Preparing Australia's Defence Industrial Base for Major Conflict

To be able to fight a possible major conflict, Australia's defence industrial base will need to be just as prepared, adaptable and resilient as it was in the lead-up to World War Two.

26/08/2025

<30 min

Australia's National Defence Strategy (NDS) warns of an increasing likelihood of a major regional conflict. Today's Australian Defence Force (ADF) has no experience of such wars or of the protracted, large-scale combat operations they would involve. Given this, the Chief of Army believes the ADF should exploit its professional body of knowledge to become both intellectually ready and sufficiently adaptable to meet the ever-changing demands of such a conflict. He believes these attributes may be developed by studying history with the purpose of devising, as Samuel Huntington suggested, ‘principles which may be capable of future application’.^[1]

A major Indo-Pacific war would be a strategic shock of a kind not experienced since December 1941 when Japan entered World War Two. The initial response to this conflict shattered Australia's existing armed forces. Yet, the military quickly recovered to help defend Australia and, with its allies, win the war. Australia's military of the early 1940s proved remarkably resilient.

A major factor of this resilience was the timely delivery of increasingly large quantities of technologically complicated war material from the domestic defence industry. Any future such conflict will again require extensive logistic support. To provide this, Australia's defence industry would need to be expanded and mobilised.

A useful historical example of such defence industry mobilisations is that of Australia, Britain and the US in World War Two. The three nations succeeded because they all had begun planning and implementing their defence industry mobilisation approaches several years before the war started. Their wartime success was built on a foundation of a prepared defence industry expansion.

This post draws on a paper planned for publication later this year that discusses the defence industrial mobilisation development activities Australia, Britain and the US undertook in the interwar period. The paper uses this analysis to inform thinking about preparing today's defence industry for a similar expansion in the context of a possible major regional conflict. The post, and the paper, use a framework of four alternative high-level resilience objectives that military forces can choose from when planning. The resilience objective chosen shapes how a defence industry might be best mobilised. This has flow-on implications because the manner in which defence industry mobilises then further influences the military strategy options.

		Deterrence Tasks
		Collective Defence	Independent National Defence
Attrition Rate	Low	recovering from a shock to the original form	continuing operation in the presence of a shock
	High	surviving a shock in some reduced form	absorbing a shock and evolving in response

Resilience conceptualisation

The NDS considers resilience ‘central to effective deterrence’.^[2] Resilience involves recovery from a shock and can broadly vary from: surviving a shock in some reduced form; continuing operation in the presence of a shock; recovering from a shock to the original form; to absorbing a shock and evolving in response.^[3]

The NDS sets out that achieving deterrence requires making ‘a credible contribution to a favourable regional strategic balance and being able to hold at risk forces likely to target Australian interests'.^[4] In broad terms, this encompasses being able to undertake collective defence (most likely with the US) and an independent national defence. In undertaking either of these two missions in the context of a major conflict, attrition of the force will be experienced and, although uncertain, could in simple terms range from low to high. In the table above these four factors are combined with the four resilience end states to create scenarios useful when thinking about defence industry mobilisation options.

		Deterrence Tasks
		Collective Defence	Independent National Defence
Attrition Rate	Low	recovering from a shock to the original form	continuing operation in the presence of a shock
	High	surviving a shock in some reduced form	absorbing a shock and evolving in response

Surviving a shock in a reduced form

This resilience objective might be chosen in a scenario involving collective defence and high force attrition. In a major conflict, the coalition may decide to fight a short, sharp war to try to win quickly and so avoid a protracted war with a great power that might have superior mobilisation potential.

The survival of specific key elements beyond the war becomes the measure of resilience success. Using Army as an illustrative example, the survival of capabilities useful in post-war national responses to major natural disasters—such as civil engineers, heavy-lift helicopters and landing craft—may demonstrate resilience success. Being able to operate these capabilities post-war requires safeguarding the necessary skilled people, the particular capabilities involved, the requisite maintenance equipment and maintenance item stockpiles on hold. A major driver is how long the capabilities might need to remain effective in the post-war period before the global supply chains supporting them resume.

