PODCAST: Australian SME rewarded for proactive strategy

Announcer:

Welcome to the Defence Connect podcast with your host, Phil Tarrant.

Phil:

Good day, everyone. Phil Tarrant here, host of the Defence Connect podcast. Thanks for tuning in. I'm joined by my regular co-host and editor of Defence Connect, Paul Robinson. Paul, how are you doing?

Paul:

Very good, Phil, yourself?

Phil:

Good. I'm not too planned or structured today, which is often how I like to do things. I guess the genesis of this podcast has been very much to keep it raw and authentic, and bring in the best and brightest from the defence industry to have a chat to them about what they're doing. Defence is all shapes and sizes. Big companies, massive companies, small companies, SMEs, and I think the attitude and aptitude of Defence at the moment in terms of looking to really harness the capabilities right across the spectrum of businesses or academic institutions is key.

What we've done today is we've brought someone in who we think is going to be able to give, or will give, a really good blended approach of on the ground realities of operating in the defence industry, matched with, I guess, some real world practical experiences of actually being on the - deployed with ADF and using some of their stuff in the field. On that quick summary basis, I just want to introduce Chris Williams. He's the general manager at H.I. Fraser. Chris, how are you going, mate?

Chris Williams:

Yes, all well. I'm a bit worried about this best and brightest comment.

Phil:

Oh, no, don't worry. We'll start at the other end of the spectrum here.

Chris Williams:

And work our way through. Perfect.

Phil:

Chris is a good friend of Defence Connect. He's been involved in the platform since its inception, which is ... And I thank you for your support, mainly in terms of ... You're one of a handful of people in the defence industry who we speak to on a regular basis just to get a real feel for the tempo of the industry, what's happening, stuff that we need to know about. We're journalists, myself and Paul, and I guess our job is to really understand what's going on and then curate and process that information, and then look to generate content from it. So you're a good sounding board for us in terms of helping us shape the stuff that we talk about. So on that basis, we get on the phone every now and then. We have a chinwag about what's going on or we grab a lunch and we'll talk about the biggest issues in defence and how that's going.

Mate, how do you feel the world right now? It's 2017, it's January. How do you feel about the year ahead? Are you excited, or are you ...

Chris Williams:

Yes, look, I think there have been a number of significant changes. We've got a new Minister for Defence Industry who's pretty enthusiastic. During our discussions we've spoken a lot about goodwill. There's a lot of goodwill out there at the moment. I think industry is waiting, and it's the conversion of goodwill into action which is going to be the most important piece. So, excited about 2017, however nothing builds goodwill like a purchase order, that's for sure.

Phil:

And talking about purchase order, what is H.I. Fraser working on right now?

Chris Williams:

A really important piece for us is strategically positioning. We spend a lot of our time trying to look at the lay of the land in the future, work out who's going to be involved in those big projects, whether it's aerospace, maritime or land, and also offshore and gas space. Invariable with defence projects the positioning work starts seven or eight years in advance, really. The analogy we use is it's a bit like a conveyor belt in the sky. When something's announced that it's going to happen in seven years time, like submarines a number of years ago, you've got everyone there looking at the sky, waiting for this job to drop. After two years a couple of those people walk away. After five years, even more people walk away, and you've really got to be the last man standing, so when the job finally drops you're there ready for it. But these things have a long gestation period and it changes in that time. So there's a lot of thinking and positioning that goes into, say, a success now actually is based on all the hard work you've done previously. It's all about positioning, positioning and trying to be there at the end.

Phil:

So defence is a long-term game, so when a business, whether an SME or a prime is getting reviewed or considered for a major project, continuity, delivery of product, all this sort of stuff is absolutely essential as part of a tender process doing that work. So what you've just outlined there, the fact that it might be a seven year process to actually, potentially, win a defence contract, you've got to be in the game. You've got to be able to show that stability. H.I. Fraser have been around for quite some time, right?

Chris Williams:

Yes.

Phil:

Tell me a little bit about the business.

Chris Williams:

The business is about 60 years old.

Phil:

Okay.

Chris Williams:

It's one of those classic defence SME stories where, up until about ten years ago we were the classic defence SME. We were 90% defence. We had a couple of major contracts and we were really almost over-exposed to defence. About ten years ago we made a decision to try and diversify and make the business more resilient, which is when we had a look at adjacent industries that had similar requirements to defence. We've grown the business now quite significantly. It's five times the size it was ten years ago, and the defence part of the business has gone from being 90% of the business to only 50% of the business. It's still doubled in size, but it's only 50% of the revenue.

