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New Zealand - Defense Industry

New Zealand has a small defence industry in the purest sense, but a number of companies have developed a relationship with the NZDF which is mutually beneficial. Some of these companies have banded together to share their knowledge of this market, arrange joint ventures where appropriate, and pool resources for domestic and export promotion.

The New Zealand Defence Industry Association is an association of about 40 companies, most of whom supply the NZDF, and are interested in exports to other defence forces. Activities of the Association include regular meetings with NZDF and MoD personnel, trade missions overseas, lobbying the NZ Government on defence industry matters and an annual Defence Industry Forum which is the only NZ opportunity for industry and defence to meet face to face outside of specific activities such as discussing contracts.

The New Zealand Defence Industry Association [NZDIA] was formed in 1993, to encourage New Zealand companies to contract for the ANZAC frigate project through joint action. It provides market and other information to members for general defence opportunities as well as specific projects. It also provides networking opportunities for member companies and encouragement to form liaisons and joint ventures where their particular skills are complementary, and provides networking opportunities for members with New Zealand Defence Force (NZDF) and Ministry of Defence (MOD) personnel, who are active supporters and participants in activities.

The NZDIA promotes and organises the annual New Zealand Defence Forum, generally held in October of each year. This Forum brings together Australian and New Zealand Defence purchasing interests supported by high level New Zealand Ministerial involvement. A major feature of this event is the Awards Dinner at which Awards of Excellence are presented by the Minister of Defence to New Zealand companies that have demonstrated innovation and commercial success. Details of each Defence Industry Forum are publicised on this website.

The Government's procurement policy approach supports its sustainable industry and regional development objectives, through enhanced identification of competitive opportunities for domestic enterprises and their capabilities to exploit those opportunities. It does not however, allow the Ministry of Defence to use its purchasing as a direct lever for industry or regional development, for example, through domestic price preference or mandatory offsets (requirements on Government buyers to obtain commitments from overseas buyers to assist domestic industry). The Ministry of Defence will not seek offsets, however tenderers may voluntarily make offset proposals. The Government recognises that commercially viable proposals may offer worthwhile and economically sound benefits for New Zealand.

The ANZIDECC directory is the endorsed purchasing guide of the Australian Department of Defence and is used as a resource to identify new sources of supply. The directory is published annually in hard copy and is supported by a continually updated website. Over 3,500 suppliers to the Defence Industry are listed in ANZIDECC, which has been published since 1974. The Project Procurement Advisor, Industry Capability Network, updates items in the catalogue relating to New Zealand industry.

The Industry Capability Network (ICN) connects businesses with major projects in New Zealand and Australia. The Ministry of Defence's Project Protector involved building seven new ships to be owned by the Royal New Zealand Navy and used for a range of New Zealand government agency tasks, in addition to at-sea training for the Navy. When the tender to build the vessels went out (May 2003), it was agreed that there should be a level of New Zealand industry involvement - but only if it was cost-effective and met the required quality.

Reflecting revised Government Procurement Policy, there was no specific level of New Zealand Content, or offsets, prescribed. "We used to request offsets for these big projects, requiring a certain amount of New Zealand content," says Gary Collier, Project Director for Project Protector at the Ministry of Defence. "We no longer can. New Zealand products and services must be utterly competitive to be selected for a project like this."

The aim was for the contract, which in July 2004 was awarded to Australian-based prime contractor Tenix (now BAE Systems), to include NZ$110 million of New Zealand industry content. In fact, about $134.5 million was spent in this country, spread over 85 different companies. The ICN, with its goal of substituting local products for imported ones wherever possible, was integral to exceeding that target, Collier says. "Without ICN, it simply wouldn't have happened. They put Tenix in touch with appropriate New Zealand companies, and got domestic industry on the radar."

Kawerau-based Allied Industrial Engineering (AIE) was one of the domestic companies that benefited, winning contracts worth more than $1 million to make watertight doors for the Navy's new Off Shore Patrol Vessels as well as rudders and P brackets for its Inshore Patrol Vessels. The ICN's ability to keep companies like AIE supplied with up-to-the-minute information was pivotal to them clinching work on Project Protector. Knowing what was coming up, who to contact, when and how, was pivotal to the firm being successful, according to AIE contracts manager Jevon Priestley.

Whangarei based McKay Electrical was another company that benefited from ICN's involvement, winning a tender to supply electrical distribution systems for both Inshore and Offshore Patrol Vessels worth approximately $9 million. Richard Harrison, the ICN Project Procurement Advisor worked on Project Protector to raise the prime contractor's awareness of New Zealand industry, as well as helping New Zealand industries to engage with the right people within the project.



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