Gavin Pearce: Defence manufacturing spread makes military sense

The sector was traditionally centred in Western Australia and South Australia, but having facilities concentrated in relatively small areas would leave them more vulnerable to a devastating attack if a war started, the former soldier said on Thursday.

"We need to spread our capability across the country," Mr Pearce said.

"It's geographically mitigating risk.

"It's now opened up; it's not all Western Australia and South Australia."

Mr Pearce was speaking as a federal government announcement that could bring big benefits to Tasmanian manufacturing approached.

North-West manufacturer Elphinstone Pty Ltd stands to get a significant share of a deal worth up to $21 billion if the procurement decision goes its way.

Elphinstone is involved with South Korean-linked Hanwha Defense Australia's bid to win the contract to build 450 infantry fighting vehicles for the army.

If the bid was successful, the hulls would be made in Tasmania and the vehicles assembled in Geelong.

The other contending bid is led by German-linked Rheinmetall Defence Australia.

Mr Pearce expected the announcement of the successful bid within a week or so, saying it would need to be done before the March 29 budget.

Elphinstone recently gained a contract to take part in making self-propelled howitzers and ammunition resupply vehicles.

Mr Pearce expected that would help lead to increasing opportunities for Tasmanian firms.

"I see that as them getting on the first rung of the ladder," he said.

"I see this as an enabler."

He listed a range of Tasmanian companies working on or seeking defence projects, and expected they were nowhere near their full potential yet.

He was also optimistic it could lead to big export opportunities.

"I think the confidence to try the next horizon will come and hopefully it's got real potential to export defence smart things around the world," he said.

"We need to make that investment in the next generation of smart people.

"That's what I want to see."

Mr Pearce said coronavirus had "re-triggered" Australians' desire to have things made in their own country.

"We're never going to compete with cheap labour ... what we can compete on is the smart, the innovative, the breaking the next threshold," he said.

"We've got a lot of smart in Tasmania.

"Now's our chance.

"We've got to the first rung on the ladder.

"That will grow exponentially if we make the right investments."