PODCAST: Getting set for F-35 sustainment – Steven Drury, director of aerospace, BAE Systems Australia

Phil Tarrant:

Well g'day everyone, it's Phil Tarrant here. I'm the host of the Defence Connect podcast, thanks for joining us. We're up at Avalon, five intense days of a lot of activity in terms of industry, but also showcasing some of the great kit we have out on the fly line, both past and present. We're recording this podcast literally less than 24 hours away from the arrival of the F-35, which the hot league expected a arrival of our next generation, fifth generation of fighters into Australia. Two of them are arriving tomorrow at about 11 o'clock. Obviously, the buzz around the Trade Expo hall is about opportunities for Aussie businesses, primes and SMEs to connect into the sustainment programmes attached with the F-35, immediately and into the future.

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I've asked Steven Drury along. He's the director of Aerospace at BAE Systems. Just to really get a bit of an insight running on some of the works BAE Systems are doing on F-35, obviously they secured a major contract recently to look after the Asia-Pacific sustainment capability stuff within the F-35. Steve, I spent some time recently up in Williamtown, within your facilities there on the south side of the runway, opposite the Air Force base there. I was very impressed by not only the work currently underway within the Hawk programme, but some of the ambitious development that needs to take place moving forward to support the F-35.

Steven Drury:

Oh Phil, you're so right. There's so much to be done and we're so excited about the F-35 decision. It's a big move for us. We're doing Hawk maintenance up there at the moment. You would have seen a lot of activity in our hangars, and the fact we have to extend one of the hangars, we're going to have to move from one hangar to another to accommodate the F-35. The assignment we had for the air frame depot was two years ago, and now we're actually seeing the aircraft turn up at the end of next year. By saying the end of next year, it puts an immediacy on the whole planning that we're doing, but we've been ready for this and planning quite well for it. We're about 90% design approval for the extension, so we'll get that done this year and then we can use the transfer of our current hangar. Those Hawks will go across to what we call our northern hangar, and then we can start setting out the southern hangar, so by December '18, we'll be ready to accommodate F-35s.

As you walked around our hangar, you would have seen some incredible people doing some really amazing things on aircraft, and those guys are just so passionate about their work and they're so excited about seeing these F-35s coming just next year. You would have noticed a real buzz around the place too. You would have seen that everyone's just really excited about this coming, and it's a great boost for the whole company and the region. You wouldn't believe the Hunter Valley, how much everyone in the government side, local universities, high schools, everyone knows that F-35's coming to their area. Everyone's very proud of that.

Phil Tarrant:

Yeah, the proud Hunter Valley locals there, they stand up and ... While I was in Williamtown recently, I spent some time on the northern side, looking at some of the manufacturing of some of the infrastructure development going on around the F-35, and it's mind-blowing.

Steven Drury:

Yeah.

Phil Tarrant:

The level of investment in there, and I saw so many local tradies out there in the blistering heat and constructing the infrastructure for the F-35. Where you guys are, and your hangar, so you're developing your northern hangar, so you're going to equip with the current Hawks. With the actual contract around the maintenance of the F-35 that's going to happen within your current facilities, could you just give me and our listeners a little bit of an idea about what that actually entails?

Steven Drury:

Yeah, so the assignment, it was nice to get that two years ago but you do have to turn this assignment into a contract and prepare yourself, and so actually getting the hangar worked out like we just mentioned, and then actually getting under contract. We're even doing that even just now. Two years later, mobilisation plans are going but actually understanding what needs to happen for an F-35, the sustainment side's still in development, so a bit of a unique programme. These assignments are happening very, very early as production's still happening and the aircraft hasn't even rolled out to Australia just yet, and already we're preparing for the deeper maintenance. That's quite unusual. Normally it's the operational side first, and that gets developed in conjunction with operational maintenance.

Having that assignment to industry early has enabled us to prepare ourselves and work in conjunction with defence, and so they actually have an obvious partner to go to, to talk about the different issues and risks that have to be managed. We don't even know yet exactly what's going to be needed on the aircraft when they first turn up, because they're not meant to be in the depot straightaway.