That journey has showed us there is a lot of commonality and a lot of similarities with oil and gas, where there are other major assets, and the common theme we're finding is that we don't really design and manufacture major assets from go to whoa and Australia anymore. What that means is we have to position ourselves where that asset is designed, and if that means you have to go to Houston, if you have to go to Pusan, you have to go to Tokyo, Paris, Madrid, then that's what you have to do. That's been a bit of a mindset change and a hell of a journey, lots of frequent flyer points, but that's what it takes to win work in Australia now.

Phil:

So that diversification for the business, was that a revenue play? Was that a de-risking play? What was the real origin of it? Was it, we need growth, and therefore because we know the incubation process to win defence work is quite a considerable length of time, whereas oil and gas probably moves a lot faster, was that part of the thinking?

Chris Williams:

A lot of it was actually about being more resilient. When the first predecessor of the First Principals, there was a previous review through DMO, and overnight one of our business units got really badly affected, and we couldn't have seen it coming. We'd been servicing the customer well, they were very happy, and then there was a decision made in Canberra and one of our contracts pretty much disappeared. We couldn't have foreseen that, and if we hadn't been doing the positioning for future defence projects, and if we hadn't been looking into adjacent industries that would have really had a significant effect on our business. So in some ways it's a classic adage that if you're not growing, if you're not doing things, then you go the way of the dodo. So it was really a risk reduction activity for us.

Phil:

And the business today, the attitude of the business today? Do you view defence still with a closer bond than what you would oil and gas type work?

Chris Williams:

Look, defence has been our genesis and with all the sort of ... with some of the mail defence gets, it's an exciting industry. You're doing exciting stuff. They're big toys, they're complicated toys, and there's a lot of technology and innovation embedded in those toys. The oil and gas space is also equally big toys, exciting. They're not competitors, they're actually complimentary, and so it's nice to look at are there any ideas from oil and gas we can bring across to defence, in terms of asset management, providing better service to the customer, and are there things that defence does really well that oil and gas could benefit from? And so, in some ways, you actually leverage the interest and excitement out of one into the other and backwards and forwards again. That's part of keeping work fresh and interesting and, you know, as you said, what's 2017 going to be like at the outset? We don't know yet, but it's been pretty exciting, that's for sure.

Phil:

So you've made these business decisions for the reasons you discussed, but are you guys poised and you're ready, so if and when new opportunities pop up you feel as though you can capitalise on them pretty quickly, or you have the breadth or the capacity to capitalise on that because of the work you've being doing in strengthening the business?

Chris Williams:

One the strengths of our business is that we're very, very good problem solvers. We're not a commodity business. We're not a sausage machine where the same person does the same job day after day after day. What that means is, each day you come to work and you're solving a different problem. I think a lot of the defence industry doesn't have that nice year-on-year revenue growth. It's about 5% a year, 10% a year, because the marketplace doesn't really work that way. It's more a case of that the revenue flat lines, and then a big project comes along and you step up. Big step up, and then modest growth, and then big step up again with another asset. So there are certainly challenges.

And the growth piece is difficult because we're not sure what skills, really, we're going to need next. What we do know is that if we have a whole bunch of really well qualified engineers, well qualified technicians, that there are going to be mechanical and critical fluid systems on board ships that need to be fixed, on oil rigs that need to be fixed, that if we throw a good techo at the problem then we'll be able to solve it. It's much less for us about selling. We don't sell thousands of line items. We're much more very targeted on very key, specific bits and pieces.

Phil:

So over the last ten years, what is some of the major defence work that you've delivered?

Chris Williams:

One of the important parts of our journey was ... The Collins Class submarine programme was a big deal for our business. Back then there was a really key focus from government on Australia industry content. During the Anzac programme, the Collins programme and the Minehunter programme, those three programmes where there's a laser-like focus on Australia industry, we were given some good opportunities. We won them fair and square against competitors, but then during the journey of the Collins programme, manufacturing fitting and couplings for Collins, we were forced to bring in a whole bunch of quality activities, process controls, and those skills and that level of traceability certification has allowed us to ... it's created a platform we now leverage into other platforms.

