BUDGET CUTS HURT DEFENCE COMPANIES

AUSTRALIAN INDUSTRY & DEFENCE NETWORK INC
PO Box 334 Tel: +61 (3) 9885 0907
Ashburton Fax: +61 (3) 9885 0448
Victoria, 3147 email: admin@aidn.org.au
Australia web: http://www.aidn.org.au
6 December 2012

BUDGET CUTS SEVERELY HURTING REGIONAL DEFENCE COMPANIES
Statement by Mr Graham Priestnall,

National President, Australian Industry & Defence Network Inc

The National Executive of the Australian Industry & Defence Network Inc. (AIDN) held their Annual General Meeting at the Naval, Military and Air Force Club in Adelaide today. Graham Priestnall was re-elected AIDN National President and Alan Rankin from AIDN-NSW was elected as the new Vice President.
Following the AGM, the Executive reviewed the initial data from its recent survey of its members to gauge business expectations. The Executive Committee also heard numerous impact statements from its State and Territory leaders. Mr Priestnall expressed his strongest concern that AIDN members are experiencing a significant reduction of defence work and that the real consequence of savage defence budget cuts must be recognised by the Government and Defence.
The reports and survey data confirm AIDN’s position that defence companies are facing significant trading challenges because of the flow on effects of the defence budget cuts and the slow-down of major projects.
In Queensland, it was recently reported that over 20 Townsville based small businesses, which support and maintain ADF capability, are likely to lose a third of their revenue because defence prime contractors are bringing contracted work back to their own empty workshops. At a recent meeting, local Townsville defence companies reported losing more than 80% of their defence business.
AIDN Chapter Presidents also reported similar trends affecting their members with regional areas being hit the hardest. The problem has been exacerbated by defence running down maintenance spare parts but not restocking to normal levels due to funding constraints. As a direct supporter of ADF capability AIDN members are concerned about the potential impact on military assets.
Reports from AIDN members in the Northern Territory indicate that some local defence industry companies have experienced a decrease in defence work revenue of up to 80%. A second worrying trend relates to Defence seeking quotations from small and medium sized contract companies for a specified amount of work but before orders are placed, the work list is halved and the SME’s are asked to requote. They expend a lot of time chasing defence work that simply doesn’t eventuate.
Mr Priestnall stated ‘that this situation now needs to be rectified urgently and some sense of certainty ‘injected’ into what are challenging trading conditions in the defence industry. Australia has already lost a significant proportion of its defence industry manufacturing and sustainment capability. If the defence spending trend is not reversed, the small and medium sized Australian defence companies that have the specialized expertise will no longer exist. The consequence will be that the Australian Government will not be able to sustain its present and future military capability and the country will pay a higher strategic price in the future.’
Graham Priestnall
AIDN National President
Mobile 0409 392 807