Bear in mind when you read this that there are Raytheon people wandering around Antartica, and that the reasons that Raytheon have identified Adelaide as a hub are probably similar to those I gave in Halliburton's Adelaide.  

Reprinted from Raytheon's website, this speech explains South Australia's new military role in the world better than I can:

An address by Mr Ron Fisher, Managing Director Raytheon Australia

To

The Australia-Israel Chamber of Commerce

27 September 2005

Deputy premier, the Honourable Kevin Foley, the President of the Australia Israel Chamber Of Commerce, Mr Allan Bolaffi, distinguished guests, ladies and gentlemen.

I am grateful to the chamber for their generous invitation to address you today and express my pleasure in being here with such a notable group within the Adelaide business community.

In light of this State’s proud victory in the battle to secure the Air Warfare Destroyer I thought it timely to provide you with a defence industry perspective of South Australia. As part of this discussion, I would like to give you a very brief overview of Raytheon Australia and our position in the defence market in order for you to be able to put my remarks in context.

Raytheon Australia
We are a wholly-owner subsidiary of Raytheon Company, the fourth largest defence company in the United States.

Raytheon has operated in Australia since the 1950’s, but our permanent presence was limited to a country manager and supporting administrative staff.

Following the Federal Government’s 1998 Defence And Industry Strategic Policy Statement that was aimed at growing an indigenous defence industry Raytheon decided to invest in Australia and I was given a charter to establish and grow a local company.

While Raytheon invested financially in Australia the more important investments have been in knowledge, skills, processes, and technology. To assist our development in these areas our parent company has been a valuable resource for us.

All of our employees in Raytheon Austrtalia are Australian, but if we need deeper specialist expertise or assistance in transferring technology to this country we can call upon any number of engineers and other experts to assist. We, in Raytheon Australia, use the term “Reach Back” to describe this key asset that allows us to draw upon Raytheon’s global resources.

Raytheon Australia made its first acquisition, a small military aerospace company, towards the end of 1999. This was followed by the naval business of Boeing, which enabled us with our naval customer to correct the original Collins combat system and has proved to be an excellent example of “Reach Back” to our parent company, which has over 30 years experience working on submarine combat and weapon systems for the USN.

Since then we have grown to be over 1,000 employees with operations in all of the mainland States and Territories with an annual turnover of A$325 million. This is dynamic growth in anyone’s language, but particularly so in the defence market.

The current disposition of the company is a function of strategic acquisitions, a desire to be close to our defence customers, and the availability of highly qualified and experienced engineers and technicians.

With regard to this latter point, we had previously identified Adelaide as a hub for the growth of engineering talent and are working with the University of Adelaide to foster a relationship based on mutually beneficial research and assisting undergraduate engineers to gain practical experience.

We are involved in a number of major programs including:

• The Air Warfare Destroyers, for which we are the Combat System – Systems Engineer;
• The replacement combat system on the Collins Class submarines, for which we are the Systems Integration Agent;
• The simulators for the upgraded F/A-18 Hornets;
• Avionics support for the RAAF Maritime Patrol Group and the Aircraft Research And Development Unit at RAAF Edinburgh, and the Strike and Reconnaissance Group at RAAF Amberley;
• In service support for the RAN Submarine Group at HMAS Stirling;
• The Electronic Warfare Training aircraft operated out of HMAS Albatross in Nowra and
• The Electronic Warfare Emulator Pod, which is to be fitted to the BAE Hawk aircraft.

Finally, we have a Geospatial Imagery business that takes telemetry data directly from a constellation of orbiting satellites through a dish and terminal equipment here in Adelaide to provide imagery and other value added products much faster than through the satellite operators in Europe and the USA. These satellites also have a potential role in wide area surveillance of our maritime approaches.

Nature of Defence Business
Turning to the nature of defence business in Australia, there are a number of characteristics that are probably unique and that most of you would covet for your own markets.

Firstly, our primary customer publishes a ten-year plan for capital equipment acquisition, or forward business. Although not irreversible the defence capability plan, or DCP as we call it, is proving to be surprisingly stable when compared to the process that preceded it. Because the DCP is “owned” by the Federal Government the rationale for changes is more transparent than when Defence put out its own unclassified version of internal documentation.

In the last ten years spending has varied between zero real growth to an annual increase of three per cent in real terms.