So then fast forward to the Air Warfare Destroyer programme. Again, that was another programme where we saw a change in the marketplace. It was no longer where you could rely on being Australia to win work. We were told very implicitly we were competing on a level playing field with the rest of the world and we had to develop some strategies to actually cope with that. As a result, to date with Air Warfare Destroyer, we've now supplied over 22,500 components to the project at acceptance rates of 99.5% for quality and we won the Australia Manufacturer of the Year Award in 2010 for that work. Now, we didn't manufacture all those components in Australia. We manufactured some, we value added some, and we worked with our supply chain overseas for some. That project was a key pivot point for us in terms of something has changed since Collins, Anzac, and Minehunters to Air Warfare Destroyer and LHD, and so we're going to try some things.

Then, I guess coming forward now, we had quite a large project over the past few years which was the upgrade of the submarine escape and rescue system. A very challenging programme. Because of the contractual requirements we couldn't buy things off the shelf. When we did actually try and engage some of the overseas suppliers they wanted to sell us a box. We needed a box with a different shape and a different material and we couldn't get that. So, we actually got to a point where we had to innovate our way out of trouble, and as a result of the innovations we had four world firsts during that programme, the upgrade of the submarine escape and rescue system, and we won the 2016 Engineers Australia Innovation Award on the back of that.

So, I think those three points were key for our business. One was the genesis of understanding certification, traceability, and in some ways growing from being that classic defence business, into something a bit more procedure driven, process driven and the important of traceability. Then there was the Air Warfare, LHD, which is that change into something's changed in the marketplace and we need a different strategy; we're going to try some things. And then for the submarine escape and rescue system, which really was testing ourselves against the best in the world to see if we are, in terms of innovation, are we good as we think we are, and how do we actually markup with the global marketplace in terms of innovation and the ability to solve problems?

Phil:

We talk about change in the marketplace and I guess that 2016 last year, a watershed year for Defence. Some key policy documentation put through, white paper, etc. Everyone's talking about it. It's still being spoken about. And we're starting to see things come into action right now. We've got a lot of big projects coming online in the years ahead. We spoke about goodwill before. Do you feel as though that goodwill ... Can you feel that transitioning, actually, to a more invigorated, rejuvenated, driven defence industry who's actually out there doing stuff right now ... or is there still a lot of talk?

Chris Williams:

I think probably the simplest way to answer the question ... There's always the ... I love the saying, "A simple lie trumps a complex truth." The simple statement is, when we see purchase orders, that's when we'll know the goodwill being converted into activity. There's a lot of activity happening in Canberra, a lot of tender reviews, a lot of requests for information. We're seeing some really interesting changes in behaviour for LAND 400 where the two down-selected companies were sent back out to the market to engage with Australia industry. That's something we haven't seen in a while. That's a really positive sign.

Phil:

Well, I know BAE hustled hard for a roadshow right across the nation just engaging SMEs. Did you get involved in that at all?

Chris Williams:

Yes, absolutely, and also with Rheinmetall as well. The way it was run was different and really good, actually. There was a genuine want to engage and I think, again, the goodwill is there. What happens next is when the contract is signed and whether or not that Australia industry involvement and Australia industry can be involved, that's when the goodwill converts to the reality. A lot of activity, Australia content, fantastic. A lot of discussions , a lot of meetings, a lot of face-to-face. That's the goodwill piece. The reality piece is, once the contract's signed, what happens then? That's really what will set the mood and morale in Australian industry, I guess.

Phil:

What do you think the primes are doing well at the moment in terms of the whole SME engagement? We spoke about two just then in the LAND 400 programme, but they're evolving, they're changing, they're seeing the benefits of greater SME involvement. I think they've known they've had to do that for a number of years. But what are the good primes doing to connect with businesses like yours?

Chris Williams:

To go back a step, I guess, the Australia marketplace for defence over the previous ten years, there have been a number of announcements, but no programmes signed up. The submarine programme was announced a number of years ago, frigates, LAND 400, LAND 121. These projects were announced a number of years ago, and we've seen a bit of traction over the last little while. What that means is that when there's heaps of announcements, but there isn't any tangible work, that means the pie in Australia stays the same size, and shareholders need to see growth, so primes need to see growth. Which makes it challenging for them to provide opportunities for smaller businesses when they haven't got ...

Phil:

They're chasing growth themselves.

