The Guardian (Australian edition) July 17, 2017 and The Canberra Times, July 15, 2017 have reported that:
Australia's Defence Industry Minister, Christopher Pyne, has voiced enthusiasm about Australia becoming a major weapons exporter - perhaps on the scale of UK, French and German exports (see Table below). As Pyne mainly promotes shipbuilding from South Australia this is likely what he is talking about.
COMMENT
Major impediments to Pyne Vision are:
- Australia does not have an industrial base or equipment research sector large enough to develop
major weapon systems
- put another way Australia does not enjoy the economies of scale to sell a high volume of weapons
to the Australian domestic market that would make unit prices competitive or lower for foreign
customers
- Australia does not have the necessary labour efficiencies or productivity to compete against
existing major arms exporters (think South Korea and Spain for surface ships). Also Singapore is
highly efficient in labour productivity making it unlikely to buy from Australia.
- Australia does not have the major advantage of being an established weapons supplier with an
established sales structure in other countries. This is unlike all the exporters listed in the Table
below (US, Russia, Germany, China, France etc)
- Australia does not have the corporate financial depth to sell weapons at below market prices in
order to secure contracts - then recoup revenue over the long term (eg. by charging higher for
maintenance and spare parts, etc)
- Australia is constrained by licences and intellectual property being held by major exporters to
Australia (eg. US, Spain, UK and for the future submarine France.
- Australia is not geographically positioned well to sell weapons to paying regional allies (except for
New Zealand). NOT to impoverished Pacific Islands, PNG, East Timor etc.
So what is Pyne really talking about?
New Zealand. It is the only country Australia has built major weapons system for, and sold those weapons to. But New Zealand is still a very small customer. The largest orders to NZ over the last 3 decades have been 2 Anzac-class frigates in the 1990s and 2 Protector-class OPVs in the 2000s.
Offsets. Australia is partly justifying the large amounts of taxpayer money it is spending on F-35As by claiming that the much smaller scale Australian content and "sales" of some F-35 components will be a victory for Australian industry
Pyne appears to focus most of his attention to ship and submarine building in Adelaide. It is highly unlikely that Australia could build and export Future Frigates, Futures Submarines or OPVs, to foreign countries. This is mainly because those countries that designed and hold the intellectual property rights to those weapons system would not want to lose business to artificially created Australian reselling or competition.
Pyne's claims of a potential export benefits of Australian built weapons can mainly be seen as ways to divert criticism of the high prices Australia will be spending on F-35s, ships and submarines over the next 20 years. Pyne wants to maintain Australia's major policy direction - that is spending on the weapons sector should not be questioned in the way spending on the less deserving health, education, welfare, infrastructure and energy sectors is being questioned.
Pyne's words do not yecertify that he is out of touch with the realities of weapons exports.
Australia has long been geared to be a major weapons importer making it difficult for Australia to become a major weapons developer and exporter. Source is the Stockholm
International Peace Research Institute (SIPRI) database via The
Canberra Times.
Pete
6 comments:
I wonder if Australia can manufacture military products too.
When car maufacture is transfered to overseas production it should have been considered as 'the loss of a strategic resource'. The removal of equipment and technology further degrades Australian potential to manufacture.
I'm not confident we can maintain and fight a war footing for more than a week or two.
I'm not sure our allies will quicly jump to our aid. They have to cross some pretty good motes to get here.
DZA
Hi DZA
Australia builds military vehicles, mainly armoured cars, in Bendigo, Victoria. This is under licence from local-foreign firms, mainly Thales Australia. I don't class such vehicles as major weapon systems.
- The Bushmaster https://en.wikipedia.org/wiki/Bushmaster_Protected_Mobility_Vehicle has been sold to the Netherlands and UK.
- The Hawkei is another Thales Australia https://en.wikipedia.org/wiki/Hawkei product.
Australia did build and sell the Nomad light transport aircraft in the 1970s. But I think this was a very developmentally expensive experience that ultimately caused grief, due to high fatal crash rate https://en.wikipedia.org/wiki/GAF_Nomad#Design_and_development
Regards
Pete
Pete
Hawkei & Bushmaster are local designs, not under license. Many of Australia's defence based companies are either partly or fully owned by large global firms (but not all). However contractual arangements means that many of these companies export out of Australia (especially if they are making products based on government DSTO ip or have existing government contracts). Also some licensed but Australian modified products can often also be manufactured & sold.