Phil Tarrant:

They’re brand new, they’re fresh aeroplanes .

Steven Drury:

That's right, but you don't know what might happen. Some things can occur on an aeroplane and they might need a deeper maintenance touch, but not a proper scheduled deeper maintenance servicing. By actually having our crew ready and trained, they'll be actually working with Air Force on the aircraft whether it's operational, deeper maintenance, and preparing for the first schedule event which might be just a few years later than that. As the numbers of aircraft build up, and there's certain modifications that are actually needed for the aircraft early on, it's a development programme still where the aircraft are getting better and better, and have to be upgraded to the latest configuration.

Phil Tarrant:

Yeah, so in terms of the delivery of the first couple of planes in December of this year, so we don't expect them to need immediate upgrades, immediate maintenance, but I guess that gives BAE a good opportunity to slowly build the infrastructure as we look to bring in a whole 72 aircraft into Australia.

Steven Drury:

Yeah.

Phil Tarrant:

How big do you see that being, at a point where we reached the capacity of acceptance and operational activity of all these planes in place? How many do you expect to see into bay at any point in time?

Steven Drury:

Our expected number of people that we're going to have to actually finally have for the sustained deeper maintenance, is some 200 plus is our best guess.

Phil Tarrant:

Okay.

Steven Drury:

The number of aircraft we're actually developing for that in the hangar is some six to eight. Remember, we're a regional depot, so we don't have to also accommodate for the 72 aircraft Australia is buying, there's other international aircraft that may also come into our depot. We don't have any details on that just yet but the JPO is going to be scheduling that into national effort. Our estimate right now says that we need some six bays for the Australian aircraft, and the other two bays are for international. These things will have to remain flexible as we learn more about the aircraft.

Phil Tarrant:

Any business who talks about scale and efficiencies and learning effects, and all this sort of stuff, when you look at what you've been doing on the Hawk programme, and then you bring in the F-35 into it, how many of the systems, and the way you do that now on the Hawk, can you apply straight into the F-35? It's not a wholesale shift or change, it's just a different plane with, obviously, different requirements, but the process to maintain this capability, is it going to deviate too much from the Hawk?

Steven Drury:

Phil, I think you've got it on the mark there. Really, the basics are going to have to be the same. Yes, it's a fifth generation fighter, there's probably different production type elements in the inner workings but, in the end, it's an aircraft that's got skin, it's got electronic boxes inside that have to be pulled out. There's different ways to work out what might be wrong with the aircraft, and there's a programme of schedule of how to actually go through a deeper maintenance requirement. Those details are always provided to the maintainers so they know what to do, but the basic skills that are needed are common. They will have to get some sort of training to work out how to do these particular servings on an F-35.

Phil Tarrant:

From what I understand with the solution that you put together through government to secure this contract, it was very much about giving good value for money. Also, obviously, the quality and expectations of getting this done, but in terms of the delivery of what they need and that cost-effectively, that was a big part of what you proposed the government. Is that something that you think the Hawk programmes allowed you, to give you that weight to be able to deliver back to the government?

Steven Drury:

Yeah, 100%. It was the Hawk programme and our excellent people at Williamtown, and peers, we also service the aircraft over in Perth, those people made it very clear that we have a great capability. I assessed this contest as more of a capability contest rather than a value for money contest, because the costs right now can't be properly calculated because you don't know exactly what's needed in the future. We were assessed by the American JPO, in fact, so the government that actually did the assessment and the assignment was the US government, and the Australian government provided some four or five entries from within Australia. We were down selected by the US government for that. Then this was us up against Japan and Korea, because it is a regional depot.

Phil Tarrant:

You're rewarded then, as a company, for greater efficiencies and processes if you deliver the project.

Steven Drury:

That's right. The first assignment, basically, they think that's the lowest risk option. They believe that you are capable and you have the right culture to provide the cost effectiveness that you desire, but it's not a life-long contract, you then have to produce exactly what it is they're expecting of you. You're going to be internationally benchmarked. The Japanese and the South Koreans will be wanting this value for money as well, and there's Europe picking winner over in Italy, and they'll be doing the same things. People are going to understand, internationally, who's actually doing the right things for depot maintenance on F-35s. Just like we're doing on the Hawk, where we've save the government tens and tens of millions of dollars over the years, we'll be doing exactly the same thing for F-35, so they have no reason to look elsewhere.

