Why does Australia invest so heavily in Defence yet struggle to build sovereign industrial capability? I explore the missing layer of Australian-owned engineering and integration businesses I call the Hollow Middle, why it matters for Australia's Defence industry, and why I chose to tell this story through a book rather than another policy paper.
Some Questions Stay With You Longer Than You Expect.
I first encountered Defence capability as a submariner. Later, I saw it from the factory floor and the boardroom while running an Australian engineering business, and more recently as an adviser watching from further back. Across all of it, one question kept returning. Why does a country with serious Defence investment, talented engineers and capable businesses still struggle to build the sovereign industrial capability it says it needs?
Part of the answer is in the shape of the industry itself. At the top, a handful of major contractors. At the bottom, thousands of small businesses supplying parts and services. Between them, a thin layer of Australian-owned companies able to design, integrate and take engineering responsibility for complex systems. That absence is what I came to call the Hollow Middle.
The problem is not how much Defence work happens here. We can assemble equipment and maintain sophisticated platforms without holding the authority or the knowledge to change them ourselves. If a part becomes obsolete, a supplier disappears, or a requirement shifts, can Australian industry redesign and integrate a solution, or must we go back overseas to ask? For me that became a sharper test of sovereignty than the value of local contracts or the number of local jobs. The need is real. The talent exists. But the industrial structure needed to connect them is often missing.
Why Now?
Australia is making Defence decisions whose industrial consequences will run for decades. The ships, submarines and systems we buy today will need adapting long after the decisions behind them are forgotten, and those same decisions quietly set where engineering authority will live, and who gets to change things when circumstances change. More money does not fix this on its own. We can become more capable operators of equipment while staying dependent on others for the engineering that shapes its future. That contradiction is being locked in right now, while the cheques are being written.
Why A Story, And Not Another Paper?
I first put this argument into print in 2019, with Mike Kalms. The book develops that early argument through years of observation and experience. For years I kept explaining it the way you have to at a dinner party, on the back of a napkin: a few boxes, an arrow or two, here is who wants the thing, here is who can build it, and here is the gap in the middle.
The napkins became models. The models became articles. Eventually I realised another policy paper was not going to carry what I wanted to say, because the system is made of people, mostly making sensible decisions inside the incentives in front of them, whose choices still add up to an outcome none of them intended.
A story also does something a report can’t. You don’t need a security clearance, an acronym dictionary or a decade in Canberra to follow it. And underneath it sit the same simple models I
once drew on napkins, the ones that make an opaque system legible: who optimises for what, why a funding line isn’t a purchase order, why the middle keeps hollowing out. You can read it as a story about people. You can also come away with a handful of tools for thinking about Defence industry yourself, whether you build in it, buy from it, or make policy about it.
Because it does ask a lot of the people inside it. Too many small businesses invest in anticipation of opportunities that never become contracts. Too many engineers, owners and families absorb the cost of decisions made in rooms they will never see. That cost is not only carried in companies and careers. It is carried at the kitchen table. I have been in that arithmetic, and so have most of the people I respect. We do not talk about it enough.
My hope is modest. That you recognise something familiar, question something you had come to accept, and keep one question whenever we talk about sovereign capability: can Australia only operate and maintain what it buys, or can it adapt and reconstitute that capability itself when the situation demands?
That is why I wrote The Hollow Middle. And it is why I think the conversation matters now.
Turn Insight Into Action.
Williams Advisory works with Defence SMEs, primes, and investors to turn capability into customer pull. Engagements begin with a Relevance Review — a structured diagnostic that identifies what is limiting growth and what needs to change to be pulled into the programs that matter.
If this reflects where your business is, book a Relevance Review or connect directly to start the conversation. For a deeper understanding of the thinking behind the work, explore The Execution Gap.
Start the Conversation | Download Excerpt From The Hollow Middle
