Hunter Defence

Hunter Defence COVID-19 Update 06.04.2020

Meeting with Minister Price, CASG and State Industry Advocates – 3 April 2020

The latest Defence Advocates Meeting with CASG was held on 03 April and the following provides an overview of discussion points, key initiatives, and how Hunter Defence can support those in our region during this unprecedented chapter in Defence.

Minister Price 

  • It is obvious within government that many people across all industry are working very hard to manage this pandemic and what we are doing in the Defence Industry space is being well recognised.
  • Clearly, there is a lot going on within government as can be seen by the daily announcements by the Prime Minister, and it is indicative that there will be many challenging times ahead for the country and industry.
  • CASG/Industry support cell working to address many issues
  • Defence is working closely with Dept of Health and the portfolio on various issues and to see how Defence can contribute in the most effective ways to support the health of the nation.
  • On the payments to Primes and SMEs, CASG is working very hard to ensure the payments are made within 48 hours. There have been 34,000 payments to date since the crisis began to the tune of $2.3B with an average value $70k.  That is very significant workload for CASG contracting!
  • Some issues still with payment flow to SMEs from the Primes. Minister and DEPSEC CASG emphasised again that they need to know if payments are being held up. It comes to the point of Defence helping as best as they can to ensure that workers are kept, even if the majority of work within SMEs is not Defence work.
  • Essential service continues to be an issue for Defence Industry with no formal recognition to date.
    • There is a general acceptance at this time that if a business has not been closed due to the fact it is non-essential, and if the business is complying with the current health requirements, then you are clear to keep operating, noting of course the importance to work from home to max extent possible.
    • Still pushing for a more formal articulation from Cabinet.
    • Notwithstanding there is a need for defence industry to operate and to Cleary be managing risk and the health of their employees and their families
    • Many business continuity plans have been enacted
  • Where cross border travel essential then Defence is working hard to ensure approvals from State authorities, whether or not there has been an essential service designation.
  • We do however need to prepare for a worst-case scenario.
  • Some concern among SMEs that some major non-Defence Primes are beginning to close down particular lines of operation and manufacturing, which has the flow on effect to SMEs who clearly have commercial as well as Defence contracts.
    • So, while Defence is leaning forward to support Primes and SMEs, that is not necessarily the way it is occurring across industry broadly.
    • Accordingly, SMEs may still fall away because of this broader issue. 

Tony Fraser

  • Dan Fankhauser is doing a lot of work regarding concerns from industry about cost/schedule/freight issues and there is thought about drafting and developing a ‘stand still deed’ to assist Industry in these times. Some future contracts will include such a provision.
    • This is currently being discussed with Primes and looking to resolve by Dec 2020.
    • Key points being payment order, flow down, recovery plans and presentation of rights
  • There does not seem to be a backlog of freight out of US, though running a week later than normal.  A DFAT senior officer to lead for whole of government working group and management process on this and Dan Fankhauser’s team will work in that space.
  • Business continuity plans being developed – CDIC key player in this.
  • It was emphasised that we are still only early in infection cycle and so we all have to continue to work together to develop a coordinated approach and be as ready as possible ready for the future as times and the health situation gets more difficult.

Key Advocate’s input

  • Talked with many SMEs – thanks for keeping things flowing – but worried about shutdowns
  • Some primes planning month-long shutdowns – can’t get parts out of Europe
  • A reemphasis that if not declared non-essential attitude is to trade within the rules and this is giving business some comfort.
  • Minister – telecon with all base service providers, infrastructure workers to push work ahead
  • Generally, communications with CASG has been excellent with the industry representatives and also with Industry itself. What great lessons we are learning for Defence and Defence industry cooperation in this country.  We should not let these lessons be lost and they should inform the basis of future defence capability investment.
  • A Principles approach is probably the right way to go for the current situation and for the future.
  • Start-up companies pre revenue won’t be able to access job keeper grants that are currently available. Is there any way for this to be addressed, not only for defence industry, but industry in general?
  • Job Keeper program welcome
  • Good news – positive behaviour from Primes has been welcomed
  • Thanks for good communication from CASG and progress on fast tracking payments
  • At a sector level, defence industry has been largely resilient to date.
  • Some businesses supplying directly into defence supply chains and those pivoting to provide support to the COVID response are increasing activity, order books and staff.
  • Defence businesses exposed to overseas or civilian markets are being substantially impacted by the COVID crisis.
  • Key issue going forward is designating defence industry as an essential service
  • Some engagement with Chief Medical Officer to support and we as an industry base need to clarify if State or Federal lead
  • Impact of restrictions on freight for supply chains – air freight is likely to be more expensive (possibly 4x to 5x due to reduced volume in international passenger flights).
  • Is there the possibility to offset costs as has been done in agricultural sector *
  • SMEs looking for essential business guidelines but understand cabinet priorities and what we have discussed today about compliance.
  • Is there the opportunity to put more horsepower within Defence to the DISP program to allow SMEs wanting to comply (in this COVID-19 period) to get qualified?
  • Online Defence Readiness Course – hopeful of outcome
  • Frustrations – freight, clarity around essential services

How Hunter Defence Can Help:

  • The Centre for Defence Industry Capability (CDIC) has been tasked to be the primary coordination agency between Defence and Industry. Hunter Defence is engaging closely with CDIC and we ask you to please come to Hunter Defence in the first instance so we can table ideas and issues
    • Hunter Defence is involved in weekly conference calls with CASG and Ministers when available.  Hunter Defence is the only regional cooperative group included in these calls outside of the state bodies.
    • Hunter Defence is also in weekly contact via conference call with Defence NSW and is working closely with the NSW state government in looking at ways and means of supporting NSW Defence Industry businesses.
  • Take this opportunity to advise Tim Owen what your issues are
    • Tim has been successful in the last two weeks in bringing attention to the higher Defence organisations the plight of regional SMEs
  • Hunter Defence, in coordination with AIDN, is working to convert the Defence Readiness Seminar Series to an online format, with support from the Federal Government. This will ensure access to relevant training is available for regional SMEs in the Hunter to during this very difficult period.

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