Leaders from Australia, the United Kingdom and the United States held a press conference in San Diego, US, on Monday, March 13, 2023, to unveil the highly anticipated AUKUS Program.
Under the program, Australia will purchase an initial three Virginia-class nuclear-powered submarines with options for an additional two. The Virginias are set to bridge the capability gap and provide Australia with Nuclear Stewardship training. This provides the precursor to the building of the Australian SSN-AUKUS fleet at the Osborne Shipyard in Adelaide.
The SSN-AUKUS will be a new design nuclear-powered submarine based on the current UK Astute class with US technology incorporated. The first SSN-AUKUS is expected to be delivered to the UK’s Royal Navy in the late 2030s.
Anthony Albanese, Prime Minister of Australia, has said the program will create 20,000 jobs over the next 30 years across the Australian Defence Force, the Australian Public Service and industry, including trade workers, engineers, scientists, technicians, submariners, and project managers.
“This is the first time in 65 years – and only the second time in history – that the US has shared its nuclear propulsion technology,” Prime Minister Albanese said at the press conference.
“We are also proud to partner with the United Kingdom to construct the next generation submarine, to be called SSN-AUKUS. A new, conventionally-armed, nuclear-powered, submarine – based on a British design, and incorporating cutting edge Australian, UK and US technologies.
“This will be an Australian sovereign capability – built by Australians, commanded by the Royal Australian Navy, and sustained by Australians in Australian shipyards – with construction to begin within this decade. Australia’s proud record of leadership in the international nuclear non-proliferation regime will continue. We will of course continue to adhere to our obligations under the nuclear non-proliferation treaty and the Treaty of Rarotonga.
“Our agreement unlocks a set of transformative opportunities – for jobs and skills and research and innovation.”
For Australia’s defence industry, jobs will not be unlocked until later in the AUKUS Program when the build of the SSN-AUKUS begins. The timing of the program is of major concern, with many businesses in the sector previously positioned to begin work next year on the Future Submarine Program.
Little is known about the exact dates Australia is expected to receive the fleet of Australian Virginia-class submarines or when the build of the SSN AUKUS is expected to begin. Australia is being told the delivery of the Australian Virginia-class submarines will be in the early 2030s, once Australia has developed operational and support capability. The government indicated that training of Australian RAN personnel has commenced.
The UK shipyards will commence the build of the first SSN-AUKUS before the end of the 2020s, with the first SSN-AUKUS expected to be delivered to the UK in the late 2030s. At this stage, there is no indication if Australian industry will be involved in the component or module manufacture for the UK boats. Australia will have completed the build of its first RAN SSN-AUKUS in the early 2040s.
Given an SSN-AUKUS is expected to be delivered every two years to the Australian Navy from the early 2040s it would appear the building of the Australian SSN-AUKUS will not begin until mid 2030s.
Audra McCarthy, CEO of the Defence Teaming Centre (DTC) said the ’Program’s announcement was a welcome relief as Australia’s defence industry has been waiting for 18 months to learn if the nuclear-powered submarines would be built at Osborne as promised by both the Liberal and Labour government.
“We are pleased that the decision will boost Australia’s economy, providing increased jobs, initially in the infrastructure sector to support the AUKUS program. However, we are concerned about the timing of the Program and how this will translate to opportunities for Australian small to medium-sized defence businesses,” Ms. McCarthy said.
“Our fears of a ‘valley of death’ reappearing are real. The timeline for purchase orders to Australian businesses in the defence sector has been pushed out, leaving industry displaced by the cancellation of the previous Naval Group contract with no defence opportunities to recover their losses for several years.
“The DTC is concerned about the financial welfare of businesses who chose to invest in the defence sector and who now patiently await opportunities to compete for. With rising interest rates and inflation, the risk to the government is that these companies will leave the defence sector, delaying the realisation of a sovereign industrial capability for decades.
“We are still waiting to learn the outcome of the Defence Strategic Review and what the impact on the wider defence industry community will be. Richard Males has hinted that the government is prepared to cancel some Defence projects to fund others, which could harm companies working on current defence projects.”
In the short-term, companies working in Australia’s defence industry, may find opportunities to participate in the global supply chain. However, companies may face hurdles with the US’s International Traffic in Arms Regulations (ITAR). ITAR presents a finance and resource compliance burden that makes it difficult for Small to Medium Enterprises (SME) to enter the US Defense market. The Albanese government is said to be in talks with the Department of State to help decrease entry barriers for Australian businesses wanting to enter the AUKUS supply chain.
The DTC is currently advocating on behalf of its members and has several meetings lined up with Australian federal ministers, members of parliament and key defence decision-makers. Currently, the DTC is requesting the following from government:
- Industry needs certainty and a consistent pipeline of opportunities to keep their “defence” related businesses current and relevant.
- Insurance provisions in construction contracts <$1m must be proportionate to the contract value and encourage SME participation.
- Devise industry policy that supports SMEs to grow to mediums and easily enter export markets.
Defence has always been a long-term game and the DTC encourages all companies working in the defence sector, both new and long-term, to keep their business diversified across other sectors. It is not unusual for a business entering the sector to wait five years before receiving their first purchase order.
Businesses who are readying themselves for the AUKUS Program need to make sure to register your Expression of Interest (EOI) on the ICN gateway, this includes businesses who have already submitted an EOI for the Future Submarine Program. The Department of Defence needs to ensure that all details on file are current.
The DTC encourages everyone interested in being part of the AUKUS Program to subscribe to the AUKUS Nuclear-Power Submarine Pathway newsletter to ensure they are updated.