Phil Tarrant:

I spent some time last night with your colleagues, and we were chatting about the F-35 and role that BAE's going to be playing within it, and we spoke about componentry and the servicing and componentry. I can't remember the exact numbers but I think what you'll be looking to do is about 10% of the total componentries on a F-35, I think it's 60 over 700 plus that need sustaining. So this is just the beginning for you guys. It's obviously looking secure moving forward.

Steven Drury:

Yeah. What we're talking about there is moving on from the air frame depot to looking after components, and there's a series of competitions for that. The first competition was last year, and that's the one you would've been talking about in November, we were assigned a certain of those components. A great thing for Australia, and it was a team Australia approach, we worked heavily with Northrop Grumman, GE, Honeywell. RUAG was in the team Australia as well. Our companies together, won 64 of the 65 components on offer in Australia. Pretty incredible effort, but as you mentioned, those first 65, there'll be another further 700 plus competed this year. Actually, the main competition's going to be this year, but, boy, we've got a great grounding for that.

Phil Tarrant:

That's good, and it's a question that I always get asked. A lot of the SMEs lament about getting into the prime supply chain, BAE included. I know you guys do a lot of work trying to make sure that there is a gateway into the BAE to ensure that you can extract the best talent in the markets that you're working within, and the Hunter region, obviously, has got some great businesses. For those guys who are looking to connect with BAE and look how they might be part of this F-35 story, how do they go about doing that?

Steven Drury:

Look, I'll probably not give out names and numbers, but there are contact available within BAE Systems Australia, where they can contact us. There is the Hunter Group. There's certain areas within the Hunter where they can actually go and talk about defence, and they definitely know our contact details. When you walked through our facility at Williamtown, you would have seen other businesses on our site, there's AirFlight, there's GE, Rolls Royce. We actually accommodate some other larger businesses and SMEs as well. What I've noticed over the last few years is defence has recognised the high cost of having multiple contracts. They would actually rather have maybe just a single or just a couple of contracts with ... Necessarily, they're going to have be primes, so the entry for an SME really is through the prime, and we're ready to stand up to that.

We believe in diversity. We believe that the best capabilities available in the Hunter, is the best for us, and it's not a matter of, "Okay, we won the contract, we won it all." We'll share it where the best talent is available.

Phil Tarrant:

That's good. Steve, we've run out of time for today but, look, I've enjoyed the chat. Like I said beforehand, we're only literally hours away from the arrival of F-35. Have you been out to the States, you've connected with the assets yet?

Steven Drury:

Phil, I was extremely fortunate that I actually was there for the role out ceremony in July of 2014.

Phil Tarrant:

Okay.

Steven Drury:

It was just so exciting to see our F-35 live, so tomorrow's going to be just as exciting.

Phil Tarrant:

That's good. Yeah, I think everyone's looking forward to see it. Look, let's keep in contact and keep us abreast of the F-35 story within Williamtown and BAE.

Steven Drury:

Yeah.

Phil Tarrant:

I think everyone's quite interested in it. For our listeners, we've been writing extensively around the business opportunities associated with the F-35, so make sure you check out defenceconnect.com today. There's a lot of information in there, but my recommendation, start chatting to people, is then I'll echo what Steve said, it's about getting out there and understanding where these networks are and the doorway is open to enter into the F-35 supply chain. Hunternet, for example, is a great start, aiding some of the other bodies, and institutions are really looking to support SME growth into the F-35 supply chain. Thanks for tuning in everyone. I hope you enjoyed that. Remember to check us out on all the social media, Facebook, Twitter, LinkedIn. You can follow me, if you like, @philliptarrant. Any questions for me or Steve, and I'll pass them on, contact the team editor at defenceconnect.com.au. Yeah, thanks for joining us, we'll see you next time. Bye-bye.