HYDAC Australia, as a small-medium enterprise (SME), is intent on becoming a leading hydraulic, automation and control supplier to the Australian Defence Force (ADF).
HYDAC National Sales and Marketing Manager Peter Agius points out that HYDAC has many touchpoints with the defence industry because fluid power in terms of hydraulics, lubrication, and cooling systems, among many others, is found throughout defence sector applications.
“We make and deliver components for a host of different OEM organisations. As a result, we see many of our components integrated into the Australian market sector, particularly in the defence sector’s many subsystems and integrated work packages.”
Mr Agius explains that key areas related to defence are acquisitions and upgrades and how hydraulic components fit into work packages through to sustainment and equipment maintenance.
“It makes sense for HYDAC to get involved here as its engineering technology, production line capabilities and maintenance expertise have evolved in line with high-level customer requirements.”
Just take filtration technology, where HYDAC is a market pioneer.
For decades our product range has included efficient and safe filtration solutions for hydraulic and lubrication oil, water, fuel, coolants and other processing fluids - critical applications for the defence sector.
“From powerful hydraulic and lubrication oil filters to fuel filters and process filters, our extensive product portfolio includes efficient fluid conditioning systems and smart solutions for fluid condition monitoring that analyses fluids and defines measures for increasing the productivity of machinery and reducing fluid consumption.”
Going forward, Mr Agius says HYDAC intends to increasingly use its electronic capabilities to bring automated condition monitoring to the table.
“These practices can be implemented into the defence sector for state-of-the-art monitoring and stronger capability.
“All in all we have the technology required by the defence sector for seamless, practical and affordable integration.”
2016 Defence White Paper ties in with AIC
The 2016 Defence White Paper contains key industry policy statements that refer to guidelines as to how the defence industry operates and how defence investments are integrated into operation, including the concept of Australian Industry Capability (AIC).
Through the AIC program, government wants to provide Australian companies with opportunities to compete on merit for defence work packages and work opportunities as well as influence prime contractors and major OEMs in their delivery of cost-effective support mechanisms.
This integrated approach provides a significant opportunity for HYDAC with its European manufacturing heritage as it underlies and encourages technology transfer and intellectual property to build and develop sovereign capability in Australia.
Mr Agius underscores that on a local level HYDAC also takes care to cooperate with primes and SMEs contributing to the defence sector.
Understanding process behind the scenes
HYDAC, Mr Agius says, is aware of the need to “tread carefully” when it comes to defence sector negotiation as an understanding of many protocols is required.
“It is a complex and challenging environment to navigate, down to the packaging that has to meet ADF requirements,” he says.
In view of this HYDAC National Development Manager for the Australian Defence Program James McEwen attended a course by the University of New South Wales on the Australian Defence Force’s (ADF) capability lifecycle program.
“The course was designed to foster understanding on the ADF’s decision-making processes,” Mr Agius explains, “which are crucial to effective dealings with this organisation.”
To better service this sector, HYDAC has also upgraded its Melbourne’s headquarters in terms of hardware, procedures, and personnel to ensure it can be a secure and valuable supplier to this industry as well as endeavouring to become a certified Defence Industry Security Program (DISP) member.
Training name of the game
The ADF is also very concerned with improving skill sets and capabilities across the industry, which requires education, Mr Agius says.
“Here HYDAC has the training packages and relevant partnerships with industry groups and academic institutions such as Swinburne University and Deakin University to really provide upskilling,” he says.
“Already HYDAC is a pioneer in using and packaging its virtual reality and augmented reality technologies to showcase and deliver training at different levels. And of course, it has its standard courses on offer, with online courses recently coming to the forefront.”
HYDAC at hand with state-of-the-art test and flushing hydraulic power unit
A concrete example of a relevant service, Mr Agius says, is when an Australian government business enterprise involved with Australian naval shipbuilding contacted HYDAC WA to enquire about its mobile filter unit (MFU).
“This was also connected to the enterprise deciding to adopt best practice principles in terms of hydraulic/lubrication fluid transfer.”
The HYDAC team was shown the incumbent test and flushing hydraulic power unit (TFHPU), which was dated and required modernisation.
“HYDAC was quick to the mark, beating competitors to supply a TFHPU that received acclaim all around.”
Mr Agius highlights IBISWorld research that reveals the defence industry has been largely unaffected by Covid-19.
Defence funding has remained unchanged as the Federal Government is anticipated to achieve its goal of defence spending, reaching two per cent of national GDP in 2020-21.
Future defence funding has been decoupled from GDP to prevent fluctuations in GDP, such as during the COVID-19 pandemic, from affecting defence expenditure.
Defence revenue was $38.6 billion for 2019-2020, with annual growth of 2.1 per cent from 2016 to 2021 and anticipated annual growth of 3.5 per cent from 2021-2026, according to IBISWorld research.
Capital intensity level high
The Defence industry exhibits a high level of capital intensity and this trend has increased over the past five years, Mr Agius points out from IBISWorld research.
For every dollar spent on wages an estimated $0.54 is spent on capital, with it being common for the sector to invest large sums of money to purchase specialist military equipment.
As an example, the Federal Government recently approved the purchase of 12 Shortfin Barracuda submarines estimated to cost a total of $80 billion.
The RAAF invested in new maritime surveillance aircraft, with 12 P-8A Poseidons joining the fleet since 2016.
The industry's success heavily depends on capital investment in specialist military equipment as the global defence sector is highly technologically advanced, Mr Agius concludes.
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