How Orbital is in prime position to benefit from Australia’s $270bn defence budget spend
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The company is positioned to leverage its first-mover advantage based on over 10 years of product development.
Advanced drone engine manufacturer Orbital Corp (ASX:OEC) has already established a global client base in the production of unmanned aerial vehicles (UAVs).
And with its position in the market now well established, the company is ready for the tailwinds now forming behind the domestic defence sector.
In his Federal Budget address last week, Treasurer Josh Frydenberg reasserted the government’s commitment to invest $270 billion in Australia’s defence capability over the next 10 years.
And speaking with Stockhead, Orbital CEO Todd Alder noted that domestic IP in the production of defence equipment has been highlighted as a priority by the Australian Defence Force.
In that context, OEC has a first mover advantage based on 10 years of product development and its standing as the primary UAV engine supplier to global companies such as Insitu – the defence subsidiary of multinational aerospace giant Boeing.
“Being able to demonstrate proven capability and reliability in your product is a definite advantage,” Alder said.
“We’ve already established ourselves as a world leader in the design and manufacture of integrated engine systems for unmanned aerial vehicles.”
“So with that unique sovereign industrial capability, our objective is to ensure that any fleet of tactical UAVs purchased by the ADF is powered by our Australian designed and built engines.”
OEC hosted Minister for Defence Industry, Melissa Price, this week at its Balcatta headquarters, providing them the opportunity to demonstrate their growing capability and production capacity.
The visit follows Orbital being chosen by the Federal Government for the fifth edition of the Australian Defence Sales Catalogue – an annual showcase of leading-edge products and technology that are developed on Australian shores.
Alder also highlighted some key features of the government’s $270 billion Force Structure Plan, in which improved capabilities in cybersecurity and unmanned/autonomous programs were given priority.
Already, OEC is directly in tenders for two major near-term drone development programs – the Australian Army’s LAND129 Program and the Royal Australian Navy’s SEA129 program.
Two global companies – Insitu Pacific and Textron Systems Australia – have been shortlisted for LAND129 Phase 3, which will involve the production of advanced tactical UAVs.
As well as its long-term Insitu contract, Orbital also signed a multi-year supply deal with Textron subsidiary Lycoming Engines earlier this year, giving it a direct partnership with both companies participating in the tender process.
Both companies are also leading contenders for the Navy’s SEA129 program. And as defence spending ramps up in the coming years, Orbital has a leading position among advanced equipment manufacturers to compete for major production contracts.
“Programs for tactical UAVs, maritime un-crewed aerial systems, teaming air vehicles and long endurance (remotely piloted) aircraft systems are just a few of the programs where the ADF will look to build its capability over the next decade,” Alder said.
“Orbital UAV has established an advanced capability in this sector, and stands ready to support those development programs wherever possible.”
This article was developed in collaboration with Orbital Corporation, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.