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rowid	image	timestamp	memento	first_capture	last_capture	current_status	text	mime	status	url	urlkey	digest	length	file_path
86		20090519181411	https://web.archive.org/web/20090519181411/http://www.defence.gov.au/dmo/ceo/speeches/HID_ADMC_Conference_vHID.ppt	2009-05-19	2009-06-27	500	professionalise | re-prioritise | standardise | benchmark | improve industry relationships and industry performance | lead reform Developing Local Industry Capability Kerry Clarke Head Industry Division DMO OUTLINE 1. The importance of strategic industry specialisation  Determining Australia’s strategic capabilities – Linking Defence industry capabilities with the national interest. – How do we identify strategic capabilities. – Why are they important. 2. Local and international procurement.  Maintaining strategic capabilities in our local industry – Which capabilities do we want to keep in Australia? – Which capabilities should we rely on overseas sources? 3. Aligning priority capabilities to future Defence planning – Defence Planning Guidance (DPG) and Defence Capability Plan (DCP). The Importance of Defence Industry Local industry plays an important role in supporting ADF capability. – Provision and maintenance of military equipment – Delivery of support services Government policy is to grow the capacity of local defence industry. – Ongoing investment in skills development (SADI program) – Improved productivity Defence industry policy will target support to priority and strategic capabilities. – Aligning capability to our national strategic interests A Strategic Approach Strategic Capability • Benefit to Australia through: – Strategic advantage – National security Strategic industry capability (SIC) – A capability which confers a national security and strategic advantage by being resident in-country. – If denied, may have an impact on ADF operational capability, could inhibit the accomplishment of military tasks and could inhibit in country procurement projects over the longer term. What Makes a Capability Strategic Strategic industry capability • Assessed according to these criteria – National Sovereignty – Knowledge – Leverage – Guarantee Supply – Regret – Effective and Efficient A select subgroup are identified as PRIORITY Local Industry Capabilities (PLIC) – considered high-risk capability Priority Local Industry Capability (PLIC) – A subset of SIC, these are capabilities which confer a higher degree of strategic advantage and national security. – If denied, may have an adverse impact on ADF operational capability, could inhibit the accomplishment of military tasks and could inhibit in country procurement projects over the longer term. Industry Capability Management Defence Industry Capability • Support to ADF operations. • Force-wide provision of day to day support services and equipment. • Level of management attention - watching over. Defence Industry Strategic industry capabilities (SIC) • Vital to Defence operations. • Mix of off-shore and on-shore acquisition and sustainment. • Seek general SIC outcomes as part of Australian Industry Capability (AIC) Program. Defence Industry SIC Industry Capability Management Priority Industry Capability (PLIC) • A subset of SIC, these capabilities confer a higher degree of strategic advantage and national security. • Will be a focus of Australian Industry Capability (AIC) Program. • Classified. Industry Capability Management Defence Industry SIC PLIC Unhealthy PLIC • An unhealthy PLIC is an industry capability that is unable to meet ADF demand. • Impaired capability poses a significant risk to ADF operations. • Focus of close Government attention. • Government intervention strategies may be invoked as market failure would be detrimental. Defence Industry SIC Industry Capability Management PLIC Unhealthy Interventions Self sufficiency is impractical for a country the size of Australia. To this end, we must prioritise which industry capabilities must be supported in-country based on strategic advantage. – Which capabilities must we keep in Australia? – Which capabilities can we rely on overseas sources? Key Points: • The Government will prioritise support to those in-country industry capabilities that deliver the greatest strategic advantage to Australia. • Where market failure or serious risk to ADF capability exists, focused support and Government interventions will be employed to retain priority local industry capability within Australia. Interventions Intervention may occur where risks exist in these categories: Example: Government Intervention Business Case Issue: Supply constraints / Low infrastructure  Intervention  Federal to State relationship to push investments Key Point: • Government and Defence will make prudent decisions on directing support to priority local Capability, but will not pay a premium for local industry work – unless the costs and risks of doing so are clearly defined and justifiable in terms of strategic benefit. Demand  Uneven cycle in Defence demand Supply  Capacity constraints in skills, IP, infrastructure Value  Excessively high local prices Market Failure  Price fixing Security and Diversity of Supply  Monopolies Delivering defence capability The flow of responsibility within Defence: STRATEGY: Strategic policy and posture - assess the environment and potential threats and devise strategy and policy to guide the ADF’s force structure and capability framework (e.g. Defence White Paper) SERVICE CHIEFS: Identify individual Service and joint capability needs CAPABILITY DEVELOPMENT GROUP: Develop the specifications to meet the Service capability requirement DEFENCE MATERIEL ORGANISATION: To either build or acquire capability to deliver the Service requirement on time Why What & When How Defence Planning Guidance (DPG) & Defence Capability Plan 2009-19 (DCP) DPG • The Government will direct Defence to produce strategic advice to identify industry capabilities that will attract priority support. DCP • Outlines Defence capability requirements 10 years into the future. • Reflects changing capability requirements in response to changes in strategic circumstances. • Forthcoming DCP (2009-19) will indicate strategic industry capabilities. • 30 June: 2009 Defence + Industry Conference, Adelaide – Planned Launch of 2009-19 DCP Solutions to increase local industry capacity • DMO will support local industry as much as possible • Through a combination of targeted, specific strategies, including skills development, demand management, productivity improvements and managed growth of onshore procurement  More Off The Shelf work • Defence will develop a skilling program, specifically targeted at improving Australia’s systems integration/engineering skills base • Defence will continue to rely on competition Global Financial Crisis • Government still committed to 3% real growth on average • Defence requires security of supply – Looking for suppliers to be financially viable • Liquidity is the key to thriving and surviving in tough times • Companies improve their liquidity when they: – Monitor and maximise their cash position – Tightly manage customer credit – Aggressively manage working capital – Optimise their financial structure • Inefficient operations also leave companies vulnerable to economic shocks. Efficient companies are characterised by: – Reducing costs and increasing efficiency – Aggressively managing top line – Rethinking their product mix and pricing strategies – Reining in planned investments and selling assets Industry Initiative Implementation • Joint Industry Training Task Force • CTD Extension Program • Joint Industry / Defence exchange and training • Australian Industry Capability Program • DEU performance • Defence procurement documentation • Access to global supply chains • E-Portal • SADI improvement • PLIC and support for unhealthy PLIC • Productivity enhancement SUMMARY  Determining strategic capabilities based on Australia’s national security interests.  Retaining strategic capabilities in Australia with the support of Government interventions, if necessary.  Aligning priority capabilities outlined in the Defence Planning Guidance (DPG) in the Defence Capability Plan (DCP).  Surviving the global down-turn Be in the defence sector! CONNECT dplusi.defence.gov.au Register your company capabilities on the Defence + Industry ePortal website:	application/vnd.ms-powerpoint	200	http://www.defence.gov.au/dmo/ceo/speeches/HID_ADMC_Conference_vHID.ppt	au,gov,defence)/dmo/ceo/speeches/hid_admc_conference_vhid.ppt	SBBTWFDLHYKCMNAWQKFFCYIPC4NDEYSP	165270	domains/defence-gov-au/powerpoints/original/au-gov-defence-dmo-ceo-speeches-hid-admc-conference-vhid-ppt-20090519181411.ppt