Recently, Minister for Defence Industry Christopher Pyne announced two significant contracts for the supply of ammunition to the Australian Defence Force had been awarded to Brisbane-based NIOA, who have no military-ammunition-manufacturing capacity.
Subsequently, on 6 February, the minister announced that Defence “will [future tense] enter into negotiations with Thales Australia for the continued management and operation of Australia’s munition factories in Benalla, Victoria, and Mulwala, New South Wales”.
An existing contract with Thales is due to expire in 2020, but, Minister Pyne sought to assure the Bennalla and Mulwala workers and the Australian public – and Thales, no doubt – that the pending future negotiations (in which the government is already setting forth a strong agenda) “provides certainty for workers that both factories will remain open for the long term“.
Given the old adage that when a politician tells you he has your back, you better start worrying, one wonders just how secure ammunition manufacturing in Australia really is – especially since the earlier artillery-ammunition-contract announcement alluded to ammunition of German origins.
These press releases, in concert, seem to me to be saying a lot more than would appear on the surface.
Given the government’s strong focus on jobs, growth, defence-industry exports – and the fact that domestic ammunition production is surely the number one most important strategic capability to keep in Australia – one wonders if all this is but a veiled threat to Thales that their continuing tenancy of the government-owned munitions facilities is not assured?
Or is there a serious German takeover bid in the works perhaps?
FILE PHOTO: Soldiers from Townsville-based 4th Regiment Artillery fire an M777 155mm Howitzer in High Range Training Area. Photo by Brian Hartigan.
The minister’s press release in full…
Minister for Defence Industry, the Hon Christopher Pyne MP, today announced that Defence will enter into negotiations with Thales Australia, trading as Australian Munitions, for the continued management and operation of Australia’s munition factories in Benalla (Victoria) and Mulwala (New South Wales).
Minister Pyne said the Turnbull Government recognises the importance of the Defence- owned munitions factories that produce ammunition for the Australian Defence Force.
“With both facilities employing over 640 highly-skilled workers, this announcement provides certainty for workers that both factories will remain open for the long term”, Minister Pyne said.
“Under the existing contract, employment across the Benalla and Mulwala sites has increased by over 80 employees in 2017, generating vital job opportunities in regional Victoria and New South Wales.
“The Thales Australia supply chain includes 130 local small-to-medium enterprises, providing a wide range of goods and services to the Benalla and Mulwala sites.
“The negotiations with Thales will see a new strategic arrangement for the management and operation of the factories, improving price competitiveness and increasing export potential for Australian-manufactured ammunition and explosive products.
“This long-term, performance-based arrangement will provide a greater degree of certainty for Thales as the principal tenant and operator of the facilities and will enable seamless transition from the current contract when it expires in mid-2020.
“Drawing on the depth of engineering and manufacturing skills resident in these factories, the decision to commence negotiations with Thales builds on the well-established relationship between Thales and Defence.
“This announcement enables Defence to continue to capitalise on the more than $1.8 billion in investment it has made since the mid-1990s.
“The 1030 hectare Mulwala factory is the only remaining manufacturing site for propellants and high explosives in Australia, and the new propellant factory is arguably the most modern propellant manufacturing plant in the world,” Minister Pyne said.
The future arrangement will also see underutilised areas of the facilities sub-leased as additional precincts to other munitions companies, subject to maintaining high safety and security standards, either where Defence identifies a requirement for a particular product, or where a commercial or export opportunity exists.