Varley wins battle for army truck contract

LOCAL BRAND: Varley Group is to build trucks for the military.
LOCAL BRAND: Varley Group is to build trucks for the military.

HUNTER engineering company Varley Group has won a $40million contract to build army trucks a year after it was locked out of the lucrative defence deal.

And that figure could be ‘‘nearly doubled’’ if a potential second phase goes ahead, which should happen, Varley chief executive officer Jeff Phillips said.

He said Varley was ‘‘very happy’’ with the five-year contract to build 800 military truck bodies as part of German group Rheinmetall Mann’s 2500-truck deal  with the Department of Defence.

‘‘It proves, too, that we are competitive with overseas suppliers, not only in our design skills and price but, what they’ve finally found out, is that Australian companies are a lot easier to work with,’’ he said.

Paterson MP Bob Baldwin said the deal, which is expected to create 75 high-end trade and engineering jobs and includes a 15- to 20-year flow-on maintenance contract, was ‘‘good news for Varley, good news for jobs’’,  ‘‘critically important’’ for the Hunter and ‘‘great news for our national security’’.

The contract comes on the back of a probe instigated by the federal government into Rheinmetall’s subcontracting process.

The German company’s $1.6billion contract with Defence specified 35per cent of the content must be Australian.

The investigation found Rheinmetall was going to build a skeleton company in Australia in an attempt to disguise the fact it would be working with an overseas subcontractor, Mr Baldwin, who is also secretary to the Minister for Industry, said.

‘‘That was totally, totally unacceptable,’’ he said.

‘‘We expected an honest 35per cent Australian content.’’

Mr Baldwin said he was ‘‘personally glad’’ that Rheinmetall had decided to award the contract to Varley before the investigation had concluded.

‘‘Varley is held in high regard by both sides of government, known for its ability to solve engineering problems where others have failed,’’ he said.

The locally owned engineering group was shocked when it was cut out of the deal between German company Rheinmetall and Defence last year after it worked with the German subcontractor to help it win the $1.6billion tender to replace the army’s fleet of trucks.

When Rheinmetall announced its contract win last July, it said it and Germany’s MAN Truck and Bus AG would work with  ‘‘local [Australian] partner companies’’ to supply ‘‘an extensive fleet of advanced logistical vehicles’’.

Mr Phillips said  the contract would mean an influx of high incomes to the region and opportunities for local subcontractors and material suppliers.


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