Australia already possesses competent maintenance, repair and overhaul facilities adequate for normal circumstances. However, without access to the global support chain a better ability to undertake structural repairs might be needed, including making heavy steel plates for ship hull repairs and improved precision machining for aircraft structures. In addition, engine parts may be hard to source, which implies locally fabricating complex metal parts. Control systems bring their own complications. Inevitably, there will be issues of the original equipment manufacturers releasing the Intellectual Property (IP) information necessary.

An approach might be to use the British interwar agency factory concept of building government-owned supplementary facilities near existing maintenance, repair and overhaul facilities. These agency facilities would be run by the existing contractor. The aim would be that the combination of the old and new maintenance, repair and overhaul facilities would be able to keep the necessary capabilities operating for up to two years independently of offshore support.

Additionally, stockpiles of maintenance items that were considered too difficult to fabricate in Australia could be established near these agency facilities. The scale of these stockpiles, and the variety of items held, would depend on their expected frequency of use.

		Deterrence Tasks
		Collective Defence	Independent National Defence
Attrition Rate	Low	recovering from a shock to the original form	continuing operation in the presence of a shock
	High	surviving a shock in some reduced form	absorbing a shock and evolving in response

Continuing operation in the presence of a shock

This resilience alternative may be selected if undertaking an independent national defence in an environment of low force attrition. Therefore, independent national operations imply that technically sophisticated equipment, if lost, will not be able to be replaced until post-war. Using Army again as a case in point, such equipment could include armoured and mechanised vehicles, artillery, helicopters and specialised logistic transport assets. However, low attrition suggests being able to continue for about a year before more than half the peacetime technically sophisticated equipment is lost. Combat operations would then be a prudent balance between keeping rates of attrition low and the military strategy's demands.

In support terms, the highest use items are likely to be weapons and maintenance. For weapons production, an approach used by Australia interwar may be employed. During peacetime, the range of munitions assessed as required in such a scenario would be produced at multiple new and old government-owned and operated facilities. Agreements would be made with weapons manufacturers to transfer the IP necessary for Australia to both optimise the designs for Australian conditions and to manufacture them in Australia. Weapons manufacturers will be reluctant to transfer such IP if a competitor could access it or if Australia was assessed as likely to set up a competing weapons production line. Government-operated facilities can overcome this resistance, albeit at a cost.

As part of this, government-funded supplementary armament annexes would also be established in peacetime near each appropriate government facility. These would remain dormant until required by wartime demands. In peacetime, the equipment needed to establish such annexes would be readily available for installation, whereas after war starts this may be unlikely.

An important early decision would be concerning deeper level maintenance. If this level of maintenance is not done in Australia during a conflict, the reliability of the impacted force elements will decline. This may be acceptable in a one-year war.

Regardless, operational level maintenance will be essential and this will need access to stockholdings of the parts, components and consumables needed for the year of a higher than normal rate of effort. Additional warehousing facilities would need to be built in peacetime and stocked with the necessary items to allow wartime maintenance independent of global supply chains.

		Deterrence Tasks
		Collective Defence	Independent National Defence
Attrition Rate	Low	recovering from a shock to the original form	continuing operation in the presence of a shock
	High	surviving a shock in some reduced form	absorbing a shock and evolving in response

Recovering from a shock to the original form

This alternative is perhaps how most view resilience. The measure of success is then the time taken to return to the pre-existing force structure in a broadly functional sense. This would involve rebuilding a damaged force while recruiting and training new personnel to replace those lost.

This resilience alternative might be adopted if Australia undertook collective defence in a low attrition environment. Helpfully, the particular contribution Australia made to such a coalition operation (presumably led by the US) would be Australia's choice to make, while the US and its partners would be under some obligation to help sustain Australia's contribution. However, the US and other coalition partners' industrial bases would be stressed and doubtless giving priority to their own needs first. Resupplying Australia may take time, probably several months and maybe years.

