Thales Australia and the Australian Government have signed a 10-year Strategic Domestic Munitions Manufacturing (SDMM) contract.
The $1.1 billion contract is for the continued management and operation of Australia’s munition factories in Benalla (Victoria) and Mulwala (New South Wales). The agreement provides surety of supply of key munitions and components for the Australian Defence Force (ADF), and guarantees the Australian manufacture and supply of strategic munitions to the ADF.
Australian Minister for Defence, Senator the Hon Linda Reynolds CSC said today’s announcement means the manufacturing sector can retain local skills and expertise.
“It’s vital that we continue to enhance the readiness of the ADF and ensure we have the necessary sovereign depth for sustaining key capability and materiel such as the surety of supply of munitions,” Minister Reynolds said. “This agreement with Thales Australia will continue to maintain a safe and compliant operation, and increase our domestic capacity to manufacture key munitions in support of ADF operations.
The continued long-term partnership between Thales and Defence reinforces the Government’s commitment to maintaining a world leading, competitive and safe domestic munitions manufacturing capability in Australia.
Thales continues to build long-term relationships with hundreds of Australian suppliers, building Australia’s self-reliance and the capability of the broader Australian manufacturing sector.
Thales’s recent supply chain study with AlphaBeta Advisers proved that there is a strong correlation between Sovereign Industry Capability and benefits flowing to Australian suppliers. In 2019, Thales spent AUD 113 million with its Australian suppliers for munitions and small arms, supporting 414 direct jobs in the supply chain.
This new contract will enable Thales to secure more than AUD 450 million in export and non-ADF orders over the coming 10 years, demonstrating Australia’s world leading munitions manufacturing capability.
The Group has invested more than AUD 20 million in research and development and AUD 25 million in capital infrastructure over the last 10 years at the Benalla and Mulwala facilities and will invest further to develop new and world leading products for the Australian Defence Force. Thales employs approximately 650 highly skilled staff between its two Australian Government owned facilities in Benalla and Mulwala. It exports products to 17 countries globally.
“We have worked closely with Defence to manufacture munitions for more than 20 years, using our deep technical expertise to provide urgently required munitions to the Australian Defence Force whilst on operations”, said Chris Jenkins, Chief Executive, Thales Australia.
“Everything is about trust. Especially when it comes to Defence. This historic contract with the Australian government builds on our trusted partnership with Defence for the long term supply of essential equipment”, said Christophe Salomon, Executive Vice President, Thales Land and Air Systems.