Australien – The Joint Strike Fighter Program and Australia


THE HON. GREG COMBET AM MP Minister for Defence Materiel and Science

Monday, 3 May 2010

“The Joint Strike Fighter Program and Australia: Staying Innovative To Remain Relevant” JSF Advanced Technology & Innovation Conference Melbourne

Check-against-Delivery

MINISTER FOR DEFENCE MATERIEL AND SCIENCE, THE HON. GREG COMBET AM MP

Thank you Air Vice-Marshal Harvey for your kind introduction and good morning everyone.

I would like to thank all of you for attending this very important conference, particularly those who have travelled so far to be here.

I note that today’s conference is well-represented by the JSF Program Office and the major JSF contractors; Lockheed Martin, BAE Systems, Northrop Grumman, Pratt & Whitney, GE and Rolls-Royce. I appreciate your support for this ongoing Australian initiative.

I also appreciate the wide range of attendees from Australia; from R&D organisations; industry; and from Defence and other government departments.

This is the fourth Australian JSF Advanced Technology and Innovation Conference, and its sub-title is “Advanced Technology for a Future JSF: From Ore in the Ground to Parts on the Aeroplane”.

The sub-title reflects an opportunity for Australia to make use of its valuable natural resources. For example, Australia possesses around 40% of the world’s titanium yet we are doing little with it despite its use increasing rapidly in both civil and military aerospace;

The aim of this conference is to help bring Australian technology and innovation together to the benefit of the JSF Program, because it is through our partnership in the JSF Program, the world’s largest collaborative defence program, that we will meet our strategic and economic goals.

I’d like to take this opportunity to discuss the status of the Joint Strike Fighter program, including the issues around affordability. I then intend to discuss the current and future Australian industry opportunities and finally I intend to make an announcement around the Commonwealth Government’s support for Australian companies seeking to win JSF work.

Program Status

Late last year, I visited Lockheed Martin at Fort Worth for discussions on progress of the JSF Program and to see first-hand what had been achieved since I visited in 2008.

I was impressed with what I saw at Fort Worth, but the visit also highlighted to me the immense challenge posed by the JSF Program – nine partner nations and many of the world’s leading aerospace companies in partnership, developing three variants of an affordable fifth-generation stealth fighter that will be the backbone of our tactical air combat capability for the next generation.

As we have seen over the last few months, there is no doubt that the JSF Program will continue to face challenges that must be overcome. But if the JSF wasn’t so challenging, it wouldn’t deliver what we all want. The significant advances in capability provided by the fifth generation JSF warranted Government accepting a degree of risk in this program.

You are all aware of US Secretary of Defense Robert Gates’ recent statements on JSF cost and schedule issues, as well as on contractor performance not meeting expectations over the last year or so. The Australian Government welcomes the decisive action that he has taken to deal with these issues and we are committed to working with the US and other partners to make this Program a great success and a model for future international collaboration.

In raising his concerns about JSF cost and schedule issues, however, Secretary Gates stressed that he saw no fundamental technical challenges that threatened the ultimate success of the Program. Indeed, we have seen major technical achievements recently, including:
* the successful first short take-off, hover and vertical landing of the Short Take-Off and Vertical Landing variant;
* first flight of the first mission systems aircraft;
* completion of certification and first flight of the Helmet-Mounted Display system; and
* Just last week the first two Conventional Take-Off and Landing test aircraft flew a total of 16 successful sorties in a period of only seven days.

There has also been good progress in ground static testing and development of JSF sensors and completion of around 85% of the total 20 million lines of JSF software.

When I was at Fort Worth in 2009 I was able to witness the assembly line working on the first production aircraft.

It is important to restate that overall, no official review of the JSF program such as the 2009 Joint Estimating Team report have discovered any fundamental technological or manufacturing problems with the JSF program, or any change in the aircraft’s projected military capabilities.

Affordability

But technical challenges do remain, as do affordability challenges.

I’m sure you’re all aware of the ongoing review of JSF cost estimates – no simple task to determine the cost of producing over 3,000 next-generation fighters for United States (US) Services and international partners out beyond 2030 with a high degree of commonality across three variants using new production techniques with new technologies and materials.

Whenever we discuss the costs of the JSF we need to keep in mind that the estimates are based on previous developmental aircraft such as the Super Hornet and F-22. It is useful to look at how actual costs to date compare with the estimated costs.

While we are early in the production phase, it should be noted that the contracts for Low Rate Initial Production Lots 1 to 3 were signed well below the predicted costs contained in the Joint Estimating Team report. For example the LRIP 3 contract was signed for twenty per cent below the Joint Estimating Team estimate.

It is also important at this stage to differentiate between the core JSF Program and our New Air Combat Capability project and to stress that we have always adopted a cautious approach to JSF cost and schedule estimates.

We have factored in significant cost and schedule buffers in our project in anticipation of the steps being taken in the US to deal with project risks and to ensure that our Initial Operational Capability will be met in 2018 as planned.

