Australia wants to boost its local arms production. For now, she is looking abroad.

CHRISTCHURCH, New Zealand — Travis Reddy wants to buy a Brazilian arms manufacturer.

As CEO of DefendTex, an Australian company specializing in precision-guided weapons, rockets and lurking munitions, he is encouraged by a government program to increase the domestic industry's capacity to make long-range weapons. The problem, however, is that it is failing to secure the financial support expected from the Australian government's Guided Weapons and Explosive Ordnance Enterprise program.

Instead, large defense contractors, particularly those from abroad, are receiving preferential treatment, according to a local analyst.

“The government tends to default to prime rates. Everything has to go through Lockheed Martin, Boeing, Thales or whatever. Let's see what SMEs [small and medium enterprises] “What can we do in terms of things like long-range missiles,” said Malcolm Davis, a capability development and military technology expert at the Australian Strategic Policy Institute. “Give them a chance to actually demonstrate their capabilities.”

For months, DefendTex has been asking Export Finance Australia, the government's export credit agency, for a one-year loan of A$70 million (US$46 million) to acquire Avibras in Brazil, which is short of funds. liquidity. Reddy said he was counting on government help, noting that domestic banks refused to give him a loan as an arms manufacturer.

DefendTex's exclusive negotiation period with Avibras has reportedly expired, with the timeline expected to last until the end of June. Chinese defense industry giant NORINCO has already taken steps to buy the company. To sweeten the deal, NORINCO expressed its willingness to manufacture Chinese weapons in Brazil.

But Reddy said Australia could benefit from Avibras' extensive experience in guided weapons, acquire intellectual property and quickly replicate manufacturing facilities on Australian soil. “We know that within 24 months we will be at full production in Australia: the full suite of intellectual property, the seeker, the propulsion system, the whole box and dice.”

Referring to growing geopolitical tensions in the Asia-Pacific region, Davis highlighted the government's slow response with projects such as the Guided Weapons and Explosive Ordnance Enterprise (GWEO).

“At the moment it seems to be moving forward on a small scale, at a snail's pace, a very hesitant approach on the part of the government, which I don't understand given the very unfavorable strategic outlook we face,” he said. he declared. .

Backup plan?

The GWEO Enterprise programme is the government’s official vehicle for developing a sovereign capability to produce long-range strike weapons. It currently has around 900 personnel and was officially established in May 2023 when Air Marshal Leon Phillips was appointed as its first head.

“The GWEO group was established to accelerate the development of a guided weapons and explosive ordnance manufacturing industry in Australia,” Phillips told Defense News.

He described the company's two primary functions: establishing a manufacturing industry and managing the acquisition, sustainment and support of weapons. According to the Department of Defense website, the government is spending $4.1 billion to purchase more and more long-range strike systems and manufacture longer-range munitions locally.

However, Reddy said the program's focus on U.S. defense companies hampers projects like his.

The government has in fact designated the Australian branches of the American companies RTX and Lockheed Martin as strategic partners of GWEO.

“Strategic partners and their American parent companies work with [the Department of] Defense must explore opportunities for greater partnerships and, to this end, develop detailed and costed plans for the manufacture of guided weapons and their components in Australia,” Phillips said.

The ministry said it would review these “quantified plans” in the second quarter of 2024.

“US support and assistance are critical to the success of GWEO Enterprise. During the Australian-US Ministerial Consultations in July 2023, leaders agreed to deepen cooperation on the Australian GWEO enterprise by collaborating on a flexible guided weapons production capacity in Australia. This cooperation is ongoing, and a first batch of GMLRS [Guided Multiple Launch Rocket System] “Missiles will be manufactured in Australia by 2025,” Phillips added, referring to a A$37.4 million contract for Lockheed Martin Australia, announced in January 2024.

James Heading, Program Director in the Strategic Capabilities Office within Lockheed Martin Australia's Missile and Fire Control Division, said industry development was essential and GMLRS was a good starting point for the country. . International demand for GMLRS is increasing, particularly in Ukraine, in the context of war against Russia.

