Good comment, John. You've got to the nub of a problem many countries are grappling with - how much is it worth to maintain a specific local defence industry?
Britain has opted to retain combat vessel manufacturing (T26) and outsource support vessels (MARS to Korea). Canada has decided to build everything locally, at huge financial cost and accepting massive capability gaps (current oilers being decommissioned, local replacements a decade away or more). Norway has outsourced the lot - frigates to Spain, tanker to Korea. France has kept everything in house, and is gambling on export sales to recover the costs.
There is no single 'right' answer, but I think there are some wrong ones. Canada's willingness to accept huge capability gaps makes it clear that their military is less important than a regional stimulus/vote-buying scheme. India indefinitely funding politically connected projects that take far too long to produce sub-standard equipment (Tejas, anyone?) shows the dangers of elevating 'locally built' above all other considerations.
So far Australia has managed to avoid these extremes, but your DefMIn and government have some very tricky calls coming up. Sometimes I am perversely glad that NZ has no significant military manufacturing industry!
Thanks mate.
And in a perverse sort of way I agree with you too about military manufacturing industry!
To repeat what I said on the previous page, when we acquire aviation assets for the RAAF (Navy and Army too), direct from overseas production lines, especially the more recent FMS purchases from the US (which by the way have mostly seen delivery on or before schedule and either on or below budget too), I never hear anyone complain about the tens of billions of dollars going directly offshore, not a word, not one little complaint, we don't even seem to have a mandatory 'offset' policy when we spend all those billions of dollars either.
Yes, for example, we are an industrial participant in the F-35 program, but as I understand it there is no guarantee of work share, yes we get the opportunity to compete for the work, but still no guarantee.
I think at the very least we should have a mandatory requirement that, say 25%, of the 'value' of the project be spent here in orders for our aerospace industries, doesn't necessarily have to be components directly related to that purchase, for example with the purchases of F/A-18F, EA-18G and C-17A, all those production lines are coming to an end, the C-17A line is very close to ending, but that still doesn't stop us requiring Boeing to spend X dollars here as part of an offset agreement for supply of components, it could even be for their commercial products, and the same could apply for any purchase for the Navy and Army too from an overseas supplier.
Anyway, enough of that rant, back to Australian Naval shipbuilding industries.....
Again, don't get me wrong, I'm not against a sustainable and effective Australian Naval shipbuilding industry (not at all!), and with the 'premium' that has to be paid too. But it does concern me (again referring to the AWD project), that from the start this project had a budget of $8.5 Billion, that is a lot of money for three ships, and now it's probably going to end up closer to $10 Billion by the time the last ship, HMAS Sydney, is completed and commissioned too.
And on top of the explosion in cost (and 'more' money having to be 'robbed' from some other project to top up the bucket of dollars for the AWD project), it's also the running late by a couple of years which also means that the RAN will have to find extra dollars to keep the FFG's in operation longer and if it doesn't keep them in commission longer, then we end up with a capability gap too!
The RAAF doesn't seem to be burdened by these problems, when the Government decided to retired the F-111C's early, and to ensure there was no 'capability gap', we procured the Super Hornets direct from the US, problem solved.
The RAAF doesn't seem to be 'burdened' with having to be both a 'milking cow' for industry and also perform its primary role, but on the other hand, the RAN apart from its primary role of defending Australia it's also there to be a milking cow for the shipbuilding industry, something is just not right with that!
So who's fault is it? Well no doubt we can all blame previous Governments for an 'inconsistent' policy towards shipbuilding, blame can also be apportioned to the other players too, shipbuilders, ship designers, management practices, work practices and the unions too, all can share some of the blame, certainly some share a much larger share of the blame than others, but at the end of the day who 'pays' for all of this? The taxpayer on the one hand and the Navy on the other.
Defence and Navy will have to find more money to complete the project, and if additional funds aren't added to the bucket of money for the AWD project, then other projects will have to be sacrificed (as the Def Min has recently indicated), there has got to be a better way!
Here's an idea out of left field!
Would it be fair to say that the AWD project isn't just a project for the Navy to obtain three new AWD's, it's also an 'infrastructure' project and an 'industrial / employment' project too? Fair comment?
Then maybe all the money being expended on this project shouldn't have all come from the Defence budget, and especially the part of the budget allocated to the Navy.
If these ships had been built in Spain for example, what would the cost be? $4B, too low? $5b, still not enough? $6B? surely that would have been getting close to the final cost?
No doubt the original project budget of $8.5 Billion (now heading towards $10B) to build here did include the 'premium' for local construction, but was it also there to cover the cost of 'infrastructure' that was required for the built at Techport? Did it also include funds to 'employ' staff and 'train and skill' them too? I don't know.
So maybe not only should dollars be coming direct from the Defence budget for the local build of the three AWD's, but maybe there should also be a contribution from an infrastructure fund and an employment/industry policy fund too.
The point I'm making is that when things have gone off the rails in this project, is it the Navy's fault? Don't think so, is it the fault of factors outside of its control? Probably more accurate.
So why is it that at the end of the day the Defence budget (and more than likely the Navy part of that budget) will have to pay for the increased cost of this project, and as the Def Min has indicated, some other capability will have to suffer to ensure this project is completed and paid for.
Rant almost over!!
It just seem to me that Navy has been forced to pay the extra cost of local build (in numerous ways), and also suffer the results of it too by late deliver and at the potential expense of other capabilities too.
There's got to be a better way!!!
Cheers,
John