Affordability has always been a key goal of the JSF Program and we must do all we can to keep it affordable:
* affordable to develop;
* affordable to produce;
* affordable to sustain; and
* affordable to upgrade throughout its life so that it can meet evolving threats.

Like Australia, JSF partner countries are seeking an affordable solution, but they are also, understandably, seeking a good outcome for their national industry given the large investment they will be making.

Achieving the twin goals of affordability and partner industry involvement requires industry to be competitive, which in turn requires effective application of advanced technology and innovation. It also requires the commitment of the Program’s prime contractors to seek out the most cost-effective and innovative solutions across the JSF partnership – hence this conference!

Opportunities for Australia in the JSF Program

Defence sponsorship of this, the fourth JSF Advanced Technology and Innovation Conference, illustrates the importance the Government places not only on the JSF Program itself, but also the role played by Australian industry and R&D organisations, now and over the planned 50 or so year life of the Program.

The JSF offers a unique opportunity for Australian industry to participate in the one of the most advanced aeronautical projects ever attempted.

Australia’s partnership in the JSF Program offers major opportunities for internationally competitive and innovative Australian companies and R&D agencies to enter the supply chains of some of the largest and most sophisticated manufacturers in the world.

While military off-the-shelf projects have their benefits, they generally imply mature supply chains and limited opportunities for new players to get involved. Developmental programs like the JSF certainly present risks but they also provide major opportunities while the supply chains for the Program are being developed.

And it’s not just the supply chain for the Australian fleet – entering the JSF Program as a development partner opens up opportunities in the global supply and support chain of the world’s largest defence project.

Because the programs are developmental, we are talking about new and advanced technologies and the opportunity to increase Australian exports in the aerospace and electronics sectors as well as increasing employment in high-technology jobs.

It’s about moving into new markets and developing Australian-based advanced manufacturing technologies, notably composites and titanium. This improves and strengthens our overall skills base in engineering design, research and manufacturing, an outcome that overlaps with those sought in other manufacturing sectors.

It is important to taken an historical view of these opportunities, just as the use of aluminium in aircraft revolutionised transport in the 20th century, the use of composites and titanium will characterise 21st century aviation. Mastery of these materials by Australian companies will be an essential precursor to winning work on aviation projects.

Australia therefore needs to keep up with cutting-edge technology and must reduce costs associated with production, maintenance and operation of the aircraft. In your discussions over the next three days, I urge you to consider how Australia might collectively leverage new technologies and remain cost competitive.

Australian Industry Progress

To date, 28 Australian companies have won work on the JSF Program valued at over $200 million. This work has been primarily in the initial design and production of test aircraft. I would like to congratulate all those companies for their significant achievement in the face of stiff international competition.

Involvement in the JSF Program has exposed our companies to the methods and practices that the overseas primes expect their suppliers to adhere to, which has, in turn, increased our companies’ chances of winning further work in the international supply chains.

To meet JSF requirements, our companies have had to produce components with the finest tolerances and highest performance, which has also helped improve local production methods, competitiveness and efficiency.

Future Industry Opportunities

With the Program now ramping up to production rates, much larger opportunities are opening up as Lockheed Martin and its JSF partners lock in second source suppliers to meet growing capacity requirements.

The key determinant of the ultimate cost of the JSF will be how quickly suppliers can reduce cost as volumes increase – that is the production ‘learning curve’ effect. To remain competitive, all JSF suppliers will need to continually improve efficiency and innovate.

Australian companies are now directly engaged with Lockheed Martin and its JSF industry partners in securing contracts and long-term agreements for the production opportunities identified in the JSF Industry Participation Plans.

The Industry Participation Plans identified billions of dollars of opportunities in JSF’s 25-year production stage alone. This is in addition to the facilities and infrastructure work in the order of $1 billion to be spent in Australia.

The Industry Participation Plans include approximately 180 individual opportunities for Australian industry based on an investigation of Australian industry capabilities during the initial development phase of the JSF Program.

While these opportunities offer large industry development potential for Australian industry, potentially creating several thousand long-term jobs, the upfront investment is considerable.

To that end, Government is working with Lockheed, its JSF partners and their sub-contractors, to develop long-term agreements with Australian companies so that Australian industry has the confidence to make the necessary investments to win this work.

While there has been active engagement with Australian industry in many areas of the Program, progress in some areas has been slower than expected. Further work is required here, and I stressed these issues to Lockheed Martin when I visited Fort Worth last year – they must search deep and hard among all partner countries, including Australia, to ensure capability and affordability goals are met.

Recent developments in terms of major long-term production work have included the signature of a Memorandum of Understanding on JSF vertical tails and composite doors and panels – potentially worth hundreds of millions of dollars. Around the same time there was a MOU signed for JSF Auxiliary Mission Equipment – also potentially worth hundreds of millions of dollars.

I also pass on my appreciation to the many more Australian companies that have not yet won work on the Program but have put a lot of effort into future opportunities. I encourage you to keep up the good work – the government team will continue to work with you as part of JSF Team Australia to achieve a positive outcome.

