Defence industry disruption: ‘Grow the factory, not the platform’

The ongoing conflict in the Ukraine is a stark demonstration of the importance of an strong industrial base that can be quickly mobilised into the service of defence production. Building domestic industrial capacity is a front-and-centre issue.

With its strong heritage in the aerospace industry, Ukraine was able to gain early asymmetric advantage in the war through its use of drones for example, and was able to quickly ramp-up production to pump out as many as 10,000 drones a month, says Mirragin Consulting managing director Rob Sutton.

By contrast, Australia stocks about 1,000 drones in total, and its productive capacity to scale-up any kind of comparable domestic capacity is unclear.

“What’s missing from the Australian defence sector is the intent to support and grow the factory, rather than the platform,” Mirragin Consulting managing director Rob Sutton said.

In the first Commercial Disco podcast for 2024, Mr Sutton told InnovationAus.com editorial director James Riley that defence procurement historically focuses on specific platforms, like joint strike fighters or warfare destroyers, rather than nurturing a holistic industrial base.

This project-by-project approach, guided by the Defence White Paper and the Integrated Investment Program, often overlooks the broader context of domestic manufacturing capabilities.  

Favouring foreign-proven systems to limit project risk sidelines the industry. It inhibits the development of internal capabilities in emerging technologies like drones. 

Meanwhile, Ukraine and Russia are engaging in a massive innovation arms race as each side rapidly adapts and evolves its military strategies.  

“In Ukraine, we’re witnessing a continuous cycle of action and reaction,” he explains. “As Ukraine innovates with drone technology, Russia counters with defensive measures, leading to further advancements.” 

For instance, Ukraine’s use of Turkish-made Bayraktar TB2 drones has been pivotal in conducting reconnaissance and precision strikes. Russia, in turn, has deployed advanced jamming systems to interfere with operations. This technological tug-of-war typifies how each side’s innovations compel the other to develop countermeasures. 

Sutton warns that the lessons from Ukraine indicate such drone technology will likely be employed against Australian forces in future conflicts. He says that Australia must prepare for the threats these systems pose, both overseas and domestically. 

Nations like Ukraine, dwarfed by Russia’s economy, are mastering what he calls an “economic mass” strategy. “They can execute widespread operations without the financial burden associated with traditional, high-cost military equipment.” 

He says this presents a paradigm shift in defence thinking: Reevaluating procurement policies to prioritise agile, cost-effective solutions like drones over traditional, high-cost military hardware. 

“We’re a trillion-dollar economy, capable of advancing in robotics and autonomous systems,” he asserts. “But, If you don’t have the industrial base that’s able to produce the equipment that you need in the field, then we’re going to fail.”

Meanwhile, Sutton acknowledges the innovation and progress of defence projects. This includes collaborations on undersea drones with Anduril and C2 Robotics, commending the efforts of RICO and the Jericho section in advancing robotics and autonomous systems. 

“However, there’s a significant disconnect in the Australian defence sector,” he says. “There’s a gap in transitioning these experimental technologies into operational capabilities.” 

“We’re doing all this great, exciting front-end stuff. But how do we get it into the actual battle? ”

He notes defence procurement decisions’ immense impact on the local robotics and autonomous systems industry, particularly for startups and small to medium enterprises (SMEs).  

“Defence is by far the largest customer for robotics and autonomous systems in Australia, and therefore has a significant role in creating, growing, supporting the ecosystem,” he explains. 

He believes the closure of the Defence Innovation Hub and the resulting pause in funding have adversely affected these businesses, underlining the fragility of the sector and the need for stable, supportive policies. 

“For a small business, a six-month pause or a three-month pause in cash flow can be fatal,” he says, highlighting the need for a more integrated approach between defence and commercial sectors.  

 The integration fosters innovations and strengthens the domestic industrial base, similar to what is taking place in Ukraine. 

The drones in Ukraine represent not just tools of warfare but also embodiments of a tiny nation’s capacity to adapt, innovate, and respond rapidly to evolving threats. 

“We must become more self-reliant as a nation,” he says, concluding that the relevance of having an internal industrial base is twofold for Australia.  

Firstly, it ensures that the nation can be self-reliant in producing critical defence technologies like drones, essential for modern warfare and national security. 

“Secondly,” he says, “it enables us to maintain economic mass in warfare, which involves the scalable production of cost-effective military assets that can be deployed extensively.” 

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