Page 16 - Australian Defence Magazine April 2020

16 NEWS REVIEW SME FOCUS
APRIL 2020 | WWW.AUSTRALIANDEFENCE.COM.AU
HOME GROWN SMES: A CASE STUDY
Local SMEs share their experiences carving out a niche in Defence industry to build sustainable businesses with potential to prime.
LOUISA MINNEY | CANBERRA
MANAGING Director of ECLIPS En- gineering Shaun Moore and Account Manager of REDARC Defence Systems Mike Hartas, talk to Louisa Minney about what they have learnt about grow- ing their businesses by investing in de- fence contracts.
SMEs are the engine room of econom- ic growth. Collectively they employ more people than any other group, create the majority of new jobs, generate over 50 per cent of our GDP, are leaders in innova- tion, and account for around a third of all Australian research and development.
Defence industry is benefitting from these characteristics, Hartas said. The REDARC team is working closely in a research and development capacity with international primes to modify designs to better suit the Australian operating environment.
A fertile defence industry can be a conduit through which defence can con- tinue to benefit from the experiences of its veterans, investing in a strong Austra- lian defence capability. Many successful defence industry SMEs have started off the back of the initiatives of veterans, among them, ECLIPS.
Moore observed that over the last three years ECLIPS’ level of engagement and quality of communication had mark- edly improved: End user feedback is real- ly helping to grow sovereign intellectual property. Through this loop, ECLIPS’ business has continued to grow, becom- ing a world leader in the design and manufacture of logistic platforms and deployable capabilities.
ECLIPS’ positive experiences extend- ed to the Australian Military Sales team and Team Defence Australia. Moore said their experiences with these teams has been ‘absolutely fantastic’. At the recent Association of the US Army conference in Washington, and Defence and Se-
curity Equipment International fair in London, military personnel and other Australian government representatives supported Australian companies by co- ordinating meetings, and advocating Australian products.
HOW CAN AN SME COMPETE?
Both Moore and Hartas agreed that diver- sification was a key aspect. Less than 10 per cent of REDARC’s business is defence.
Their diversification strategy looks outwards because SMEs cannot do ev- erything themselves, Moore pointed out. The ECLIPS strategy is to partner with other Australian businesses that oper- ate across multiple sectors, leveraging their existing local resources. Further- more, these collaborations have capacity to converge Australian knowledge and IP from multiple industries to develop genuine Australian export innovations. Moore reiterated that these long term, symbiotic business relationships not only support a greater level of business resil- ience within the Australian economy, they inevitably provide better value for money for taxpayers.
Both agreed that it is a significant commercial undertaking to commit to tendering for a Prime Contract. Howev- er, the only way that Australia can break the multinational monopoly in the Aus-
LEFT: Mike Hartas with his customer on a site tour.
tralian Defence sector, is for more genu- ine Australian SMEs to take up the chal- lenge and ‘have a go’, as ECLIPS have.
Hartas also saw value in advocating within senior Defence and Government areas. He is an active member of the board of the Defence Teaming Centre (DTC) and a member of industry asso- ciation Industry Voice.
CHANGING PERCEPTIONS
Moore and Hartas indicated that the big- gest hurdle that Australian SMEs face is perception that multinational Primes au- tomatically represent a lower commercial risk profile than Australian SMEs with lower turnover. This is despite the fact that pragmatic and independent commercial assessments, such as Dun & Bradstreet often reach very different conclusions. These assessments consider more than just turnover, they analyse associated debt, balance sheets and tax paid in Australia.
Moore and Hartas agreed that their ex- perience with Defence has been positive, and that the environment for innovation and interaction has never been better and is mutually beneficial. Developing these benefits takes effort, time and goodwill.
Louisa Minney is a business analyst, CEO and sits on the board of a number of Aus- tralian SMEs.