Follow-on Development

In addition to the opportunities already identified in the Industry Participation Plans for the JSF production phase, there will be major additional opportunities through the follow-on development and sustainment phases of the Program.

Although JSF is a long-term project, the baseline design is essentially complete. We therefore need to look at future development opportunities for Australian technology and innovation that enhance capability and affordability. And it’s not just about the aircraft itself – there are many other opportunities in JSF enabling and support systems.

Following establishment of the baseline design, it is planned that JSF will undergo technology refresh and block upgrades over the life of the Program to ensure the aircraft retains its capability edge. Investment in non-recurring engineering alone will be in the order of US$500 million per year.

Each block upgrade represents about ten years from concept to implementation. This long time horizon emphasises why Australian industry and R&D organisations need to anticipate future requirements if we are to continue to play a role in the Program.

For Australia to be successful in this future environment we must drive innovation in defence technology by pooling the expertise and resources of government, industry and R&D organisations.

Today’s conference is one small step in that process. The connections made here today between research organisations, industry and government may well lead to new capabilities in the JSF in 10 years time.

Government support for defence innovation

The Government is very interested in supporting innovation in the defence industry. The Government is currently refining its Industry Policy Statement and we expect to release it shortly.

A key policy initiative, however, is the $21 million Defence Industry Innovation Centre, which works with SMEs in the defence sector to boost productivity, improve innovation and increase competitiveness. I had the honour of formally launching the Centre in September last year. I am pleased to see some of its representatives here today.

Most recently, Defence and the Department of Innovation, Industry, Science and Research have been working to identify potential sources of financial support to assist in delivering major industry opportunities, particularly important for large upfront investments to meet JSF production capacity requirements.

To expand the relationship between DSTO, universities and industry, the Government also committed to establish a research centre to conduct research on defence priority areas. The establishment of the Defence Materials Technology Centre (DMTC) is a product of this initiative. I’m glad to see there are representatives from the DMTC here today.

There have also been significant changes to the Skilling Australian Defence Industry (SADI) program over the last two years. Defence has concentrated on reducing the amount of ‘red tape’ involved in applying for SADI, making it as easy as possible for companies to access SADI. It is very pleasing to see that there has been a strong increase in SADI applications and in the financial commitment of industry.

The New Air Combat Capability project also initiated the Australian JSF Industry Technology Facilitation Program around the time of the last of these conferences.

The program identified some 300 proposals from Australian universities and publicly-funded research organisations which had the potential to contribute to JSF follow-on development or to improve JSF manufacturing processes.

In this context, it was recognised that, to achieve long-term national industry objectives for JSF, it was necessary for Defence to provide some support for development of selected priority areas, for which suitable funding mechanisms were not at that point available.

To continue this important work I am pleased to announce that $8.5 million in funding to assist industry in overcoming early investment challenges was approved as part of the recent $3.2 billion NACC Stage 1 second-pass approval. This $8.5 million is in addition to all the other programs and is concrete evidence of Governments commitment to help Australian industry that is competitive win work on the JSF.

This is particularly important as our focus shifts to greater engagement in production, sustainment and follow-on development.

While we are yet to specifically allocate these funds they will be devoted to relatively small investments that have a large potential pay off for Australian industry. We are working on three categories of funding to support:
* Technology developments that will enhance Australian industry participation in the JSF Program;
* Small investments that will enhance the potential for SMEs to compete for and win opportunities that are identified in the JSF Industry Participation Plans; and
* Innovation by Australian industry and research organisations, where this has applications for JSF follow-on development.

We are expecting that some of the new technologies presented here at this conference may be eligible for support under the JSF Industry Technology Facilitation Program.

As an example, one of the innovations Defence is already supporting relates to laser-assisted machining of titanium. The Government is working with Ferra Engineering, CAST CRC and Lockheed Martin on the controlled transition of technology in this area from the laboratory environment to the workshop.

If successful, this work could lead to a 40 per cent or more reduction in the time to machine complex titanium parts. I would like to congratulate all those involved for their work in pioneering this approach.

A similar approach is being examined on direct manufacturing of titanium and other alloys to near net shape where there are savings of up to 60 per cent in machining time considered achievable.

Government and the private sector need to jointly seize the opportunities that such innovative work and our partnership in the JSF Program offers – we need to work together now to secure the opportunities for the future.

Conclusion

As I said before, the JSF Program is extremely important to Australia and the other partner countries from a strategic and economic perspective and the work you are doing now will have major long-term implications.

The Government is committed to working with the US and the other JSF partner nations to make this Program a great success and a model for future international collaboration.

My key message is that we must stay innovative and competitive to remain relevant.

I would now like to declare open the fourth Australian JSF Advanced Technology and Innovation Conference. I wish you all well over the next three days and I look forward to hearing about the outcomes.

Media contacts:
Rod Hilton (Greg Combet): 02 6277 7620or 0458 276 619
Defence Media Liaison: 02 6127 1999 or 0408 498 664

Press release
Ministerial Support and Public Affairs,
Department of Defence,
Canberra, Australia