Chris Williams:

That's right, yes. That then becomes quite a difficult loop. What we're envisioning seeing is, as big programmes come online they're actually ... You know, big primes get a PO from government that then filters through ... nothing creates goodwill better than a PO. And the other thing that purchase orders do is it gives you gross profit, and that gross profit then gives you the luxury of training, innovation, marketing. You don't get to do those things if you're not profitable. If the marketplace is the same size with a lot of competition, it's like that classic red ocean strategy where everyone's going after everyone else. It doesn't create room for those intangible things that provide benefit in the future: training, innovation, R&D.

When we start to see the pipeline of projects being unclogged, we expect to see purchase orders on the primes and then would expect to see that roll down to industry or to whoever is the best contender. I'm not a huge fan of ‘there must be this much Australia content’; However, that needs to be balanced against if something does happen, do we have the capability to actually keep planes in the air, ships at sea, trucks rumbling along. Again, it's not a simple marketplace by any stretch of the imagination.

Phil:

It's not. It's very complicated. You're touching on this whole notion of sovereign capabilities. What do we need to have as a nation to ensure our interests, irrespective of what's happening globally? What can our local talented businesses provide us to ensure that we can sustain ourselves in all circumstances in the important stuff that matters? This is a debate dialogue that's happening right now about what those things are.

Chris Williams:

Yes, of course.

Phil:

I don't think anyone knows yet. Everyone's waiting to hear what they are. What's your whole view on the sovereign capability dialogue? Is it something you're really behind or you're more of a globalist pragmatist on it?

Chris Williams:

Australia is in a position where we're a medium power, so we have a real conundrum with the two ends of the spectrum. One is value for money, so how do we get the best price for something, and the other end of the spectrum is sovereignty of supply chain, so it's an insurance policy when something goes wrong, can we get the bit we need when we need it? We've had situations in our history where we haven't been able to send assets to sea, or haven't been able to deploy. For example, during the Falklands where submarine spares were diverted to the UK navy and we had challenges getting submarines to sea. During Timor when it was go-time the defence minister had some challenges because we had Anzac fitted for, but not with. We had F-18’s that had replaced the F-111’s that had challenges in terms of on top time. That really highlighted the sovereignty supply chain and defence as an insurance policy.

The other end of the spectrum is the value for money. I can't imagine the Australia taxpayer being excited about having to pay three times the price for a truck, a plane, a submarine, so it's a very difficult thing to balance. With the announcement of the industry is a fundamental input to capability, and there's an activity ongoing at the moment with the CDIC to identify which of those capabilities really are at this sovereignty of supply chain of the spectrum and which ones are at the other end of the spectrum. In some ways, some thought needs to go to, instead of looking at who can yell the loudest in Canberra, it's more a case of if we actually need to deploy, what do we need? What's the $200 part that means we can't deploy a squadron of JSF? What's the $100 part that means a LHD can't leave the wharf? What's the part of the supply chain for helicopters and armoured vehicles that is going to cause all sorts of challenges if we have to deploy by ourselves, not part of the US supply chain, but by ourselves.

Phil:

And this is a skill, because it's only when you're tested ... This is why people drill, right? ... it's only when you're tested when you realise where your shortcoming are. And you've made a very good case in point in Timor, where when we're, okay, it's go-time, well, hang on a second, there's a couple of problems here.

Paul:

The F-18’s don't reach there.

Phil:

And it's evolved thankfully into a more dynamic defence industry. During that Timor period you were still in the service. You were a submariner?

Chris Williams:

Yes, that's right, yes.

Phil:

So what are we talking about in terms of defence industry you're very academic sometimes or business orientated and stuff.

Chris Williams:

Yes, that's right.

Phil:

When you're sitting there, however many fathoms under the sea, do the guys on the ground or in the sea or in the air actually have this dialogue or think about these type of issues, as in, is the defence industry giving us the stuff we need to do our job efficiently, or is there an expectation that this thing should just work and that's someone else's problem, let them think about it?

Chris Williams:

Yes, yes.

Phil:

Talk me through that. This one's quite interesting.

Chris Williams:

Oh, what a doozy. I haven't been at sharp end for about 13 years now. I guess back then the focus was on doing the job, and one thing is we have an incredibly professional defence force and armed services, so you don't find submariners or surface warfare officers - they might be not quite happy with the complete capability, but they get on with the job and just do it.

Phil:

Use what you've got.

Chris Williams:

Use what you've got, absolutely.

Phil:

We've been doing that for hundreds of years in our forces.

