Kinexus are ready to release the latest edition of our Defence Industry Insights, a bi-annual publication we spend six months collating, scrutinizing, and interpreting for the benefit of the Defence community.
In the Defence Industry Insights – Fifth Edition, we take a deep dive into current trends and activity happening within the Defence Sector, as well as the future of things to come.
It’s an interesting time for the Defence Industry. With a Federal election looming, multiple projects all on the go at once, and increased competition for skilled workers from adjacent industries, there’s a lot of pressure on our already limited talent pool.
With most acquisition programs aware, clients are facing added challenges around workforce supply and demand. As a whole, the industry is moving towards greater integration and collaboration, but within each sector there are unique roles and actions that impact its trends and requirements.
To understand how these changes affect you, Kinexus has provided a snapshot of what’s happening in each sector.
2019 is going to be a good year for the Australian Naval sector.
The Future Submarine Program’s Strategic Partnering Agreement (SPA) is expected to be signed in the first half of the year, which will instigate moderate levels of hiring. South Australia (SA) will see significant hiring for the SEA 5000 project across a range of naval engineering and Project Management Office (PMO) skill sets, with a large proportion of engineering skills in Command, Control, Communications, Computers, and Intelligence (C4I) systems. While we may not know the extent of Prime contractor hiring until the acquisition of ASC Shipbuilding is finalised, we can expect some serious hiring within the Small-Medium Enterprise (SME) space.
Construction on the first Offshore Patrol Vessel (OPV) commenced in SA in late 2018, which will give a significant boost to the local naval ship construction workforce. The Naval Shipbuilding College (NSC), currently in its infancy, is expected to mature in operations and capability over 2019 as they work with shipbuilders and the Education sector.
Naval sustainment workers can expect to see a huge increase in demand for their skills across 2019, thanks to the new Landing Helicopter Dock (LHD) Asset Prime Contractor (ACPC) arrangement, and the Collins Class Submarine Life of Type Extension (CCSM/LOTE). The last of the Air Warfare Destroyers (AWD) will join the HMAS Sydney fleet in late 2019, while HMAS Supply is set to replace HMAS Success before the end of the year. Kinexus also expects the announcement of a new hydrographic capability scheme by mid-year, another new platform which will stimulate workforce demand for the sector.
All signs point to the supply of workers with naval engineering experience falling well below demand in NSW, the ACT, and SA. WA will also experience shortfalls in workforce availability, as submarine sustainment work is transferred from SA to WA. In fact, the Western state is shaping up for a bit of a knife fight in a phone box, thanks to a resurgence in competition for engineers from the Resource sector.
Newcastle welcomed the first two Joint Strike Fighters (JSFs) in December 2018, and pilot training for these shiny new aircrafts will kick off in 2019. Kinexus expects a challenge will present in hiring for Information and Communications Technology (ICT)-skilled workers with high-level security clearances – particularly in the Newcastle/Hunter region in NSW – due to the increasingly shallow pool of relevant talent, and the newly evident need to support the JSFs. Out of a grand total of six, two new full mission simulators have been installed in Williamtown, VIC, with various trade trainers already assigned and currently training RAAF maintainers.
The gradual retirement of the P-3 Aircraft will be continued as the RAAF introduces the P-8 into service. The acquisition of the MQ-4C Triton Unmanned Aircraft Systems (UAS) was announced in 2018 but is unlikely to graduate into significant hiring up until 2020, as the transfer of the C-27 sustainment continues from Sydney to Brisbane.
The Armed Reconnaissance Helicopter (ARH) will continue to be rendered obsolete, leading to a steady supply requirement for avionics and structures engineers in Brisbane over the next five years. With the added announcement of an ARH replacement program anticipated in 2019, it’s likely to be an exciting year for the Aerospace. Not much of a surprise, but avionics and software skill sets are in short supply, along with Integrated Logistics Support (ILS) in QLD, NSW, and SA,
The LAND 400 Ph2 tender in 2018 has spawned the creation of the Military Vehicle Centre for Excellence (MILVEHCOE) in QLD. Engineers and key production staff are being recruited in Australia and being sent to Germany for training. The facility should become operational by 2022.
Kinexus expects a decision on LAND 400 Ph3 around mid-2019, although this will not affect hiring activity until 2020 at the earliest. This will depend largely on the winning tenderer, as existing workforce capability varies hugely between the competing bidders.
In Benalla, VIC, demand for blue-collar explosives ordinance manufacturers will increase across 2019, following the award of the Munitions Manufacturer Contract (MMC). QLD will likely see demand for similar skill sets increase from 2020.
Other significant Land sector projects remain in the sustainment phase, or – as is the case for LAND 19 – are yet to demand substantial hiring.
Demand for workers with Information and Communication Technologies (ICT) skills remains strong in the technology space, with many projects currently in sustainment. The systems integrators for the ERP Transformation project has not yet been given a timeline, however, when this is announced we can expect a surge in demand for workers with strong SAP skills across Australia. SAP workers with security clearances are a rare breed, meaning supply is unlikely to meet projected demand.
In Adelaide, SA, projects such as JORN Ph6 and various Maritime sector activity are fuelling the need for software engineers. Initial works on the Defence Science and Technology Group’s (DSTG’s) Defence High Performance Computing Centre (DHPCC) is expected to further drive demand for systems architects and software engineers, and data science workers from mid-year onwards.
ICT security workers are also finding themselves hugely popular, as the Defence industry competing with several other adjacent sectors for workers equipped with these skills, such as banking and financial services. Worth noting is that these competitors are offering substantially higher remuneration than Defence.
Despite the industry-wide skill shortage, Defence sector ICT project managers in the ACT are currently in over-supply. This is mainly due to the ACT’s project cycle, which is not expected to change much within the short term.
Over 2018, Kinexus observed mixed results from the geographical distribution of industry workforces to support the Australian Signals Directorate (ASD) project. Access to suitable workers has been key to determining the relative success within each location.
To date, few contracts have been awarded off the back of the new ICT Provider Agreement (ICTPA), which was finalised in 2018. It’s expected that both Defence and wider Industry will acclimatise to the revised agreement over 2019. Some big holes were evident in the ICTPA, with a few notable industry organisations having been omitted. This is likely to contribute to workforce churn, as some workers move to ICTPA incumbents. Those who found themselves left out of the agreement will need to partner with organisations on the panel in order to gain access to the work.
Kinexus has seen a notable need for workers with NV2 level security clearances, particularly in Canberra, ACT. This has grown off the back of a variety of new projects, as well as a more nuanced approach to clearance level requirements by Defence for existing projects already in the pipeline. Preference has swung to favour NV2 clearances, rather than TSPV.
Kinexus has a lot more to share than just a sector overviews. If you want to find out about state-based trends, employers’ 2019 hiring intentions, gender diversity, skills in demand, and the state of the Defence SME market, click here to pre-order the Kinexus Defence Industry Insights – Fifth Edition here.