Australia doesn't need to have its own arms industry, and that's a problem

It's often cheaper, much cheaper, to simply buy weapons from a big power - like the US. Competition (and the drive to remain top dog) ensures America will always be prepared to shovel huge amounts of money into procuring lots of fast aircraft, ships and tanks. The superpower gains economies of scale along the way. So should we just give up attempting to manufacture equipment?

Former prime minister Malcolm Turnbull urged Australia should rank among the world's top 10 arms exporters within a decade. It was a grand announcement but since then there's only been smoke. Well, now the government has a chance to demonstrate if it's prepared to back up its own rhetoric. Two key opportunities are now opening.

Melissa Price was given the Defence Industry portfolio in May and the way she handles these issues will show if she's actually up to her new job. Even Liberals admit her brief stint as assistant environment minister turned into a debacle: Price urgently needs a few quick runs on the board if she's going to remain in the ministry.

Her chance came last month, when the US snatched almost $12 billion worth of work on the F-35 Joint Strike Fighter away from Turkey. That country had signed a deal to buy S-400 surface-to-air missiles, which would have handed the Russians the top-secret flight profile of the US aircraft. So the big question is, where will that work go?

By way of comparison, Australia only received work worth just over $2 billion, even though we were among the first to sign-up for the project. If this government's really serious about making the alliance work for us, the time has come to demand a bit of quid pro quo.

Importantly, the work that's up for grabs hasn't been allocated to US businesses (so there are no Congress representatives that need to be fought). Companies like Australia's Quickstep has already won significant work manufacturing critical components of the F-35. It's already competed against the world to win work providing advanced composite material for the aircraft. It's ready to step forward and take up more, but there's a problem. British, Dutch and Norwegian companies, along with others, are already circling, trying to pick up the tasty morsels dropped by Turkey. Unless the government gets involved to advocate for Australian industry soon, only scraps will be left for our companies to pick up.

Contests like this are never fair. The problem for companies like Quickstep isn't that the Europeans are making cheaper, or better, parts. The real issue is that these companies are being backed by heavy and unsubtle government lobbying. Other nations' governments have already demonstrated that they're not concerned about the best commercial decisions, they simply want a share of the work. Australia's share. Unless the government gets involved quickly, only scraps will be left.

Unless there's urgent advocacy from the highest levels, it's likely Australia will loose its best chance to pick up the high-value manufacturing work the government claims to want so badly. This issue is fast becoming a critical challenge for Scott Morrison, and that's because it's one where success or failure will be measured in dollars and cents. There's no point pulling numbers out of a hat, however one analyst insists a failure to at least double the current value of work on the project would be "inexplicable". The ball's now in Price's court.

Companies like Quickstep need government support. It's all very well to print off glossy export strategy brochures, but active lobbying is necessary to transform the words on the page into real outcomes. Ambition to export is great. The question now is was this merely a political strategy, directed at re-election, or is the government serious? Is it rhetoric or reality?

However Quickstep isn't the only business that's progressing beyond expectations.

The ballistic armour company Xtec has developed an innovative new way of manufacturing protective helmets and plates, and last week it managed to break into the US market. Xtec acquired an American manufacturer, HighCom, and now has the opportunity to dramatically expand sales of its lightweight defensive armour using a developed sales and distribution network.

The company's managing director, Philippe Odouard (who, incidentally, is also on Quickstep's board), says the transaction is transformative. He says it will allow "accelerated commercialisation of proprietary products by combining XTclave technology and manufacturing capabilities with an established distribution network in the lucrative US market". He's using a different method to expand. Odouard didn't seek to beat the Americans - instead he's using Aussie innovation (ensuring curved armour has constant protective strength) to gain leverage into the huge world market.

This is great, and dynamic, but it involves a very different way of leveraging Australian business into the world market.

It rarely makes any sense to compete, directly, against the big guns. That's why the word "niche" is overused when it comes to Australian business. The aim has to be to find a space where nimble, agile thinking can outwit the leviathans that dominate the defence industry. What's required is support from government, not to prop-up industry but simply to level the playing field and allow Australian exporters to compete effectively.

Christopher Pyne made a great deal of noise about how this was going to happen before he handed the ball on to Price and wandered off to consultancy work himself. The question today is was all that noise simply rhetoric, or can it be made real?