Munitions might be the highest usage item. These could be resupplied by accessing the global supply chain and, in particular, US weapon suppliers. However, there is a high likelihood that the munitions available would be limited in type and with erratic delivery. Australia's contribution to the collective defence operation envisaged would then be shaped by the global munitions supply chain.

An alternative pathway is to adopt the Australian interwar approach to weapon production as earlier described. In this scenario though, Australian weapon production lines will be expected to also supply allies and partners, and therefore may need to have a larger capacity than in the previous resilience objective. Additional government-funded armament annexes might need to be built in such a situation.

Operational and deeper level maintenance issues would be eased in this scenario, as it is assumed access to US and other supply chains remains available. It would then be a matter for other countries as to Australia's resupply priority. An assessment of how others might make this judgement would inform the type and scale of stockpiles Australia decides to hold in peacetime. Maintenance resupply times would determine how long Australia could be involved in the coalition's operations.

		Deterrence Tasks
		Collective Defence	Independent National Defence
Attrition Rate	Low	recovering from a shock to the original form	continuing operation in the presence of a shock
	High	surviving a shock in some reduced form	absorbing a shock and evolving in response

Absorbing a shock and evolving in response

For Australia, a worst-case scenario might be undertaking an independent national defence in a high attrition environment. The large-scale invasion by Russia of Ukraine in February 2022 is a real-world example of such a scenario. Ukrainian forces suffered high attrition rates in equipment. While some was made up by obtaining military supplies from other nations, the high losses also forced a rethink on force employment and force structures. This reconsideration particularly concerned those elements that could not be quickly replaced, such as aircraft, helicopters, naval vessels, tanks and artillery. To remain in the fight required change.

This resilience state is the most difficult to undertake, particularly under the stresses imposed by ongoing conflict. However, developments in digital technology and its proliferation across most societies have made such resilience more achievable than previously.

In this scenario, the pre-existing peacetime force structure quickly declines. Consequently, significant pre-war preparations that allow a rapid force evolution on demand need to be made. A mix of defence industry approaches might be efficacious.

Weapons production could use the Australian interwar approach described earlier. To recap, this uses multiple government owned and operated factories (to overcome IP issues) each producing various weapon types with an expansion capability in-place comprising dormant armament annexes near each factory.

The same Australian interwar approach could also be used for developing new innovative technologies to a maturity level appropriate to being manufactured. As the government then owns the IP and when wartime demands required, the design of these technologies could then be quickly passed onto shadow factories to mass produce. Shadow factories were an interwar British concept involving a government funded and owned factory building another's product but being operated by a third party contractor. While useful, this approach by is unlikely to provide the full breadth of new capabilities at the speed required.

To address this, government-owned, contractor-operated facilities (a US interwar approach) run by pre-selected private companies could also be established to continually work on developing innovative technologies. These companies might further use government funding to build dormant, mass production shadow or agency factories capable of quick activation to manufacture at scale the innovations the companies have devised. At times, the shadow option would be preferable as some companies may be better at mass production than innovation; the agency concept assumes a company is good at both aspects. Both options should include extensive use of subcontractors (explained further in the paper noted).

A significant problem in this mix of methods is their operation in an environment of ongoing rapid innovation and fast design change. The network of facilities involved would need establishing well before a conflict to have the processes, subcontractors and skilled staff in place to allow a quick start on demand. Easing this somewhat is that the production is probably of lightweight small items, rather than large platforms such as warships. The facilities involved may be able to exploit 3D printing, precision machining, composite fabrication and rapid production refreshes to very quickly meet new operational demands. An extreme example is FPV drones: one Ukrainian manufacturer is producing 4,000 a day with the country overall making 5 million annually.^[5]

The Ukraine war has demonstrated that a military experiencing high equipment attrition rates can be rebuilt, evolve and expand as necessary. However, Ukraine was able to survive long enough to evolve through having a moderately large defence force, being resupplied from neighbouring and offshore countries, and having an existing domestic defence industry.

