Australia’s war readiness has driven a major Australian defence manufacturer to switch focus from drones to rockets and missiles. Despite years of multi-million dollar growth and export success with drone manufacture, DefendTex is now primarily focused on defence equipment that can be made from Australian materials.
“The problem with anything that has electronics in it, whether that’s an unmanned ground vehicle or a drone, is the dependence on an international supply chain,” says DefendTex founder and CEO Travis Reddy. Unlike the US and Europe, Australia does not have a semi-conductor foundry. Sourcing supply from Taiwan could be affected by China’s position.
“If we’re at war, our ability to resupply will be non-existent because we can’t get things from America or from Europe because our potential adversary sits in between us and them,” Reddy adds. “Certainly not in the quantities that we need, and certainly not at a cost that that is able to be supported by a country our size.”
Australia has the raw materials needed to make a rocket, so DefendTex doubled down on developing that capability. Unlike missiles, rockets are unguided and do not require electronics. “We try to design things that can be optionally guided,” Reddy says. “While we have access to electronics, we can make them smart and and very accurate. And if we lose that, when everything north of the line is the enemy, what you actually need is combat mass.”
With a degree in computer science from Monash University and 24 years in the Australian Army Reserve, rising to the rank of captain, along with years of successful business development, Reddy had the skills and knowledge to take on a failing defence manufacturer and turn it around.
He used funds from the 2007 successful international sale of intellectual property of a company he founded to buy into a failing defence business, Metal Storm. “I studied the company in detail, and I could see where they were going wrong,” he says. “I could see the potential for the technology.”
Reddy tried to convince the Metal Storm company board to adopt his turnaround plan, but he was ignored. Within months the company went under. In 2014, he bought the company assets out of liquidation, only to find the Metal Storm technology was fundamentally flawed.
Then, in 2016, the Army announced an inaugural Army Innovation day, intended to assess unsolicited ideas. Reddy came up with the idea of Drone40, a piloted flying grenade, long before Ukraine jumped feet first into drone technology to fend off the Russian invasion. He and his technologists made a crude prototype of the drone, and Reddy decided take a risk to make a big impression on the army chiefs, “because it was make or break for us.”
He came up with an extremely effective, but potentially disastrous plan: he would stand on the event stage, make his presentation and hold his hand out. The drone pilot, who had about an hour’s drone-flying experience, would fly the drone into the Canberra event hall, fly it around and over the generals’ heads, and then land it on Reddy’s hand.
“That was the only demonstration I think I’ve ever done that actually worked flawlessly,” he says. DefendTex was awarded seed funding to further develop the concept of Drone40, which has now become a multi-million dollar product. “If it wasn’t for Army Innovation Day 2016, DefendTex and its 140 employees wouldn’t be here,” he adds.
Since those heady days, DefendTex has been on a long, slow and successful climb, developing new ideas for the defence industry, without much financial support. “There are many problems trying to run a defence company in Australia, and one of them is finance,” Reddy says. ESG guidelines have stymied DefendTex’s ability to borrow money for expansion, so growth has to be funded by winning contracts.
Suggestions of venture capital funding annoy him. Venture capitalists have to get a huge return for their investment, and often the only way to do that here is to build a small Australian company up and then sell it to one of the big international defence primes.
This means Australia ends up without any sovereign capability – “which is the exact problem we were trying to address”, he says. “Government as a ministerial level continues to think that venture capital is potentially the answer to the problem, and it’s certainly not,” he adds.
DefendTex products now include a range of drones and uncrewed land vehicles, which currently make up about 40 per cent of the company’s focus. Rockets and missiles are not listed on the DefendTex website, “because the people who need to know about them already know about them,” Reddy says.
The company’s focus switch has had difficulties: rockets and missiles can be hard to build and hard to sell. “Anyone can build a drone in their backyard, as Ukraine shows,” Reddy says. “While you can have differentiators, at the end of the day, a drone is a drone is a drone. But the barrier to manufacturing rockets and missiles is much higher. It’s technically more challenging. You can’t just buy a couple of components off eBay and put something together.”
DefendTex can manufacture rockets at speed, but winning US or Australian government approval for equipment is something else again.
The company is now supplying Soviet-type 122 millimetre Grad rockets to Ukraine (usually bought by European nations and donated to the beleaguered nation). Ukraine has the launchers for these rockets, Reddy says, and it is not too worried about approvals – it simply wants combat mass.
He believes that like Ukraine, Australia should wholeheartedly embrace the concept of assymetric warfare. “We just don’t have the numbers to be the superior fighting force,” he adds. “We’re just too small, so you’ve got to fight smarter, not harder.”