Three years ago, Australia embarked on a mission to create a world-class aerospace industry. As that industry gathers for its biennial showcase at Avalon, we find out if its ambitions have been achieved. Plus, we look at the changing domestic airline sector and at how the military is equipping itself for a role as regional superpower
Three years ago, a joint steering committee comprising representatives of Australia's aerospace industry and government faced a daunting task - to implement 16 recommendations from the Aerospace Industry Action Agenda designed to improve the health and competitiveness of the country's aerospace sector.
The Action Agenda, a government-industry initiative, resulted in a vision for the local industry: "To develop and sustain world competitive capabilities in the Australian aerospace industry and increase annual exports fivefold to A$3.5 billion [$2.7 billion] by 2012."
"We've achieved a lot more than we thought we would three years ago," says Tony Quick, director and general manager of GKN Aerospace Engineering Services and leader of the joint steering committee (JSC) whose job it was to drive implementation of the Action Agenda recommendations. The JSC comprised senior representatives from Australian aerospace companies, including Aerosonde, Australian Aerospace, Hawker de Havilland and Production Parts, plus Qantas, the government, defence bodies and the Civil Aviation Safety Authority.
"All of the recommendations have been addressed during the life of the Action Agenda," says Quick. "A number of the recommendations contain issues that will continue to be progressed by industry and government individually and through the various forums that have flowed from the Action Agenda."
Recommendations from the Action Agenda included recognising the strategic and economic value of a world-competitive aerospace sector, establishing a single body to represent the country's aerospace industry, looking at new investment incentives, boosting aerospace employment and training, developing a new Co-operative Research Centre for aerospace technologies, and getting Australia's aircraft certification standards recognised by other countries.
"We now have significant involvement of industry and government working together," says Quick. "The Action Agenda has put aerospace on the government agenda. The government now recognises that it is one of those industries that needs the government and industry working together. You can't have a successful industry without a supportive government."
The government successfully used the "Team Australia" approach for the Lockheed Martin F-35 Joint Strike Fighter programme, whereby the country's aerospace capabilities are showcased as a whole and this approach is being adopted for other global aerospace programmes. "The various initiatives undertaken in conjunction with the Action Agenda continue to increase industry collaboration and are leading to a greater unity of purpose," says Quick. "This is exemplified in the increasing use of the Team Australia concept in seeking major work packages from the global aerospace primes."
Tony Carolan, Hawker de Havilland general manager programmes and business development, says: "The government's involvement on JSF through Team Australia has been great. Industry and government haven't played effectively as a team before that." Quick believes local industry has been encouraged by the government's ongoing support, demonstrated by the JSF programme, and more recently by the Air 7000 multi-mission unmanned air vehicle acquisition project and the award of a strategic investment incentive grant to Hawker de Havilland which secured the Boeing 787 movable trailing edges contract for the Australian company. The 787 project alone has resulted in 115 local suppliers getting a slice of the work, with Hawker de Havilland estimating that the project will yield more than A$4 billion in local revenues. "This government support has achieved maximum engagement of Australian industry in these projects," says Quick.
The Australian subsidiaries of the major global aerospace companies are also doing their bit to boost local industry. Boeing Australia, for example, says it has a very strong commitment to Australia and the country's aerospace industry. Boeing Australia has 2,400 employees, making it the largest Boeing subsidiary outside the USA. Among Boeing Australia's current work is the 737-based airborne early warning and control Wedgetail programme - the largest aircraft modification programme ever undertaken in the country.
"As a team, we are focused on developing suppliers and partners within Australia to the benefit of the aerospace industry and the broader community," says Boeing Australia's recently appointed president, David Withers.
"Part of this approach has been to concentrate on nurturing SMEs, creating opportunities for them to integrate with the Boeing Global Sourcing network for aircraft parts manufacturing. This gives them valuable exposure to Boeing and other key international markets, with a consequent flow-on effect to the Australian economy."