Conclusion

In Australia's last big war the role of the defence industry was pivotal. Without industry, the war could not have been fought or won. If there is another big war, defence industry will be equally important. However, as was done before World War Two, steps will need to be taken that allow a timely expansion of defence industry if and when a conflict starts. These steps will vary depending on the resilience objective chosen. Now is the time to consider, plan and implement these foundational steps.

Footnotes

¹. Simon Stuart, ‘The Challenges to the Australian Army Profession’, army.gov, 25 November 2025,https://www.army.gov.au/news-and-events/speeches-and-transcripts/2024-11-25/challenges-australian-army-profession.

². National Defence Strategy 2024 (Canberra: Defence, 2024), p. 27.

³. Brenton Prosser and Colin Peters, 'Directions in Disaster Resilience Policy', The Australian Journal of Emergency Management, Vol. 25, No. 3, July 2010, pp. 8-11, p. 8.

⁴. National Defence Strategy, op.cit., p. 22-23.

⁵. Martin Fornusek, ‘Ukraine has capacity to produce 5 million FPV drones per year, advisor says’, The Kyiv Independent, March 29, 2025,https://kyivindependent.com/ukraine-can-produce-5-million-drones-per-year-advisor-says/.

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(Layton, 2025)

Layton, P. 2025. 'Preparing Australia's Defence Industrial Base for Major Conflict'. Available at: https://theforge.defence.gov.au/article/preparing-australias-defence-industrial-base-major-conflict (Accessed: 27 August 2025).

(Layton, 2025)

Peter Layton, "Preparing Australia's Defence Industrial Base for Major Conflict", The Forge, Published: August 26, 2025, https://theforge.defence.gov.au/article/preparing-australias-defence-industrial-base-major-conflict. (accessed August 27, 2025).

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Comments

Within this area, Defence’s newest members will be exposed to the conflict spectrum and theories associated with its employment. While additional emphasis will be afforded to one’s own Service, consideration will be given to joint operations and planning processes. The topic will also include an exploration of current ADF operations and emerging technological impacts on future preparedness.

The ADF’s contribution to Australian National Power through shape, deter and respond activities will be understood in general terms. Tied with this awareness will be ADO roles and responsibilities, including civil-military relations. The importance of Defence’s contribution in this regard will be linked to a general sense of Australia’s strategic environment. Resource management fundamentals will help underpin responsible expenditure of Commonwealth funds.

All members of Defence will also need to be competent in military administration, ADF roles and structures, and undertake all initial mandatory training. This foundation will continue to develop in subsequent JPME levels and increasingly expand opportunites for Joint Stream (out-of-category) postings and roles. APS does not require core military skills.

Following on from their respective recruit or commissioning course, ADF personnel will commence their Initial Employment Training (IET). This period can include workplace experience and periods of on-the-job training.

Graduation from IET marks the formal transition from Level 1 to Level 2. It is at this point when they are considered effective in the workplace.

Defence members at this level will have a sound understanding of their own Service or domain warfare systems and capability. As they progress through Level 2, they will display a stronger understanding about the ADF’s holistic contribution to Joint Force warfighting domains. This will extend to the nature and theory of war, which has developed through an academic study of historical case studies and contemporary military issues. Importantly, such awareness will help inform their understanding of the impact of technology on current and future warfare. Awareness of gender perspectives on operations will contribute to their well-rounded application of the Profession of Arms.

By recognising the difference between complicated and complex problems, personnel at this level will ensure their problem-solving strategies and decision making are optimised. In the earlier stages, personnel will employ more transactional, linear thinking, decision support tools (such as the Joint Military Appreciation Process or variations) but they will increasingly apply alternate thinking strategies to seek more sophisticated options. Greater availability of human-machine teaming systems will progressively reduce our reliance on lower order cognitive activity and thus facilitate more nuanced considerations to complex problems.

Australia’s approach to the formulation of military strategy and its strategic environment (including international and geopolitical) will strengthen as members advance in this Level. Through both courses and experience, they will also acquire a stronger understanding of interagency strategies, policies and decision making processes.

