Our Australian Defence Sector Overview

By Kinexus on 8 March 2018

The Defence Sector is undergoing significant change. The concurrence of significant growth in the procurement budget, structural reform in the public sector and new market entrants all lead to opportunities as well as challenges.

The upcoming Kinexus third edition Defence Industry Insights will provide an update on the state of the Defence Industry workforce and explores the opportunities and challenges faced by the industry.

In order to provide the industry we serve with timely intel, here is a sneak peek into what is going on in each Defence Industry sector at the moment.

The Naval Sector is at the beginning of a protracted period of sustained growth due to major acquisitions and upgrade projects. Supply of white collar skills is already falling short of demand in SA, NSW, ACT and WA and this is likely to worsen over the medium term. Most available candidates lack the required Defence Industry experience or security clearances. As a result, vacancies are taking longer to fill as organisations struggle to find the right talent. Increasing salary expectations of suitably skilled Defence Sector candidates also makes it difficult for organisations to attract the talent they need, particularly in NSW. As a result of this candidate-driven market, most skill sets across the country have experienced salary increases higher than the standard 4% increase across the Defence Sector in the last 12 months. Programs such as SEA 1000 and SEA 5000 are driving increased demand for above the line consulting expertise in SA and ACT. What’s more, the lead organisations on SEA 1000 are mobilising their project teams and ramping up recruitment activities. Although this means the search for specialist Naval Sector workers is increasing rapidly, organisations are also more willing to recruit workers from outside of the Defence Sector to fill their project teams. With the arrival of the first Air Warfare Destroyer (AWD) in Sydney and increased Landing Helicopter Dock (LHD) activity, demand is also on the rise for naval sustainment skills. To fill this growing sustainment skills gap, industry is looking for ways to introduce workers from adjacent industries. As such, most organisations are working to understand Navy’s intent to adopt an asset management approach to sustainment. Despite this, little hiring from adjacent industries has been observed.

In comparison to other Defence Sectors, the Aerospace Sector is seeing a modest amount of workforce growth. Workers have begun transitioning from the P-3 to the P-8 in Adelaide and new roles have been created to support the introduction of the C-27 and Growlers. The focus is now on the arrival of the first F-35 at the end of 2018 and preparations for Initial Operating Capability in 2020. Upgrades and facility additions to base infrastructure in NSW, QLD and NT are well underway, and in most cases approaching completion. There will also be increased focus on the development of a sustainment contingent as well as a transition to a Generation Five workforce. This will involve different skills, systems and processes to those currently being used to operate and sustain the Royal Australian Air Force’s (RAAF) air combat capability. The adoption of the Defence Aviation Safety Regulations (DASR) by defence is translating to an increasing number of workers observed to be undergoing practitioner training, indicating a level of compliance and uptake within industry. However, some organisations appear to be more advanced in the process than others.

The Land Sector is awaiting the decision on the winning LAND 400 offering, which is expected in the first half of 2018. The prospective primes will need to stand up project and engineering teams in either Brisbane or Melbourne, depending on the offering outcome. The recent award of the Munitions Manufacturing Contract (MMC) will see a change in contract in 2018 for the manufacture of an array of ADF munitions. This is unlikely to lead to significant change in the workforce. As anticipated, the new era of Major Service Provider (MSP) run integrated work packages has kicked off with an MSP being engaged to deliver Soldier Systems Branch tasks in Melbourne in early 2018. It is expected that this will create a high level of demand for land systems engineering, logistics and project management skills. The recent award of the LAND 19 project is not expected to create much skill demand until around 2019.

As the vast majority of large defence Information and Communications Technology (ICT) projects have moved into sustainment phases, companies have begun preparing for upcoming projects. With large materiel projects due to commence across the Aerospace, Land and Naval Sectors, companies are seeking workers for design and development phases. This places business analysts, software engineering and systems architecture skills in high demand. A broader interest in developing cybersecurity skills also means that workers with information security skill sets are highly sought after. As usual, the ICT market is heavily impacted by the requirement for the majority of workers to hold security clearances. This continues to limit the ability of companies to access the required skill sets needed to deliver on their projects. As a result, workers with high-level clearances continue to be in strong demand in the ACT. Although ICT workforces have mostly been ACT based, organisations are beginning to distribute their workforces elsewhere in order to get access to and attract the right skill sets. Various companies are already establishing defence capability in states such as SA, VIC and QLD to support ACT based projects and departments. Despite strong competition for talent across the board, demand for ICT workers in all areas is likely to decline for a short period. The replacement of the Applications Managed Service Provider Arrangement (AMSPA) panel with the Information and Communications Technology Provider Arrangement (ICTPA) within the next six months is anticipated to slow down hiring processes during that period as defence and industry adapt to the new mechanism.

If you would like to find out more, click here to pre-order our Kinexus Defence Industry Insights – Third Edition.


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