Likewise, local suppliers are benefiting from other programmes, such as the production in Queensland of the Australian Army Tiger helicopter by Eurocopter company Australian Aerospace.
Quick believes one of the major achievements of the Action Agenda was the creation of a single body to represent the local aerospace industry, with the formation of the Australian Aerospace Industry Forum. The Action Agenda report found that the local industry was fragmented and needed a single association to position it as a participant in global aerospace platform developments and as an independent supplier to niche markets. All leading aerospace nations have strong industry associations, the Action Agenda found.
Tenix's defence contracts include the Project Echidna electronic warfare self-protection upgrade for the C-130J
"We recognised there were a number of things we could do within three years [the Action Agenda implementation period], but clearly a number of recommendations have a life beyond," says Quick, adding that it will be up to the Forum to take this work forward. The Forum was launched by Australian minister for industry, tourism and resources, Ian Macfarlane, in April last year.
Members of the Forum comprise industry associations that represent the Australian aerospace industry, large aerospace firms with an operation in Australia, and small and medium-sized enterprises (SMEs) and institutions whose primary activity relates to the aerospace industry (see box below).
The group had its first meeting in December and established four working groups - export and supply chain management education, training and research aerospace, defence industry engagement and certification and regulation.
Over the next couple of months, the working groups will begin their activities in earnest, with membership of the working groups and work plans currently being finalised, says Forum member Carolan. The Forum has been modelled to some degree on the Aerospace Industries Association of Canada, which acts as the single voice for that country's aerospace industry, says Carolan. The Canadian body is well respected, effective, works well for the industry and has a strong voice with the Canadian government, he believes.
A major issue that came out of the Action Agenda for Australia's aircraft manufacturers, particularly the thriving general aviation sector, was the lack of recognition for aircraft certification standards. The Agenda sparked the creation of the Aerospace Industry Regulatory and Certification Advisory Panel (AIRCAP).
AIRCAP advises the Civil Aviation Safety Authority on ways to improve the efficiency, effectiveness and consistency of certification, with panel members appointed by the government. "A key role of AIRCAP is to assist CASA with the successful conclusion of new international certification agreements," says Quick. "AIRCAP and the certification working group have encouraged CASA's efforts to conclude a bilateral aviation safety agreement [BASA] between the USA and Australia and a mutual certification recognition agreement between the UK and Australia."
An executive agreement on the BASA with the USA was signed in June 2005 and work is continuing on negotiations with other major aerospace countries, he says. AIRCAP is seeking consultants to produce a number of reports on certification and mutual acceptance around the world.
GA aircraft manufacturer Gippsland Aeronautics, which has suffered financially and in overseas marketing because of a lack of recognition of Australian certification, says this process needs to continue. "The government must fast-track bilateral arrangements for the acceptance of CASA approvals," says Gippsland chairman Gary Wight.
The manufacturer believes AIRCAP is making a difference. "We are hopeful that the reports to be commissioned by AIRCAP concerning certification and mutual acceptance will be of use in our negotiations with CASA," says Wight.
CASA was the subject of a number of recommendations in the Action Agenda report, including issues of cost recovery and the efficiency, effectiveness and consistency of aircraft certification conducted by CASA. A CASA cost recovery review is continuing and AIRCAP has made a number of recommendations to it. CASA has made improvements elsewhere, says Gippsland co-founder George Morgan. "CASA has improved its performance in the manufacturing area by establishing a discrete manufacturing office."
Other Action Agenda recommendations are related to fostering aerospace research, development and innovation in the country. Australia's Co-operative Research Centres (CRC) have been a platform for Commonwealth support for research and development and the highly successful CRC for Advanced Composite Structures (CRC-ACS) has led the country's R&D in aerospace composites. Since the Aerospace Action Agenda, the CRC-ACS has secured ongoing government funding and has also received supplementary funding through increased membership from the aerospace industry, says Quick.
