Over-optimism won't help Quickstep investors

Today's Australian Financial Review (AFR) has s special report Defence insert.

It has a piece of overly optimistic reporting on Quickstep and its industry hopes on the F-35.

It states that they hope for $700M over 20 years on F-35 work.

Yet in 2010 that was shown as "potential".




The article also implies that the U.S. is going to get 2400-some F-35s.

Given how the business plan has fallen down for the F-35, that many jets is a very big dream.

Poor investors getting mislead by a puff-piece article by an alleged leader in Australia on big-business finance "reporting".

I wonder where the rent-seekers will see their billions in F-35 work for Australia?

SME's face the truth about F-35 industry work (or lack of it)

Government and big industry told a fairy tale about thousands of F-35s. Yet things just are not working out that way.

Now SME's are waking up from a happy and unrealistic dream.

"But despite the contracts we have in place, the revenue has not covered the investment, at this point in time," he said. "According to how the build schedule was looking five years ago, there should have been up near 100-plus aircraft being manufactured this year, but with all the delays it is down to 32 aircraft."

Another South Australian company that invested $10m to obtain work on the JSF is now also in difficulty because of delays.

And, Production Parts died last year. BTW, LRIP-5 was supposed to be 120 jets.

Confidential government report warns 1,500 SME defence contractors at risk of failure

The dying defence sector SMEs.

This is what happens when you reduce the budget in a specific industry by a large amount."

In part. The other part of that is SMEs were in for a tough go because the Entrenched Defence Bureaucracy told massive fibs to industry about the fantasy of 3000+ F-35s. That: there was up to $9B in home industry work (potential) and every superlative to describe the Just So Failed.

Ask Production Parts how that all worked out. Oh wait. You can't. They are dead.

Corporate carcasses indeed.

F-35 industry missing out on orders

Governments--in this example; Canada--can spin how great home industry effort is for the F-35 program, yet there is the simple fact that there are a lot of missing orders for the SMEs (those critical jobs that are very fragile under this high risk program).

The subdued red field in the chart below shows what industry was promised is quite a bit different than what is happening. That is a lot of missing orders. Corporate carcasses indeed.

How will SMEs survive?

This is a good read on some of the problems facing Australian home defence industry.

Unfortunately it is not aggressive enough in pointing out the flaws in the Defence bureaucracy. This is a war. Thy enemy has a name.

I believe it was Da Vinci who said,"Many have made a trade of delusions and false miracles, deceiving the stupid multitudes".

If SMEs seeking defence business are to survive, they will have to make their case that they cannot perform work in a hostile environment. This is an era where senior Defence and DMO--those that collect a fat government paycheck--have only one interest. That interest is to continue to collect a fat government paycheck.

I don't see any of this improving until there is sound strategy that has the defence of the country as its main goal. Once Australia decides to participate in that effort, then we move on to simple things.

A simple thing would be to demand that Defence and Defence advisers tell the truth in hearings before our elected officials. When they do not, they get charged and punished.

After that, things like breaking up the DMO should be easy to do. Simply because the DMO is a major roadblock to progress.

I would like to see a university study suggest that in a very strong way.

Until then, the Royal DMO and the Defence bureaucracy can continue to do what they want.

Pointing out that SMEs are in trouble is a good effort. However, what is needed is to name the traitors and wastrels that continue to hurt this country's defence posture so that they can be removed. Every piece of dead wood removed means money can be redirected to things that provide value.

F-35 program's "business plan" vs. the real world

So what kind of language is used in the real world with companies that have to depend on customers instead of taxpayers to make them float?

Much more harsh. I pulled the quote below from an unnamed company profile to current and potential stockholders. It is a company that does about $3B in revenue per year.

"Any business not achieving clear steps towards these targets will be restructured or exited."

Will more SME's fall in the F-35 worldwide supply chain? If so, how many of them will be in Australia?