"The main challenge is getting the licensing, the certification and getting the sort of middle of each of our respective bureaucracies to open up, take risk and transfer IP effectively," said Pat Conroy, the minister for defence industry.
AUKUS Pillar Two, GMLRS and the mechanics of cooperation
Speakers at the 2026 ASPI Defence Conference framed AUKUS Pillar Two as an active laboratory for industrial integration. Jennifer Moroney of RAND called Pillar Two an "unprecedented experiment in technological minilateralism," a mechanism that has allowed Australia and partners to share sensitive technologies that were previously difficult to transfer. Minister Conroy described Australia’s GMLRS battlefield rocket production program as functioning like a "pipe cleaner" — a practical project that exposes the legal, regulatory and industrial obstacles to producing US missiles in Australia. Together, those descriptions underline a simple proposition voiced repeatedly at the conference: hands-on cooperative programs reveal the precise policy fixes required to make deeper industrial ties work.
Redarc and the SME pivot to defence
Concrete examples at the conference showed how Australian firms are shifting to meet defence demand. Redarc, known for civilian four-wheel-drive vehicle parts, has retooled into defence work; defence now accounts for 15 percent of its business. That pivot illustrates both opportunity and exposure: small and medium enterprises gain new revenue but become sensitive to the volatility of defence markets and to Australia’s reliance on a single dominant buyer. As Matt Opie of Defence SA noted during the panel "Industrial Resilience and Australia’s Freedom to Act," the size of a prime contractor can buffer volatility — but so can access to other markets. For many SMEs, that access will be the difference between fragile growth and sustainable industrial capability.
European and Japanese templates for industrial cooperation
Conference speakers held up examples from elsewhere in the world as instructive. The European Union’s Security Action for Europe was cited as a scheme that enables common procurement across member states to close capability gaps without every country building full systems end to end. Kristijonas Vizbaras, co‑founder of Lithuanian–Danish company Brolis, described how collaboration lets each country "do what it did best" and lifts barriers to components — for example, France and Germany producing semiconductor components that Lithuania used to manufacture weapons domestically. Japan’s reforms were presented as a parallel lesson: Osamu Nishiwaki from the Ministry of Foreign Affairs of Japan explained that Japan changed rules to make it easier to export complete systems — from interceptor missiles to warships — and critical materials and components intended to support production in allied countries, including Australia. The conference takeaway was plain: cooperation often requires domestic reform as much as diplomatic agreement.
Regulatory obstacles: licensing, certification and IP
Speakers returned to the same bottlenecks: licensing, certification, and intellectual property transfer. The argument was consistent — practical cooperation uncovers the precise regulatory frictions that hinder industrial integration. That reality is why AUKUS projects and co‑production programs are seen not only as capability projects but also as instruments to force bureaucracies to change. The policy work ahead, the conference implied, is less about grand strategy and more about aligning export controls, procurement rules and certification pathways so that trusted partners can buy, build and integrate components across borders without disproportionate delay.
What this means for Canberra, Australian manufacturers, and allied partners
- Canberra (policymakers and regulators): must prioritise reforms to licensing, certification and IP frameworks that practical cooperation has already exposed as blockers; government-to-government agreements will be central to unlocking broader market access for Australian firms.
- Australian manufacturers (SMEs and prime contractors): will keep adapting civilian lines into defence work — firms like Redarc already have — and will press for diversified export pathways and partner supply chains to reduce dependence on a single domestic buyer.
- Allied governments and industry partners (AUKUS countries, Japan, South Korea, India, the EU and NATO members): can offer scale and specialised inputs that make shared supply chains viable, but deeper integration will demand legal and regulatory adjustments on both sides.
Australia’s strategy, as the conference discussion made clear, is not binary: it need not choose between self-sufficiency and dependence. Instead, industrial resilience will be built in factory floors and through the agreements, regulatory reforms and trusted partnerships driven by Canberra. The practical experiments — AUKUS projects, GMLRS production, and bilateral minilaterals — are doing more than produce capability; they are mapping the route for policy change that must follow.
https://www.aspistrategist.org.au/australias-defence-industry-needs-allies/
