Defence Businesses

The Varley Group

That is the view of Victor Ugarte. Of course he’s not entirely impartial, because he heads up that division and as he told us recently, the company spent several years developing expertise and capacity to compete for the LAND 121 (Overlander) project that will give the Australian Defence Forces, a modern and more flexible fleet of land-based vehicles intended for use over the next three decades in all kinds of theatres (see sidebar for details).

“We were competing for this project as far back as the early part of the last decade. We certainly appreciate this opportunity for Varley to grow. This is the largest contract in the history of Varley Defence.” The contract, with Mercedes-Benz Australia/Pacific, was signed in November 2008 following almost three years of tendering and negotiations and will mean Varley will be busy producing vehicles through 2014 and possibly into the following year. Victor says the contract value started at around the $50 million mark, but late last year Defence made a decision to increase its purchase of Mercedes G-Wagons for tactical training purposes (in phase 5 of LAND 121), almost doubling the contract’s monetary significance to Varley. “It is an excellent opportunity for us to once again demonstrate not only to our new customer Mercedes-Benz but also to the Australian Defence Force that we have become specialised in the design, development, production and integration of military equipment in products such as military hard shelters, vehicle bodies and modules, and in other areas such as military aircraft servicing and maintenance where we supply specialised ground support equipment, both nationally and internationally.”

Varley is supplying the LAND 121 vehicle modules to its customer Mercedes-Benz, who is then responsible for the final vehicle integration at its facility in Mulgrave Victoria from where all vehicles are then delivered to the end customer – the Department of Defence. The 4×4 and 6×6 cab chassis are delivered directly from the G-Wagon manufacturing plant in Austria.

Although the module integration is seamless, requiring an inter-connecting cable for power and lighting, and a number of mounting points to the vehicle chassis, “the vehicles bring a lot of expertise and capability to the fleet, more than simply off-the-shelf products.”

A great deal of innovation has gone into the designs and Victor says Varley’s experience in related sectors has been invaluable in providing input to the development of these new vehicles – examples being the surveillance and ambulance variants in LAND 121, which contain technology used by Varley’s specialised vehicles division that builds civilian emergency and rescue vehicles. Every module has gone through a comprehensive systems engineering process involving a review of the requirements for feasibility followed by conceptual design and a series of reviews with the prime contractor and the end customer to ensure the requirements met the user’s performance expectations. Prototype development and acceptance testing and evaluation phases followed. Victor says Varley’s experience in these fields made it possible to meet the challenge and get it right first time, on time and within budget.

The choice of a base chassis/engine built in Europe was an obvious disappointment to local hopes but there was clearly no Australian product that would either match the requirements or could at economic cost be adapted to meet the rigours of a defence role in extreme operational environments such as the tropical Northern Territory of Australia. Indeed, the G-Wagons will largely replace the existing aged fleet of Land Rovers (and Land Rover itself is now no longer a British company but Indian). The Mercedes-Benz product is well known in both commercial 4×4 versions and a wide variety of competent and tough off-road applications in industry and defence worldwide, so its adoption for Australia’s armed forces was logical.

But local content has been maximised by Varley, which in its Hunter location is surrounded by a mini ‘manufacturing and engineering hub’ of small and medium enterprises that are expert in related applications and have been adopted as suppliers to the project. “We have more than 50 suppliers that are delivering materials and components, in many cases pre-fabricated, to the program. It feels good to know that we are able to contribute to the local economy.”

Victor says it is highly likely that the experience these companies (including some further afield around the country) have gained by being part of the LAND 121 project supply chain will stand them in good stead and, “will hopefully lead to opportunities in other domestic and global military programmes in the future.”

Given Varley’s resources, he adds, “We are doing our best to bring more suppliers into our supply chain. This is a good thing because we are setting the bar higher; building a defence industry base in the region and looking forward to working with them.” It is always a precarious industry in some ways – defence budgets are at the whim of Federal politicians and can be pruned or expanded to suit – but LAND 121 has given Varley the financial security to not only maintain its in-house employment levels through a difficult economic phase but also consider expansion, targeting other programmes (and later phases of LAND 121 are still up for grabs) and also opportunities at more international tier-one customers. “We are looking forward to working with the Defence Materiel Organisation and defence prime contractors on integration of deployable military systems on the new vehicle fleet.”

It should be made clear that Varley is not just knocking together some vehicle bodies. The equipment is highly sophisticated as well as rugged and includes the latest materials and manufacturing technologies. Beyond LAND 121, the company is now looking at an involvement in programmes for battlefield communication systems and deployable air traffic management and control systems, among others. “We have been approached by primes because of our knowledge of army’s new vehicle platforms and to leverage our capability to produce transportable mission systems.” There is also the long-term opportunity afforded by the need for maintenance of the new fleet – some 2,200 4×4 and 6×6 vehicles which must serve for at least 15-20 years. Defence and aerospace currently accounts for around a quarter of Varley’s turnover; Victor has his eyes on increasing that proportion over the next few years not only by expanding the customer base but also by increasing the group’s capability.

In its defence business, Varley has long had its foot in the door, but clearly LAND 121 has shoved that door wide open. “We are a supplier of system solutions and in an excellent position to be able to service the needs of any prime’s capability requirements in the future.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 5:33 PM AEDT