The total defence market now exceeds A$7 billion annually. This is a combination of capital equipment acquisition, minor equipment, and logistics expenditure.

This expenditure is underpinned by broad public support; and although some political differences have arisen over the last decade, Defence still enjoys largely bipartisan political support at a parliamentary level.

However, on the down side, we operate in a single market and one in which demand, at least for major acquisition programs, is uneven. It can be a long time between programs of the size of the AWDs and amphibious ships.

On the other hand, defence spends over A$2.5 billion each year on smaller programs, equipment and consumables that have a predictable pattern. The nature of our marketplace is also changing. The Federal Government has undertaken a number of reforms that have proved to be of considerable benefit to defence industry.

In addition to the DCP, the market has been advantaged by improvements to defence capability planning and equipment acquisition in line with the recommendations of Malcolm Kinnaird.

There has also been a greater focus on the need to improve the quality and quantity of skills available to the defence industry. There is clearly a demand for additional engineers, specialist technicians, key trades people and project managers.

Last year the Government announced its Skilling Australia policy and the defence industry program with the commitment of A$200 million over the next decade to assist defence companies to improve and broaden the skills of their workforces. This is a welcome recognition of this important issue and I commend the Defence Materiel Organisation’s CEO, Dr Stephen Gumley for acting as a vocal champion for this cause. However we also need to ensure that our Universities are aligned/partnered with defence industry and government to make certain we have a coherent program for the development of engineering in Australia.

The government has also embarked upon a series of defence industry strategic sector plans to ensure sustainable support for the ADF. The Electronic and Aerospace Sector Plans have been approved and promulgated, with the Land and Weapons Plans nearing completion.

These plans each take a different approach reflecting the characteristics of their respective sectors. The Electronic Sector Plan is particularly forward looking, as it is not prescriptive of industry, rather it establishes benchmarks and leaves it up to industry to determine how they are to be met. The fifth plan, naval shipbuilding and repair appears to be on hold, as this sector is effectively being restructured through the competitions for the AWD and Amphibious Ships, with the sale of ASC also to come.

South Australia
This is an appropriate point to move on to our perspectives of the role of the defence industry in South Australia.

In my view, just as the Federal Government sees an important role for South Australia as a defence industry hub the State Government has a similar vision.

Indeed, the South Australian Government has been the most proactive State government in attracting companies to relocate and position to win defence business. There is recognition that the defence industry is key sector of the State’s economy and that its growth is of strategic importance. As at the federal level I believe defence industry also enjoys bi-partisan support here in South Australia.

According to the State Government, defence contributes over A$1 billion annually to the Gross State Product, employing around 17,000 people including uniformed personnel. Further it is estimated that while South Australia receives only 6 per cent of Australia’s annual defence spend, in line with its share of the national population, it accounts for approximately 30 per cent of all capital expenditure.

Against this background, the Government here has taken several steps to promote defence industry. Two years ago it established its Defence Industry Advisory Board with an ambitious aim for the state to become the dominant location for Australian defence activity. This has been supported by the Government’s Defence Unit, a Defence Teaming Centre and the common goal over the next decade to double the defence industry’s contribution to Gross State Product and to grow employment levels in the industry to 28,000 people.

Although Raytheon’s initial presence in South Australia was a function of the companies we acquired we have built on those foundations with the backing of the Government and recently centralised our operations at a new location in the technology park at Mawson Lakes.

As I mentioned earlier, we had previously decided to make Adelaide one of our centres for growing our engineering workforce and are now looking at whether there might be other parts of the company’s operations that could benefit from being moved to South Australia.

The State Government has responded well to the issues affecting our business and indeed, shared by others in the industry, namely:

• The investment climate
• Cost structures
• Supporting infrastructure
• Industrial capability, and
• Our potential supply chain of local businesses.
• 
  

Of course, the availability of skilled people was a vital issue, noting that the nature of our business as a systems integrator means that we are seeking systems engineers rather than tradespeople.

By virtue of the size of the population it is inescapable that this is an issue for Adelaide. However, I am pleased by the Government’s proactive approach by challenging this issue on several fronts.

The Government has sought to establish a defence institute to focus on electronics and systems integration skills and to further these skills with a centre of excellence.

There is also the “Make The Move” campaign aimed at people in the 30-45 age brackets, which is coincident with our own target group, albeit we are looking for people with very defined skills and, preferably, experience.

