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12 Jul 2023, by Amy Sarcevic
With spend predicted to reach 52.559 billion in the 2023-24 financial year, Defence is the largest procuring agency of Australia’s Commonwealth government. However, its requirements pale in comparison to those of export markets, like the USA, where USD$773 billion (AUD 1.1 trillion) has been allocated over the same period.
With Australia’s Defence expenditure known to fluctuate, demand from international markets can also provide more stability. As Michael Riera of Austrade points out, down peaks in ADF spending cannot always sustain all pockets of domestic industry and, at times, regional contractors can be disproportionately affected.
“Regional defence companies are often less connected to international markets than their metro peers, simply due to the lack of physical proximity to broader networks.
“That is why we encourage all regional companies to consider gaining a foothold on the international defence ladder. This can increase the sustainability of demand for their products or services and decrease reliance on the ADF,” Michael told Informa Connect.
Challenges of tackling an export market
But while the case for entering international markets may be straightforward, the practicalities of doing so are often not. Differences in language and business culture can make it challenging to build relationships for anyone in an early stage of export readiness. For regional companies, the task can be more difficult, with less access to OEMs or international firms.
“Businesses who haven’t approached an export market before may not realise what it takes to be successful overseas. It can take a huge amount of time and commitment to create partnerships on the ground. Without the right support, companies could invest years in trying to tackle an overseas market, only to fail,” Michael said.
Help is at hand
To help regional contractors get their slice of the export pie, Austrade is offering a broad repertoire of tools, contacts and resources.
“We have done the legwork for local industry, in partnership with Department of Defence, setting a global Defence & Security Director network for Australian defence businesses to access and gain support from.
“These are highly qualified people based in priority markets, including the former head of government relations for BAE systems and a former British defence attaché, to name but a few,” Michael said.
Austrade also works with international investors and foreign Primes looking to partner with those in Australia.
“Partnerships with international companies are such an important piece for regional contractors. The Global Supply Chain Program facilitates this and can be a great pathway to growing Australian Defence industry in other markets.
“We encourage businesses to reach out to us, tell us what they do and what their value add is, so that we can assist to build these partnerships further and help them succeed overseas,” he said.
Innovation initiatives
Austrade also shines the spotlight on overseas innovation initiatives. These can offer a less traditional, more attractive, pathway to procurement than simply applying for a tender.
“Defence innovation programs, like that seen in the UK and USA, can offer a streamlined way of accessing offshore defence opportunities. We have seen these giving rise to lucrative contracts,” Michael said.
Australian companies have had particular success with the US Defence Innovation Unit, an initiative which seeks prototypes with a higher technology readiness.
“Once the prototype is complete, the US Defence Force can service that contract through other arms of defence. This bypasses the normal transaction process, as it has already gone through competitive innovation tendering process – so it is much more streamlined.”
Outside of the US, programs such as DASA [Defence and Security Accelerator] in the UK are also worth exploring.
“This is a similar concept to that seen in the US. It involves the solicitation of novel technologies at all types of tech readiness – from early to late stage – and expedites the process of getting them into the armed forces.
“All companies should be looking at pathways such as this when entering a new market.”
Further afield
Alongside Austrade, Michael also encourages regional contractors to seek support from their local Chambers of Commerce and industry hubs.
Initiatives such as the NQ Spark facility in Townsville will also be a “great way to socialise with dual-use opportunities and international companies”, he said.
Giving more advice to regional contractors, Michael is due to present at the ADM Townsville Defence Forum.
This year’s event will be held 23 August at the Ville Resort-Casino Queensland.
Learn more and register your place here.
About Michael Riera
Michael is a Senior Adviser at Austrade, based in Brisbane. He is a trade and development professional with over a decade of experience working for the Australian and UK governments, having a particular focus on supporting defence industries to access opportunities globally.
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