchange, or I would tell you to be going off and buying some shares of Nova. That'd be a good way to... Yeah, I think it-

Phil Tarrant:

Is that a newsflash, is it, Jim? You see how I did that?

Jim McDowell:

Don't tell the owners. Don't tell anyone.

Phil Tarrant:

Don't tell anyone.

Jim McDowell:

Yeah. I think I'd like the conversation to be curated so that it's not me, me, me. I'm sovereign to the extent it excludes him from being sovereign, and I'm more sovereign... It's about... This is a really broad church. There's a really big defence budget. There are a number of very big skyscrapers in the sovereign sense already been built by the big primes. We've got to have room for some homegrown quarter-acre blocks or bungalows or something like that that will be there forever and ever, where these decisions will be made. Where the board sits in Australia, where all the decisions are made here, where the profits come here, where the taxes... All of that stuff is as much part of the sovereign capability as the big primes or the local SMEs. Everyone does a great job, but it's an ecosystem. And we've got to plug that gap in the middle, which is really clear at the moment that we do not have the strength in the middle of our defence industrial economy that other countries do.

Phil Tarrant:

Mm, no, I agree with that. And what I sort of read from that, Jim, is defining sovereignty may be folly. I think we need to be comfortable with being uncomfortable with the notion of sovereignty, and there's going to be some grey in there. And does that matter too much if we can't define that? There's still pretty early days with this.

Jim McDowell:

It is a nuanced... I wrote a little op-ed in The Australian a while back and started off by saying a bit defensive or sorry they started to use the word sovereignty because they've created as much of debate around the word as they have around the capability. In the end, I was a bit tongue-in-cheek, but I think you've just got to look at each capability and say, "What's the best we can do for this in a value-for-money sense?" Because we're never going to start designing nuclear submarines. We're only... The first Brit one came out... And the American ones before that... But the first UK one was 1958. So we're a bit behind.

Phil Tarrant:

Mm. I think that's the sort of capability we should be turning to our very-trusted friends to help us out with. No, that makes [crosstalk 00:29:53].

Jim McDowell:

Mm-hmm (affirmative). Yes, well, that's the next best position, which is privileged access. Let's call it privileged access.

Phil Tarrant:

And that access is AUKUS largely; it's not... Nuclear power submarines is just part of it. But the big sort of headline for me is access. It's privileged access saying, "Hey, guys, we'll give you this stuff..." Well, "Guys and girls, we'll give you this as well." Access is as powerful as sovereignty.

Jim McDowell:

Yeah. And the other industrial point to make about AUKUS is... And [inaudible 00:30:20] having worked in the United States for years and obviously having worked in the UK and Australia, I can... The US has a huge industrial base; much, much, much bigger than anybody else's. And the UK industry has exploited its very tight security relationship with the United States to grow its industrial base in the United States. Australia has at least as good a security relationship. And the only company that's really grown its industrial base there is Austal. And I was on the board of Austal for five years, with those 3 or 4,000 people down in Mobile, Alabama building ships for the US Navy. So we've got to kind of use this AUKUS thing opportunity to also help the Australian industrial base because that'll help Australia in the end. And we in Australia have been very, very, very open to industry from the United Kingdom and the United States and France and others, where we have not yet exploited our opportunities, particularly in the US but also in the UK.

Phil Tarrant:

Are you running... I know you sort of operate outside of Australia in these foreign markets, which is quite broad-reaching as well. You've got plenty of job adverts up there, back in the UK and Ireland's... I reckon they're lining up to make their way out in Australia. They've got to be a nice catchment of potential workforce recruits.

Jim McDowell:

Yeah. Look, we like to employ people in the UK as well. And of course, if we can get... One of the great things about working for a BAE or a Boeing or a Lockheed is the opportunity for cross-pollination and international exchanges and so on. And we know we are doing a bit of that now, but scale's something to do with it. And there's nothing like having a bunch of engineers and others come over here and then maybe go back or go over there and come back. All of that is very, very productive for us.

Phil Tarrant:

Yeah. And I know... You sort of had your feet on the desk there, Jim, for about 12, 14 months or so. Fast forward a year when we get together and have a chat. And I note your points around... I like where you position the business and... We've got to fill out the middle. What do you reckon we're going to be chatting about, Jim?