Chris Williams:

Yes, absolutely.

Paul:

With a roll of gaffer tape and a stern look.

Chris Williams:

Yes. If it doesn't work then you just fight through. You keep on fighting through. That's not to say that there isn't an enormous amount of frustration at times when a bit of kit doesn't work.

And there's also been a change over the past, probably ten years, in terms of a fair bit of outsourcing of the technical knowledge from Navy to being outside Navy, so instead of having it embedded inside the Navy it will be subcontracted in. Which means that as an operator, you may not necessarily have the technical skills at the moment to be able to go through and do a whole bunch of machinery, on the DDGs, they used to machine their own parts up. If something broke, you’d break your manifold down and rebuild it, and then away you’d go.

I know from firsthand experience during RIMPAC, that when the diesels had some challenges ... basically the techo’s were flown from the original equipment manufacturer from Australia to Hawaii to go onboard to fix things. Now that has actually ... it's almost the pendulum has flown through now ... from basically just being operators to the Navy trying to re-acquire that technical knowledge again. There's been some really good progress in that area. So to ...if the kit doesn't work ... having that relationship with industry so you can have dialogue to actually make it work. A key tenant to that is having a technically competent customer you can have that discussion with.

So, it's beyond someone getting a call saying ‘this doesn't work’ to ‘this doesn't work, we've tried these few things, we've found fault here, here, here. Look, can you give us a hand?’ That's a much, much better discussion and from our business point of view, we'd much rather have a technical discussion than a contractual, you haven't done this, we haven't done this fist fight. We're a very quantitative business, we work in facts, we work ... if we do strong technical work, then the contractual side will sort itself out.

Phil:

Sort itself out.

Chris Williams:

Yeah.

Phil:

If you do a good job, normally the contractual stuff ... you're always going to have problems ... but you've got to have a trust in a relationship. You've got to have trust in a relationship terms become negotiable, right?

Chris Williams:

Yeah. Absolutely.

Phil:

You can actually go about sorting that stuff out which becomes more mechanical.

Chris Williams:

Yeah.

Phil:

Well, what I'm interested in ... so you're transition from Navy - Navy Officer to defence industry ...

Chris Williams:

Yeah.

Phil:

And defence industry is fortunate that it provides continuity of people who come out of uniform into civilian life after service, and that's a great thing. It's good for defence to actually have this potential recruitment ground for you that want to exit. When you're on the ground, or in the sea, or in the air, is there awareness amongst ... I'm not talking, obviously, you're senior brass knows who's providing the kit ... so the junior officers, non-commissioned officers, or just the enlisted guys, are they aware of who's making this stuff that they're using?

Chris Williams:

Yeah, absolutely.

Phil:

There is that awareness there?

Chris Williams:

Absolutely. It's very much branch specific, as well. Your operators will have a high level view, generally. They'll know the bit kits by name. And then you have the individual branches who have the hands-on relationship with the bit of kit, and the hands-on relationship with the service supplier. If you think about a ship at sea, or a squadron deployed, or a company deployed, it's a mini city. You have all the things you'd have from a city. You've got power, water, food, sewage. Then you need the ability to get there so you've got your engines, or what have you. Once you get there, you've then got your effectors. You got your senses and effectors, so you need radars and missiles to reach out and touch people.

Each one of those areas, whether it's platform systems, combat systems, comms, they'll have a specific branch of Navy or Army, or Air Force to look after that. If you're a mechanical sailor, you'll know that bit kit inside and out. You'll also know who the supplier is, and you have those relationships because during the re-fits, you build that relationship up. That's a really important piece in our business is that, we have a strong relationship with the guys on the ship. So when the ship gets alongside, you've got to reach out to the guy and say, look, how did the bit kit perform? Happy with it, not happy with it?

Paul:

So you're getting direct feedback from the guys actually using it?

Chris Williams:

Yeah. There's this no substitute for that because it's like the Chinese whispers. If you wait for it to come through all of the official channels, it will take a week or so, will have been through three or four sets of hands, and the message gradually gets changed a bit. There's no substitute for that face to face. ‘Look, how’d our bit of kit go?’ Even if it's not our bit of kit as in H.I. Fraser manufactured, if it's an oversea bit of kit that we're supporting, it then gives us the time to say, ‘Go, right. We have these challenges so we can start fault finding and then reach back to our overseas suppliers.’