“That doesn't necessarily mean everything is made in Australia,” Heading added. For example, he noted, it could be five to 10 years before Australian industry could unilaterally build missile seekers for the GMLRS.

Tenders for GMLRS production requirements in Australia close around June-July this year, which will lead to the assembly of GMLRS kits from next year at the storage base Defense establishment Orchard Hills in Sydney. What will follow is the gradual introduction of locally assembled components, before increasing quantities, Heading said.

To be clear, Reddy said, he does not dispute the Lockheed deal, but believes the government needs a backup plan.

“I'm not saying don't do GMLRS, don't do HIMARS [High Mobility Artillery Rocket System]. Do all this and preserve 5% of your budget [for] “There is a plan B,” he said, referring to government funding to support acquisitions of domestic industries. “This would be the pragmatic approach that would allow us to get the best of both worlds. So, if the world goes into a tailspin tomorrow, we have a solution to respond. »

He argued that purchasing Avibras would be a “very cheap” insurance policy that does not take away from long-term projects dependent on American companies.

Davis acknowledged there was no clear path forward after the Lockheed deal to more sophisticated, locally manufactured capabilities. “I think it's taken an inordinate amount of time to really make progress, and we're only talking about assembling GMLRS components here in Australia in 2025.”

He said the government should encourage industry to pursue local production of longer-range weapons like the long-range anti-ship missile, the extended-range variant of the joint air-to-ground missile and the Tomahawk cruise missile – all these elements. which are manufactured by American companies.

But the GWEO Enterprise project is not just about American-made weapons. For example, the Spike missile from Israeli company Rafael Advanced Defense Systems and the Naval Strike missile from Norwegian company Kongsberg are both likely to be produced in the United States.

“The GWEO is really about giving industry the opportunity to participate,” Heading said, emphasizing that gaps in Australia's defense industry are down to capability rather than capability.

To overcome these problems, Davis suggested that the government give greater priority to the GWEO program and incorporate the lessons of the Russo-Ukrainian war.

“We should actually be thinking about how we can, ourselves, develop the long-range strike capabilities that can meet the needs of the ADF. [Australian Defence Force]the needs of our allies and partners, and also provide us with an export capacity,” he insisted. “Once again, there seems to be a lack of boldness and vision on the part of the government, even to think beyond the most minimalist application of GWEO in the short term.

“I don’t understand why their perception of GWEO is so narrow and limited. »

Prepare for war

Part of the problem is Australia's peacetime mentality, Davis said.

“We assume that nothing bad will happen in this decade and that we still have 10 years to wait. Ironically, we have stated in previous defense white papers that we no longer have a 10-year strategic warning period, but this mentality of a 10-year strategic warning period is still pervasive in the organization defense and within government,” he explained.

“It must be recognized that we could have two, maybe three years to prepare for a major war,” he added. “So what can we do in the next two or three years in terms of mass production of capabilities? It's going to take risks, it's going to take a little vision.

“I fear that these decisions will not be made and that we will find ourselves in another war in 2027 or 2028 with what we have – and without much to show for the GWEO. »

Certainly, the program has not been idle, Philips said, highlighting several major achievements to date, including upgrading infrastructure and technology at the state-owned Mulwala and Benalla munitions factories operated by Thales Australia; cleaning up the Port Wilson wharf to allow for large-scale arms imports and exports; commissioning the construction of additional storage and distribution infrastructure; and domestic production of the 500-pound BLU-111 bomb.

In addition to the GMLRS contract, Phillips also highlighted accelerated acquisitions of Tomahawks, JASSM-ERs, naval strike missiles and sea mines from abroad.

But these foreign purchases by the government do not help in situations like Reddy's.

“They are not taking any steps to develop a national, sovereign alternative to the type of weapons they need,” he said. “In the event of a high-intensity conflict, will Australia as a nation have the capacity to manufacture the munitions it needs to enable the Australian Defense Force to carry out its mission? The answer is no. »