Aerospace Industry News

• Government (at all levels), Industry and Unions are to work together on plans to achieve the objective.

• Industry development is to be encouraged across the spectrum of aerospace activities.

• Greater emphasis is to be placed on winning civilian work.

• Greater emphasis is to be placed on obtaining export orders.

Tripartite Co-operation

In 1986, we saw the Aerospace Industry Council as the vehicle for collaboration between Government, Industry and the Unions. The aerospace input has now been diluted, by the formation of a broader based Aerospace, Electronic and Scientific Industry Council and the demise of the Aerospace Industry Council. This move is seen by some within our industry as a sign of a lack of commitment on the part of Government to play its full role, although others (notably those whose business interests extended across aerospace and electronics) saw the move as a sensible rationalisation of scarce Government resources. There is now a greater role for AAAI to play in liaison with Government.

Priority for Aerospace

The industry is concerned that the Federal Government while wishing to see our industry attain an internationally competitive status, appears unwilling to match what Governments overseas provide to their aerospace industries to help them win international markets.

Australia has many mature industries, but in many respects its aerospace industry is still developing – despite the time some elements have been operating • and generally because of factors beyond the industry’s control.

Industry members argue for priority for the development of the Australiar1 aerospace industry by pointing out:

• that Australia is a large market for the world’s aerospace industry and therefore Australia has some ‘purchasing clout’ which can be used for Australia’s benefit;

• that Australians have become used to levels of aviation services (and safety records) which Australia will find difficult to maintain, unless it builds an indigenous aerospace industry to get more of the dollars spent on providing aviation services spent in Australia;

• that the Australian aerospace industry has excellent prospects for export growth, if Government, Industry and the Unions work together;

• that there are many technological, management and work skill spin-offs from aerospace activities which are of economical value to the nation; and lastly, • that the nation requires a strong aerospace industry as a vital element of its Defence self reliance

Role of Government

The primary role of Government is seen as being to provide the economic stability, framework and infrastructure to allow companies to do successful business. In this regard the exchange rate of the $A, Australian labour costs and other Australian on costs are crucial. But over and above this broad economy wide role, the Government should place additional emphasis, priority and resources to develop those industries which are significant for the long-term economic future of this country. The aerospace industry is one such industry. Despite the concerns which may be expressed about the Government’s aerospace industry policy and despite the demise of the Aerospace Industry Council, co-operation and consultation between the industry and both Federal and State Governments are seen as being much better and effective than was the case four years ago.

Exports

When considering how to build our industry’s export markets, we have to bear in mind the international nature of our business. Companies have to become increasingly involved in international investment, acquisitions, joint venturing, technology transfer etc. This means that export marketing in the aerospace industry has to be much more sophisticated than reliance on direct marketing support, which may be effective for other industries Continuation of the civil offsets programme is critical In our present economic circumstances Australia has to be hard nosed about international trade. Australian aerospace companies face government assisted competition in every area of endeavour. Without Australian Government assistance in the form of offsets partnership schemes, export promotion subsidies and/or assistance with finance, the Australian aerospace industry will cease to exist. While a free market without artificial Government support measures and subsidies may be an ideal towards which to strive, the reality is that it will be a long time before it exists. When all the other countries have removed their support measures, we can remove ours. In the meantime, the Australian aerospace industry has to survive (as part of our strategy to have a diverse economy less stressed by downturns in world commodity prices). To allow us to survive, the Australian Government and the Australian aerospace industries have to work together. Members argue for a range of non-financial support initiatives as well. Most relate to the Australian Government being prepared to play a ‘lead customer’ role in relation to Australian products or capabilities.

The Plan

To achieve the aerospace industry’s objective and implement the strategy we need to:

• improve our skill base by increased training effort for both shop floor and management workers in our industry;

• improve the productivity of our workforce by negotiating realistic broad banding agreements and agreements on work practices; continue with aggressive offsets and local content policies for both civil and Defence purchases of major aerospace systems;

• develop significant risk (or equity) sharing joint ventures between major Australian aerospace companies and international companies;

• exploit marketing opportunities, particularly in relation to repair and overhaul and the modification and upgrading of aerospace systems and particularly in our region; increase investment in improved technology; increase investment in R&D;

• exploit indigenous R&D capabilities for the greater advantage of Australian based companies;

• develop a more comprehensive subcontractor and supplier pyramid with much greater capacity than exists at the moment; and

• give Government priority to a range of measures to ensure that our companies at least start their export efforts with the advantages provided to their international competitors.