We can start being a bit more proactive and providing solutions.

Phil:

We've discussed this before, but looking at uniformed people as a potential moving into defence industry, that's where they're shaping their views on companies. So if you get that wrong, you're not going to attract the best talent. It's just ... people are going to go, I don't want to work for that guys because I’ve already dealt with them.

Paul:

Pre-conceived ideas.

Phil:

And XYZ. So it's something that every single defence business needs to be working on all the time because it's a couple of customers ... you've got the guy using it, he's a fundamental customer ... and if they don't like your stuff, you know.

Chris Williams:

Yeah, you're only as good as your last knife fight. If you provide something which is pretty ordinary, service is ordinary, support is ordinary, it doesn't matter if you get a contract which locks Defence into using your for a period of time, at the end of that period of time, you aren't getting renewed.

Phil:

So H.I. Fraser is fortunate in that, you can cross that bridge between uniform and civilian life. You know that the psyche of Navy and that's what you do a lot of your work, is in business. So you're able to probably interpret the way Navy works ...

Paul:

Navy speak.

Phil:

To non-people without a military background. What would be your tips for SMEs or even executives within larger defence businesses to the best ... how can you best communicate or connect with uniform people so you can resinate, or just better the way that you can forge those collaborations? What makes them tick?

Chris Williams:

There's the traditional formalised structures which are presentations where you'll have the BAE/Rheinmetall LAND 400 presentation where you'll meet people. They are various conferences where we can meet and greet people. The trade shows like Avalon, Pacific, Land, they're places where you can meet and greet. For mine, there's no substitute for going to the site hut. Spend the morning in the site hut where the customer or our customer's customer will come by and just drop in. In the course of their work, they'll swing by. If you're there, not in the dress, which is quite aggressive ‘I’m a CEO’ dress.

Phil:

You’ve got to be approachable.

Chris Williams:

Yeah. In fact, my team recently pulled the piss out of me when I said I was going down to the island. They said, oh you need to wear high Vs so I put on the high V stuff at work on the way down. One of the techos asked me if we were playing dress ups? He said, ‘are we playing dress ups? I'll wear a tie tomorrow.’

I think sometimes those informal, impromptu discussions, with not only your team, three or four levels down through that management chain, but also as an informal interaction with your customer.

Paul:

Each type of those engagement things that you've mentioned, they attract different types of people, too, don't they? So the conferences attract the top brass, the trade shows attract a mix of enlisted and junior officers ...

Chris Williams:

That's right.

Phil:

And then you've got actually being on the site hut, you're talking to the enlisted guys who are actually using the things every day.

Chris Williams:

Yeah. Also with conferences, we've seen a change out of the past few years, as well. A number of years ago you’d see a lot of engineers, a lot of chief engineers, design authorities come through with the increasing emphasis on time sheets and utilisation. We’re tending to see less hands-on technical people and we tend to see more marketing, BD, for those conferences. It's another example where the marketplace is changing. You've got to find the conferences that resinate and actually add value. It's no different, the marketplace has changed over the last ten, fifteen years, in particular. Conferences have changed, so it really is rolling maul in a way.

Phil:

So in terms of one of the major ... I guess sets of works coming out of Defence at the moment, the JSF. We spent some time recently up in Williamtown.

Paul:

It's incredible.

Chris Williams:

Oh, it's fantastic.

Phil:

The facilities are gonna be outstanding.

Chris Williams:

Yeah, absolutely.

Phil:

First class. Fifth generation facilities.

The OBISC office was incredible.

Phil:

I'm excited about it, and a lot of good work coming out of that for ...

Chris Williams:

Absolutely.

Phil:

For Hunter-region based businesses. On the JSF side, you guys are providing some work into that yourself? Is that right?

Chris Williams:

Minister Pyne made an announcement last year that there were a number of companies down-selected in Australia to be collaborators, so what happened was, the Joint Strike Fighter project office, the JPO, in Fort Worth, I think it is, announced there were four regional sites. It was UK, Japan, Australia, and I think Italy was the other one. What they’ve said is, there's about 700 components at the moment that have been identified for repair and overhaul. About 100 of those were put out to open tender across the world to see who could provide competitive pricing. The number of companies in Australia were down-selected so, RUAG, BAE, Northrop Grumman, to name a few.