The Action Agenda recommended the establishment of a new CRC specifically for aerospace technologies. This recommendation has not been implemented, however, as it was not supported by industry because of competitive pressures between companies, says Quick. Instead, alternative ways of supporting R&D have been pursued, he adds. "It was agreed to focus on commercialising R&D through a Team Australia approach, such as through the Advanced Maintenance and Aircraft Life Extension initiative, where firms are working together to market their capabilities," says Quick. That initiative will see nearly 30 local companies take part in an Australian industry aircraft maintenance and life extension stand at this month's Australian International Air Show at Avalon, to market their capabilities to visiting defence forces. A capability directory is also being produced to help market Australia's skills in this area.
The local defence industry also hopes that the government's new defence aerospace industry policy will allow it to flourish. Last May the government launched a review of its defence policy and in December it released for industry comment a draft defence industry policy following a consultation process with local industry on how it should be implemented. The final defence industry policy was released by defence minister Brendan Nelson on 1 March. A new policy is seen as necessary because since the Defence and Industry Strategic Policy Statement was released eight years ago there have been numerous changes, including increased investment in defence, more operational campaigns and reforms to the procurement process.
The document highlights nine strategies designed to assist the Australian defence industry in meeting the requirements of the Australian Defence Force and to help it win business overseas. The strategies include implementing a strategic approach to equipping and sustaining the ADF maintaining priority for local industry capabilities creating opportunities for Australian firms supporting the development of skills in the defence industry facilitating defence exports and driving innovation in defence technology.
The policy identifies initiatives that will help the government implement the nine strategies. These include developing a new Australian Industry Capability programme to identify opportunities for local industry. It also intends to encourage defence technology innovation through clustering research by the Defence Science and Technology Organisation, universities and industry using the Co-operative Research Centre approach. To boost exports, the Department of Defence will set up a new defence export unit. The government is pledging high levels of support for R&D by local firms, a reinvigoration of efforts to expand defence industry exports, and a broadening of the government's Skilling Australia's Defence Industry programme to address the sector's skills shortage.
"Implementing the policy will deliver a more capable, responsive and sustainable local defence industry," says Nelson.
Boeing Australia says it looks forward to the policy's implementation. "This new policy will be relevant, realistic and strategic in outlook and will take into account the plans of the larger aerospace companies, including Boeing," says Withers. "Boeing Australia will continue to work closely with the Australian government and I am confident the aerospace industry has a bright future in this country."
Forum member Tenix Defence Aerospace Division says: "We understand and support the aims of this policy. We will be working with the government to implement it effectively and obviously we want it to work, but it's early days yet." One issue that concerns Tenix is whether there is enough military work in Australia to allow capabilities to be maintained.
A crucial aspect for the Australian aerospace industry moving forward is to maintain the momentum of the Action Agenda and the relationship between industry and government. "We've got to make sure that we don't pause and have the industry slip back and work against each other," says Quick. "We need to continue with what we as an industry are already doing and work with government to utilise the Team Australia concept to maximise the engagement of Australian industry into global supply chains." He says it is crucial that the industry-government partnership continues, adding: "The government has created the right climate by helping directly and removing barriers and the other important area is building up confidence of local suppliers."
The government must also continue to help industry in the area of research and innovation, says Hawker de Havilland's Carolan. There are challenges ahead for Australian companies, he warns, including meeting aggressive cost structures set by primes. The Australian dollar exchange rate has also not helped, he points out.
Tenix says the government could help industry further by the timely award of programmes to help maintain and grow Australian capability. "The Action Agenda has helped. We would like more progress, but are pleased with what has occurred."
After the progress made over the past three years, Quick is confident the industry will reach its number one priority from the Action Agenda - to create a sustainable world competitive aerospace industry able to deliver high levels of value-added exports. The A$3.5 billion target by 2012 is "definitely achievable with the right things in place", says Quick.
But other industry executives are less confident. One says: "You'd have to be most of the way there by now, and we're not. It's such a competitive world."