Jim McDowell:

I reckon we're still going to be chatting about how far we've gotten in positioning ourselves as this horizontal prime. And I really think we'll have made significant headway in that. We'll also, hopefully at that point, have a real view about the architecture of the guided weapons enterprise. Because I think that's the other part of AUKUS. In fact, it's the part of AUKUS that's going to bring more benefit earlier than the submarines, which are necessarily quite a long burn; industrially, at least. So that GW enterprise is going to be really, really important to test the bona fides of AUKUS; the transfer of technologies, the growth of Australian technology. And we have formed a joint venture company with EOS to pursue that called Sovereign Missile Alliance, which is clear in the title. And by this time next year, we'll hopefully see the architecture that we're going to deliver this big policy goal over the next 10 years.

Phil Tarrant:

Mm. Something to be said about actually putting the name on the tin; what it actually is. So you've got that one, right?

Jim McDowell:

Yes. Yes, yes, it is. It's not very subtle, but hey-ho, I'm Irish. Well, I'm actually Australian, but anyway...

Phil Tarrant:

You must be Australian, you've been here so long now, right?

Jim McDowell:

Right. I am Australian and I was actually born with a British passport because I'm from Northern Ireland, but because the Republic of Ireland claimed sovereignty over us for such a long time, I could also get my Irish passport. So the chances of me running for the Senate are pretty low, I think.

Phil Tarrant:

You can always relinquish something there, no doubt. But... Yeah, stranger things have happened, Jim.

Jim McDowell:

Yeah.

Phil Tarrant:

Mate, you're best off in the seat you're in right now. I think that's a... I quite like the bold, ambitious plans that Nova has, along with the cohort of some other very talented sort of large Aussie defence businesses to try and beef out this middle section. And how do we get Australian-originated large defence businesses, primes, whatever we're going to choose to call them, starting to export that even further? I think that's something everyone wants to happen.

Jim McDowell:

Yep. And you can't export anything until your home government buys it. I was a defence exporter for a long time, and it's the first question you get asked.

Phil Tarrant:

Are they buying it at home?

Jim McDowell:

Yeah.

Phil Tarrant:

Anyway, buy Australian. There you go. Put that with a kangaroo with it.

Jim McDowell:

Well, there is a Buy America Act. There's a piece of legislation called Buy American.

Phil Tarrant:

Buy American.

Jim McDowell:

Yep.

Phil Tarrant:

There we go. Anyway, I think we're on the pathway, at least. Everyone's having a discussion around this and there is a lot of action taking place. A lot of the behind-the-scenes you don't see happening, but it is moving. This is a theme, no doubt, that will dominate a lot of the conversation moving forward; this notion of sovereignty. I'm still yet to really... I don't know. I shouldn't really be giving definitions. I'm just a journo having a chat with people, trying to get their read on it. But this is something which is fluid and we've got to be comfortable with it being fluid for a period of time. Because the only way we're going to get to where it's going to go... Jim, I've really enjoyed the chat. We covered a lot of ground there today.

Jim McDowell:

That's lovely.

Phil Tarrant:

Let's just check back in and... Let us know. I know there's some things happening with you guys as well. When you can talk about them, come in over yonder with some... And let us know about these ongoing growth within Nova Systems.

Jim McDowell:

Yeah. Look, [inaudible 00:35:38], it's been great talking to you and thanks again for the opportunity to... You guys are very generous with us and we really do appreciate that. So you're doing a great job and keep it up.

Phil Tarrant:

No worries. Thanks. That's Jim McDowell, Nova Systems CEO. I hope you enjoyed that, everyone. Plenty of chats like this wherever you listen to this podcast; come check them out. Also defenceconnect.com.au. You can find us at social media, same thing, defenceconnect, wherever you tune in, dial in to the social media-type scenario stuff. Hey, quick question. Sorry. A favour for me. Feel like we're doing with this... Please keep those reviews coming on whichever podcast player you listen to. Just the way the algorithms work makes more people find us. And we can make sure that these informed discussions and conversations are sort of wider-reaching. We'll see you again next time. Until then, bye-bye.