As they progress through Level 2, Defence personnel will progressively develop awareness and then expertise beyond their initial employment category.

These broader systems and processes will expand to include one or more of the five key Joint Streams: Military Support, Operations, Capability Development and Delivery, Strategy Policy and Engagement, and Intelligence.

Within JPME Level 2, Defence personnel will become increasingly proficient in their initial employment category. Through both their formal courses (initial employment training and subsequent intermediate courses) and workplace experience, they will display competency in their contribution to military power. As they develop greater technical expertise, senior personnel at this level will become suitable for growing the next generation, by seeking instructional roles.

Those operating at this level will understand both internal Joint Force command relationships and international engagement with coalition partners. Their employment of operational art will consider instruments of national power and campaign design, while the relationship challenges between strategic, operational and tactical levels of war will be clearly understood. Continual professional development will keep Level 3 practitioners abreast of emerging trends and future warfare techniques. Expertise will be apparent in the planning requirements for force generation and the factors that shape the execution of joint operations. National and military strategic planning considerations for Volatile, Uncertain, Complex, Ambiguous and Novel (VUCAN) environments will mature. Personnel will be increasingly aware of the influence technology has on current and future warfare as well as whole-of-government response options.

Those operating at this level will be increasingly comfortable with systems thinking to perceive and influence complex adaptive systems. Various alternative thinking strategies, such as Design Thinking and Multi-Criteria Decision Making, will allow them to thrive in the challenging multi-domain environment.

Importantly, they will be able to translate complex strategic issues into tangible ideas for their subordinates.

This level is noted for its integration of civil-military functions and instruments of national power. This includes strategy and public policy development as well as contemporary operating environments and implications for military and security forces. Awareness of both Joint and multinational logistics will complement resource management systems of the Joint Force.

Expertise in one or more of the Joint Streams specific processes will continue to develop with staff and/or leadership responsibilities aligning with roles held.

Examples of the advanced knowledge base likely to be demonstrated include: One Defence Capability System (or its successor) and FIC management, Joint Force staff roles, advanced Human Resources systems and processes, Whole of Government and international engagement approaches, as well as legislative requirements associated with the relevant Joint Stream.

Through more senior category appointments and opportunities, those at Level 3 will display expertise within their specialist category employment. Completion of charge courses, deployments, exercises and pre-command courses, personnel will increasingly expand their specialist expertise to support joint effects.

Increasing leadership expectations will develop within their category’s specialist vocation.

This level is recognised for its future Joint Force planning, development and sustainment challenges. Those operating in these positions will resolve military resource challenges and understand limitations of contracted support to operations. Operational artists will be adept at integrating strategic objectives to planning through the exploitation of emerging and non-traditional concepts for joint and multinational warfare. These skills will manifest in their ability to design and lead theatre strategies, campaigns and major operations. They will also be seeking opportunities to exploit technology’s influence on current and future warfare as well as its role in whole-of-government response options.

Cognitive performance will be enhanced through active seeking of diversity and a tolerance for ambiguity. Dealing with Defence-related wicked systems will be normal.

Problem-solving will increasingly accept increased risk to reflect the greater depth of wisdom and confidence in one’s judgments. This level is also noted for strategic thinking, visioning and championing a learning culture.

Level 4 leaders will be strong advocates of divergent thinking in their subordinates (when appropriate), to ensure Defence continues to improve systems and processes.

Those operating at this level have a very clear understanding of the impacts on national Defence policy and strategy. They will positively influence military capability development to enhance relevant instruments of national power. A strong awareness of contemporary global affairs and trends, combined with a deep understanding of international relations theories, will enhance their management of national military resources to support national security and foreign policy. Gender, peace and security impacts will continue to guide their strategic policy development.

Those operating at this level will be considered Generalists who possess a wide range of skills and expertise in multiple Joint Stream areas. With the exception of a select few specialists, these personnel will have actively sought out opportunities to broaden their versatility beyond their specialisation. Typical areas will include: strategic planning, civil-military relationships, campaign planning, strategic governance, business and financial acumen, One Defence Capability System leadership, strategic direction setting of emerging capabilities, policy leadership for future capability needs, and industry engagement for sustainment and growth.