Within that supply chain we then announced as a co-collaborator with RUAG for a number of components. It's very early stages and the JSF project is very, very driven by nationalistic - and politics, I guess. So what you're finding is that the U.S. would no doubt love to do all the work themselves. They build their own industry by doing all of the JSF work themselves.

The Japanese would love to do all of the work themselves. The UK would love to have all of the work themselves. Australia would love to have all of the work themselves. And this is where it goes from being a simple free market, who's got the best price, to what sort of leverage can be provided by various parts of the Australian government to insure that all that really good work that's been done up by BAE, up at Williamtown to serve the facility, to get all of the ducks in a row, that actually can be realised.

There's a lot of really good work done on the JSF program earlier in the piece, a bit quiet in the middle, and then just recently when Minister Pyne went to the U.S., that again reinvigorated the discussion. It's a really important piece - we need the Australian government behind us as an industry team.

We need them to commit to investment, and help us with investment because the Dutch have just set up I think it's a $35 million euro loan fund to help Dutch companies secure work on JSF.

Paul:

Oh, wow.

Chris Williams:

The Dutch are playing for keeps. The UK are currently, and they're very, very god at this ... they're currently organising themselves to send a delegation ... the countries that have missed out, from my understanding the Italians and the Norwegians, they have just sent delegations, or they’re in process of sending delegations to the U.S. to say, ‘right we're buying these aircraft too, we want work.’

That's right, so if we sit in Australia and assume we’re a really good bunch of guys, the U.S. love us, they'll give us work. It's just not going to fly compared to the Dutch government providing a $35 million euro bank to fund industry to be able to up-skill for these projects.

Phil:

So we shouldn't be resting on our laurels?

Chris Williams:

We can't. So I come back to some of the really good wins that we had. For the likes of Marand, Ferra, Levett, Quickstep and Broens. A lot of that genesis was early in the JFS program where those ... I think it was Minister Combet at the time ... was over in the U.S. talking with the projects, flying the flag, saying, ‘look, we're buying all of these aircraft, we want to be involved in the program, you need to involve us.’ We've started seeing that happen again just recently in a more energetic way with Minister Pyne.

Paul:

So he's really playing an important part isn’t he?

Chris Williams:

Yeah, absolutely. There's no shortage of enthusiasm. I think it's also important, if you've got a vision for what you want the industry to look like, then you put things in place to do that. Without a vision, everything you do becomes protectionist, or  anti-competitive.

Phil:

Reactionary isn't it?

Chris Williams:

Yeah, absolutely. So with Minister Pyne certainly being very active, he's been to the U.S. and we're seeing some really good changes in LAND 400. The change there, with the industry involved. So a lot of goodwill, but let's transition that goodwill into action.

Phil:

And purchase orders. Chris, mate, we've run out of time. Thanks again, I really enjoy our chats and we'll get you back on a regular basis. I think, to bookend this conversation, it’s our job as journos to speak with industry and actually understand what’s going on with the guys on the ground. Appreciate your insights, appreciate your view of the world. I think it's a very practical and pragmatic way to view business. And H.I. Fraser is obviously kicking a lot of goals, the awards that you guys have won for innovation and manufacturing capability. I think it's indicative of a healthy SME market we have. We need to make sure that prime's and government, defence ... and they do get it, but really understand that some of the latent talent we have here in Australia and the fact that we can actually use this to create a very capable defence force. Thanks for your time, mate. It's very good.

Chris Williams:

No, thanks for the opportunity.

Phil:

Thanks man, good one Paul.

Paul:

I didn't ask for anything I don’t think?

Phil:

It's all right, you've got to write some stories up.

Paul:

Actually, I think Chris sees my number pop up and he must be curse under his breath at yet another call, but I’ve got lots of questions for you, we'll definitely bring you back.

Phil:

Remember to check out defenceconnect.com.au. If you aren't subscribing to our newsletter, please do. You can do it on the website there. Follow us across all the social stuff which is growing rapidly. Retweet us, seems to be the very popular thing to do at the moment, so please keep doing that. Remember too, if you'd like what you listen to on the podcast please leave a review on iTunes, it would be appreciative.

If you'd like to have a chat with us, or you've got any questions about what was spoken about today or any of our guests, email This email address is being protected from spambots. You need JavaScript enabled to view it.. You can follow me, if you'd like @philliptarrant. If you want to know anything more about H.I. Fraser, go to www.hifraser.com - no au.

Okay, thanks guys, tune in again next week. We'll see you. Bye-bye.