Australian Firms Turn to US After AUKUS Agreement

Australian Firms Turn to US After AUKUS Agreement

Australian Firms Turn to US After AUKUS Agreement

Executives are saying that the AUKUS collaboration, which involves Australia, the U.K., and the U.S., is creating new opportunities for Australian defense companies to establish themselves in the United States. In fact, one Australian company has even set up a location within a U.S. Army arsenal.

The AUKUS agreement not only allows Australian defense companies to expand into the largest defense market in the world, but it also provides a chance to bring those benefits back to Australia’s growing defense industry. This is particularly important in the Indo-Pacific region, where there is a potential for large-scale conflicts.

According to Rob Nioa, the CEO of Australian munitions company Nioa Group, the goal is to have a presence in the U.S. munitions base with production capabilities in the Indo-Pacific region.

Announced in September 2021, the AUKUS collaboration focuses on nuclear-powered submarines and critical technologies such as artificial intelligence, quantum computing, hypersonics, and autonomy.

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Australia has already secured $1.6 billion in U.S. defense contracts through the AUKUS pact, and they are making significant investments in the United States to fulfill these contracts, according to Paul Myler, deputy head of mission at the Australian Embassy in the U.S.

During an event at the Center for Strategic and International Studies on April 5, Myler emphasized that the AUKUS pact is not just about buying U.S. equipment; it represents a radical reimagination of the partnership.

However, there are still obstacles to overcome in working together, as pointed out by Cynthia Cook, director of CSIS’ Defense-Industrial Initiatives Group. Cook mentioned that companies face challenges in understanding government requirements and aligning their products with government demands.

Additionally, companies from partner nations may struggle to access tender opportunities, and the geographical distance and time zone differences pose their own set of challenges.

Creating a Strong U.S. Presence

Australian Firms Turn to US After AUKUS Agreement

Nioa Group, founded by Nioa’s father in 1973, started as a small firearms shop in Queensland. Over time, the company expanded its customer base to include law enforcement and defense, and shifted its focus to munitions production. Today, Nioa Group is the main supplier of artillery ammunition for the Australian Army.

In addition to its presence in Australia, Nioa Group also operates in New Zealand and has a joint venture with Germany’s Rheinmetall. Recently, they established a munitions shell forging factory in Australia to supply the German military.

About a year ago, Nioa Group entered into a contract with the Australian government to develop a domestic guided weapons enterprise, leading to the creation of the Australian Missile Corp.

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Nioa Group has formed partnerships with several U.S. companies, including Northrop Grumman. In 2023, they acquired Barrett Firearms, a Tennessee-based company known for producing the primary anti-personnel sniper rifle used by the U.S. Army and Special Operations Command.

Now, Nioa Group has made history by signing a long-term lease at Picatinny Arsenal in New Jersey, becoming the first foreign company to have a presence on the U.S. military’s guns and ammunition development property. This move allows Nioa Group to collaborate with the U.S. military on various armaments supply needs.

“We have existing work that would see us wanting to be inside the wire working with them,” said Nioa.

This new opportunity also opens doors for Nioa Group to work closely with other U.S. companies based at Picatinny Arsenal, such as Northrop, General Dynamics, Winchester, and BAE Systems. To further strengthen their U.S. strategy, Nioa recently appointed Dan Olson, a former vice president of Northrop Grumman’s weapons systems division, as a member of their advisory board.

Nioa expressed their aspirations to grow in the U.S. market and acknowledged the need to establish an ammunition presence in the country. They recognize that the path to achieving this is not entirely clear yet, but they believe it will involve understanding the supply chain constraints and meeting the U.S. government’s demand for increased production.

Nioa Group also mentioned their interest in acquiring companies already in the supply chain and working with or acquiring components needed in Australia. This could potentially lead to easier co-production.

While AUKUS has facilitated the establishment of relationships with the U.S. government and collaboration with U.S. industry, Nioa believes it is still too early to witness the transfer of technology. There is some concern that despite policy agreements, the actual transfer of technology may face obstacles and delays due to existing systems and processes.

Another Australian company, EOS Defence Systems, has taken a similar approach by expanding their technology development work in the U.S. and partnering with U.S. companies. They established a production footprint in Huntsville, Alabama, in response to the growing demand for remote weapon station systems in the U.S. military.

The company is widely recognized for its remote weapons stations, which it supplied to the U.S. military in the 1980s. However, it recently lost a contract to a Norwegian company. Despite this setback, EOS is focused on expanding its presence in the U.S. through its other business sectors.

One area of focus for EOS is developing lower kilowatt directed energy solutions that can be integrated into smaller systems like armored vehicles. The company is on the verge of signing two contracts for lasers with international customers and plans to bring this technology to the U.S.

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Over the past two decades, EOS has also made significant advancements in ground-based laser technology, including the ability to blind satellites. Now, the company is working on disabling satellites’ sensors and even the satellites themselves. This presents a tremendous opportunity for export.

According to EOS CEO Andreas Schwer, AUKUS has opened up new avenues for conversations and collaboration, enabling the company to participate in classified programs. This partnership will facilitate the exchange of product data, information, software codes, and even hardware, making their operations more seamless.

While EOS already has partnerships with U.S. companies like Northrop Grumman, they are actively seeking acquisition opportunities and additional partnerships. They are prepared to introduce their laser technology or satellite terminals to the U.S., potentially even under a different brand name. However, they are carefully evaluating all opportunities before making any formal decisions.

Small businesses making waves in the U.S

Australian Firms Turn to US After AUKUS Agreement

Smaller and newer Australian companies are exploring opportunities in the United States, including 3ME Technologies. This Australian company specializes in electrification and is now expanding its global reach. CEO Justin Bain has expressed a desire to focus on the AUKUS countries.

3ME Technologies has achieved notable success, such as converting the Australian Defence Force’s Bushmaster vehicle into a hybrid-electric version. They have also worked on projects involving battery systems and power solutions for counter-drone and directed energy systems. The company’s expertise in battery safety is highly valued in industries like mining and defense.

To further their growth in the U.S., 3ME has initiated discussions with several prime contractors. They are excited to make their debut at the Sea Air Space trade show this month.

Assisting 3ME in their conversations with U.S. primes is the Australian government program called Going Global. This program supports companies seeking to collaborate with U.S. defense prime contractors.

Bain envisions 3ME playing a significant role in establishing a robust high-end battery and electrification supply chain in the Indo-Pacific region. This is particularly relevant as the U.S. takes into account logistics operations in a disputed setting within the main theater of operations.

Bain emphasized the importance of strengthening the supply chain in INDOPACOM and the need for more support in the region. He highlighted Australia’s experience and presence as a reason to focus efforts in that area.

During an event at CSIS in April, Ellen Lord, the former Pentagon acquisition chief under the Trump administration, pointed out the challenge of working with small Australian companies.

Hugh Jeffrey, the Australian Department of Defence’s deputy secretary of strategy, policy, and industry, expressed optimism about the efforts to link the Australian and U.S. defense-industrial bases, despite past limited success. He mentioned the recent export control reforms in the U.S. National Defense Authorization Act and the potential for enhanced cooperation between Australia, the U.K., and the U.S.

Jeffrey believes there is a growing consensus on the need for change in industrial base integration between the U.S. and Australia, signaling a shift in mindset for both countries.

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