Some example potential & actual exports include the following:
Thales Australia - Hawkei, Bushmaster, EF90 rifles, ammo, propelants
Boeing Australia - JDAM-ER Glide bomb wing kits (DSTO concept)
BAE Australia - Nulka decoy missile (DSTO concept)
CEA Australia - high tech radars
SAAB Australia - Naval CMS
EOS - RWS (remote weapon systems)
Platt - machine gun mounts
Various naval ships, boats & designs (eg I believe Austel are currently looking at export potential for the Guardian class PPB)
And a number of others that most people would never have heard of making products as diverse as satcomms to target drones.
What Australia lacks is the big $$$$$ exports (Nulka being an exception) that comes from selling big ticket items like planes, helicopters, tanks, ships, submarines, sonars etc. The best potential is probably CEA, unless Canada would like some subs.
Hi Anonymous [at 6/8/17 1:39 AM]
Thanks for your detailed comments. When itemised Australia has developed many weapon components and exported some smaller weapon systems. The Nulka and CEA radars prove Australia can be world class.
A problem with Pyne's was, what looked like a more grandiose vision of Australia exporting Major weapons systems, and to hard fought commercial arenas like the Middle East. The Middle East has long been the preserve of UK, US, French, Russian and German arms sellers.
I don't know if mainly French Government owned (and union sensitive) Naval Group, would forego the opportunity of building Canadian Shortfins or Scorpenes in France or Canada.
It seems rare that major arms sellers allow second party customers to market major weapons to third parties. I can only think of TKMS allowing South Korea (mainly DSME) to sell those medium sized 209 subs to Indonesia.
Regards
Pete
Pete
The ability to manufacture licensed designs for resale to third parties depends on the licensing agreement & usually requires the permission of originating countries & original designers. Sometimes permission is pre-determined for a possible export list as part of the deal (eg Australia often lists NZ as part of the agreement). Brazil has the rights to sell SAAB jet fighters to South America but due to the quantity of UK components in the Gripen jet, Argentina has already been denied by the UK. Most times it is a case by case basis. The designers get a cut regardless of where its built & in some cases the designers are only that.
Australia has no hope of building Scorpenes for Canada but does for Shortfins. Primarily because once the design is done (& provided Canada does not mess with it), the only way France can make more money out of the deal (ie on top of licensing & building profit) is if its built in France. The problem for Naval Group building in Canada is that Canada has never built submarines before. This adds risk & costs in both time & money. Depending on the number to be built (say 4 - 6), then unless Canada insists otherwise, only Australia & France could be the builders. Australia has an advantage in that it is already building that exact design & with the quanity that we are building our efficency will only keep improving. France could also build the design however they will only have ever built the nuke version (still a learning curve & ramp up to go through) & they also have the replacement boomers to build. The US would also be happier with their equipment being fitted in Australia or Canada rather than in France (if Canada wanted the same fitout as Australia).
If Canada wanted Shortfins built in Australia, France would be hard pressed to refuse. Both are long standing allies. There is also considerable other French systems (especially from Thales who are also major shareholders in Naval Group) in the subs & Thales Australia is one of our largest defence companies. There is even the possability of split builds. The one thing Naval Group don't want is to lose the deal to TKMS or SAAB. The best chance Australia has of naval exports is long production runs of a large number of units so that provided you want what we are building, few can match us. eg with the AWD's there is a 60% efficency gain between AWD 1 & AWD 3 (we are stopping just as we start to get good at it). We are building & planning 12 subs, 9 frigates, 12 opvs & 21 patrol boats. There are not many nations that can match those sort of numbers in single production runs.
Hi Anonymous [at 11/8/17 1:20 AM]
Your comments are so useful with such depth of experience that I'll incorporate them into an article and respond to them next week.
I agree Canada is a major possibility for future sales. Shortfin is possible or more likely a middle sized SSK (eg. Scorpene) as Canada seems to have placed subs as a lower, long term priority (so far).
If Trump is OKing nuclear propulsion for South Korean and Japanese subs then the US should be less of an obstacle for such potential nuclear propulsion technology transfer projects as:
- India - Shortfin (with some extra Barracuda features) technology transfer for (P-75I) SSKs and for India's 6 SSN program.
- Once Brazil's economy is restored transferring some Barracuda features for Brazil's planned "SN-BR" SSN under PROSUB http://gentleseas.blogspot.com.au/2015/03/brazil-new-submarine-prosub-program.html .
Indeed Australia improves in shipbuilding costs and efficiency with each vessel of a run built.
Regards
Pete
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