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Australian Defence Industries (ADI)

In May 1989, Australian Defence Industries (ADI) was created as a government-owned corporation to take over the major defence industry facilities still in government ownership. Australian Defence Industries (ADI) superseded the Office of Defence Production which had been established within the Department of Defence to improve the competitiveness of government owned dockyards and defence establishments. The Defence Minister explained that the launching of ADI was part of broader process to 'step away from the bureaucracy and politics' and make government factories and dockyards 'an integral part of Australian industry'.

Its four operating divisions were naval engineering at the Garden Island dockyard, ammunition and missiles, weapons and engineering and military clothing. As a prime contractor in the Australian naval shipbuilding market, ADI's main projects were the build of six minehunter vessels and the ongoing upgrade of the FFG-7 Adelaide class frigates.

The Defence Minister detailed the government's approach of managed competition in the naval shipbuilding sector: "Defence, like the economy at large, is best served by an industry structure that can hold its own in the world market…We have not abandoned the idea of nurturing particular capabilities in special circumstances, but government support of that kind is no longer an easy way out for firms unable to compete in the commercial area… Our objective is to foster Australian prime contractors able to achieve high levels of local content without subsidies. The ship building, ship repair and engineering industries exemplify this approach."

ADA [Australian Defence Apparel], Australia's leading designer and manufacturer of specialised protective clothing, dress uniforms and ceremonial apparel, was spun off of ADI in 1995.

ADI's large site in St Mary's in western Sydney was being progressively being repatriated for residential development with their munitions capability being consolidated in Benalla, Victoria and their testing facilities being sold to Vipac Engineers and Scientists. ADI manufactured the Steyr AUG based, F88 Austeyr assault rifle at Lithgow Small Arms Factory. ADI also produced a variety of smokeless powders for reloading rifle, pistol & shotgun cartridges, production of Australian armoured vehicles, such as the Bushmaster and producing Australian specific modifications to imported military vehicles.

On 14 June 2001 the Australian government announced its decision to select the company Transfield Thomson-CSF Joint Venture for the acquisition of Australian Defence Industries (ADI), as part of the ADI privatization process. ADI was Australia’s leading defense contractor, with revenues of approximately $A550 million (335 million euros) and 2800 employees. Its ongoing contracts included the production of the Huon class minehunters for the Royal Australian Navy, and the Australian government recently also selected the company for the FFG frigate upgrade program. Furthermore, ADI is the Australian leader for Command and Control systems, communications and munitions.

The decision to select Transfield Thomson-CSF Joint Venture’s bid was the first step in the sale, with transfer of ownership expected to be effective at the end of September 1999. Through the acquisition, Transfield and Thomson-CSF intend to strengthen ADI’s technology expertise and system integration capabilities, consolidating the company’s leadership position in the Australian defense market.

For Transfield, which is Australia’s leading developer of public infrastructure and has extensive experience in privatization, the acquisition of ADI is a strategic investment to increase its role in regional defense and high technology industries. Transfield is one of Australia’s largest engineering and infrastructure companies, generating approximately $A1.7 billion (1,04 billion euros) with 7,000 employees.

Thomson-CSF’s acquisition of ADI was fully in line with the Group’s ongoing strategy of alliances and partnerships:

  • A "multi-domestic" and international strategy, in Europe and outside Europe, which enables Thomson-CSF to operate a global network while pursuing the development of a strong local presence, and to diversify its centers of excellence geographically;
  • A strategy aiming to reinforce systems capabilities: ADI has also a systems integration experience in naval program;
  • A strategy aiming to reinforce service provision: ADI will bring valuable activities in managing concessions for the australian Defense Ministry.

There would be opportunities for synergies between Thomson-CSF and ADI in naval combat systems, surveillance systems, communications, and simulation and training. Thomson-CSF had been established for 35 years in Australia and already employed 700 people. With local subsidiaries specialising in sonar systems and air traffic control, the company has consistently demonstrated its commitment to the development of Australian industry. Thomson-CSF is a global leader in professional electronics for civil and defense markets. With some 50,000 employees and sales of 6.2 billion euros in 1998, the company develops and supports advanced electronic equipment and systems, with a broad portfolio of businesses ranging from components to large-scale systems.

In October 2006, the French military company Thales increased its 50 per cent share in Australian Defence Industries (ADI) to full ownership. Getting the US to agree to the takeover was the biggest hurdle, given ADI's involvement in military projects involving US-sourced technology. The bid by Thales in 2002 to acquire the 50 percent stake in ADI held by Transfield was dropped after it became clear the US opposed the takeover. The new company, to be known as Thales Australia, employed 3500 people and had a turnover of about $1 billion.

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Page last modified: 27-03-2012 18:13:01 ZULU