At the enlisted level, Tier B and C warrant officers provide a vital link across the ADF, not only championing 75% of the ADF at the strategic table but also helping translate the top-down messaging. To do this, they must excel in understanding both worlds. Strategic level warrant officers also play a pivotal role in the command team relationship not only as advisors to decision-makers, but also in the strategic leadership of organisational culture, ongoing professional development, and the ideological underpinnings of the Profession of Arms throughout the ADF’s workforce

For those still in key roles within their primary category, there will be strong leadership expectations to ensure the delivery of capability, strategic advice on capabilities, limitations and future needs, as well as shaping the professional development system to grow future generations within the field.

Senior officers and their equivalents will be comfortable in crisis leadership situations across all aspects of Defence. They will be highly effective when commanding Joint Task Forces or conducting influence operations. This performance will come from a deep understanding of Joint Force attributes, structures, capability requirements, emerging concepts and risks affecting military strategies and campaign development. Their strategic leadership abilities will extend to synthesising operational lessons learned across all Force elements including deployment, employment and sustainment. All of these areas will be enhanced by their astute awareness of political and resource implications in joint warfare strategy and planning.

Multi-agency, political and global wicked systems are an expected reality of Level 5 roles. Those operating at this level will have the cognitive agility to respond comfortably with these challenges by exploiting paradigm shifting approaches (such as nudge theory) to improve systems to a more advantageous state.

Senior leaders at this level will be expert in strategic communication and information impacts. They will comfortably implement grand strategy through future-focused policy formulation and employment of armed forces. Their expertise in national intelligence community and architecture will help them influence national security and foreign policy. The implications of contemporary challenges on national security strategies will be understood. This depth of understanding will be drawn from a strong awareness of national powers’ characteristics, capabilities and limitations combined with the civil-military relations necessary to deliver national power instruments.

Senior officers and SES band public servants at the highest echelons will be skilled in decision cycles and information/knowledge management systems. They will understand Government processes for capability acquisition and how to exploit technology enablers within enterprise systems.

As leaders of Force Element Groups (FEGs) or Joint Task Forces (JTFs), senior military officers will integrate emerging capabilities and technology to both maintain force-in-being deterrence and deliver operations to meet Government response options. In policy and advisory roles, they will exploit emerging capabilities and technologies when shaping military strategy, policy development and implementation. Industry engagement will enhance support of sovereign capability and Australia’s economic prosperity

A Service Warrant Officer is a unique appointment within each Service, one of influence and advice rather than Command. E10 Warrant Officers have strategic leadership responsibilities as Command advisors to Senior Leadership of their Service to provide critical insight to key decisions through an alternative lived experience and with support from Senior Enlisted Personnel to give a balanced, informed and analysed perspective from the workforce.

They also play a pivotal role in the organisation’s leadership, able to utilise their professional knowledge and experience to provide context and make the complex simple and the simple compelling. The unique appointment ensures the Service WO stays connected to contemporise issues for the workforce and represent those gaps and opportunities at the appropriate delegated level.

Service Warrant Officers deliberately steward, communicate and are genuinely dedicated to their Service; while always supporting strategic organisation culture and setting the conditions for long-term success.

Service Warrant Officers have a concurrent liability to foster relationships supporting Australia’s national power through networking and encouraging active engagement with counterparts to promote a commonality of purpose: – Friendship, Partnership and Leadership.

Defence Mastery

Military Power Joint Mastery defence-poa-level4

Integrated National Power defence-poa-level5

Theatre Operations Strategic Art defence-nsps-level4

Biography

Peter Layton

Dr

Dr Peter Layton is a Visiting Fellow at the Griffith Asia Institute and an Associate Fellow RUSI (UK). He has extensive aviation and defence experience, is the author of Grand Strategy and the co-author of Warfare in the Robotic Age.