Another State Government initiative I applaud is the recent agreement for the prestigious US University, Carnegie-Mellon, to establish an arm here, bringing the number of quality universities to four.

I would expect the AWD program to act as an additional lure for people to come to Adelaide; after all there will be few bigger programs to work on over the next ten years.

Together with other high profile programs the Government is hoping to be won by South Australian companies, the AWD will no doubt help stem the tide of inter-state migration that has historically affected this state.

The AWD
Turning to our role in the AWD program we are naturally excited to have been selected as the Combat System – Systems Engineer for Australia’s new Air Warfare Destroyers.

We are also delighted to be working with our fellow AWD alliance partners – the Commonwealth, ASC and the recently selected platform system designer, Gibbs and Cox on a venture that will not only provide a major leap in the Royal Australian Navy’s air warfare capabilities but will also be one of the most significant shipbuilding projects ever undertaken in this country.

As to our role as part of the alliance, Raytheon Australia is to:

• Integrate the non-Aegis elements of the combat system and conduct combat system trade studies;
• Develop the design of the complete AWD combat system in conjunction with the Commonwealth, the US Navy and its combat system engineering agent for the Aegis system, Lockheed Martin;
• Develop complete ship and integrated logistic support systems with ASC and Gibbs and Cox; and
• Develop project management and systems engineering structures and deliver mission systems integration.

Our involvement in the Collins Class submarines has provided us with the opportunity to demonstrate our expertise in mission systems integration to our Australian customer.

It also demonstrated our ability to work with both the Commonwealth and the USN in the integration of US-sourced combat systems into an Australian warship.

This, of course, was supported by the strong pedigree of our American parent and our ability to “Reach Back” and tap into that reservoir of expertise.

Since 1998 Raytheon has been the electronic and weapons systems integrator for the US Navy’s latest and most advanced surface combatant programme, the DD(X). In May of this year we were awarded a follow-on us$3 billion DD(X) ship system integration and detail design contract. Raytheon has also worked as the Whole Ship Systems Integrator for the US Navy’s latest amphibious ships, the LPD – 17 San Antonio Class. We will also be taking on an important role in the next generation of aircraft carriers, the CVN-78, with Raytheon’s selection earlier in the year as the industry lead for warfare systems integration of all onboard weapons systems and electronic operations.

Experience in this area and our ability to reach back to our American parent will be extremely valuable for the AWD program, helping to ensure the necessary transfer of experience and expertise to support the development of an effective solution for the AWD combat system. We see it as part of our role to flow some of this expertise to other smaller Australian companies with whom we will work on this large program.

Conclusion
As you can see, Raytheon Australia is very optimistic about our own future in Australia’s defence industry and the contribution that our industry can make to this State.

Challenges remain but I can see that there are strong efforts at both the State and Federal level to address these concerns, particularly in the skills area.

We also recognise our own responsibility as significant players in the defence marketplace to play our own role to provide for the industry’s growth.

This is our commitment to you today as I hope that Raytheon Australia can secure for itself an important part of South Australia’s future prosperity.

Thank you very much.

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I've just found a great pair of June 2004 stories on an electronics industry news page. 

One begins "Defence Minister Hill has announced that Australia and the U.S. intend to sign a Memorandum of Understanding on co-operation in missile defence next month.

The other begins with "South Australian Premier Mike Rann announced details last week. of an aggressive plan to double the size of the defence industry in South Australia, and to increase defence employment from 16,000 to 28,000 workers by 2013.  In Washington Mr Rann met  with the leaders of Raytheon and other leading US defence contractors"

It's a beautiful piece of syncronisation (page 15 here) between the Governments and defence companies, and mostly we've been none the wiser.

EPILOGUE:

By Shawn Pogatchnik, Associated Press Writer  |  August 9, 2006

BELFAST, Northern Ireland --Police on Wednesday arrested nine protesters who broke into the Northern Ireland software center of U.S. defense contractor Raytheon Co. and smashed windows and computers.

The protesters in Londonderry, Northern Ireland's second-largest city, said they blamed Massachusetts-based Raytheon for designing missile-guidance systems and other military software being supplied by the United States to Israel in its current conflict with Hezbollah guerrillas in Lebanon.

Raytheon declined to comment.