Reece

Figures from the Office of Defence Production (formerly Def­ ence Support) state that obligations at early 1985 totalled $1. 5bn of which about $700m had been achieved over the period from 1970. On the civil side alone there had been purchases of nearly $3bn (then year dollars) leading to obligations of $462m with firm contracts worth $337m of which $250m had been actually performed. Much of this civil commitment had been made in the past two years as a result of a massive buying spree by Qantas, TAA and Ansett.

The target of 30% offsets is at best a goal though recent contracts, particularly in the defence region which are easier to control, have specifically stated that 30% is essential as a prerequisite to completion of the bid. The overall standpoint of the situation is also clouded as during the seventies the program was administered under less severe guidelines than is presently the case. This had led over the years to three major reviews of the policy. The first two, conducted in 1976 and 1979, realised the need to further fine tune the system while the third, in 1984 and chaired by Sir Brian Inglis, has investigated the total perform­ ance of the system and has suggested ways that the benefits of the policy be maximised and the costs minimised and ways that offset agreements may be subject to effective legal enforcement. The latest review went before Federal Cabinet in October and a joint announcement by the Ministers of the Department of Industry And Commerce and the Department of Defence is expected as we close for press.

Australian industry is presently estimated to be earning around $50m a year from offsets. This added workload is directly responsible for between two and two and a half thousand jobs. More than half of all offset activity is aerospace orientated so the importance of a tightly administered offsets program to the vi­ ability of our home grown aerospace industry is clear to see.

In the meantime it will be the on-going task of both federal departments to pursue those companies that are delinquent in their commitments under the previous gentleman’s agreements of the ‘best endeavours’ era of the seventies.

Most major aerospace companies that regularly deal with Australia have been fairly responsive to their commitments though on occasion difficulties arise owing to the rapid increase that can take place virtually overnight in relation to a sweep ofl arge commercial orders. One such case is Boeing, who over the past two years has sold 4 747s, 6 767s and 24 737s that attract offset program obligations. Obviously they will have to work hard at directing 30% of the nett value of these aircraft to Australian industry over the next decade. Boeing, like Airbus and McDonnell Douglas, though have taken their obligations fairly seriously (though as one would expect with a little ‘violin play­ing’!) and following a little timely prodding by the Federal Govern­ment in 1983 have agreed to place work locally.

One company that has sold a substantial quantity of hardware to Australia since 1970 is Lockheed who in the period have seen twenty Orions and a dozen Hercules airlifters depart wearing RAAF roundels. Lockheed have to date issued very little work to Australian industry and up to the time of the advent of their new P-3 AEW&C Orion the company had apparently been most reluctant to take their offset obligation seriously. industry executive recently told Australian Aviation that “The Lockheed offset team will routinely tour the local facilities, offer signs of hope, and never be heard of again”.

With the arrival of the AEW&C project though, Lockheed are realising they need to improve their local image and are now endeavouring to rectify same so as to win over local industry who are currently being targeted as potential risk sharing partners in the development of their AEW configured Orion. This potential sales objective is now objectively leading them towards the realities of the benefits of offset workload.

And that about sums it up as Australia nowadays has never been in a better position in which to be able to promote itself as a source of specialised aerospace hardware.

The recent deterioration in the value of our dollar has effective­ ly made our export industries 20% plus cheaper. That, combined with the multi million dollar state of the art upgrading of our primary manufacturing facilities thanks to the F-18 program, has placed Australia in an extremely strong position in which to bid for, and win, a large and technologically proficient work base that will help transform the Australian aerospace industry in the years ahead.