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In partnership with the Defence Science and Technology Group Axiom started production of the DST-designed face shields last week, with 600 of them already handed out.
Axiom will make about 1000 face shields per day, which will help sustain supplies over the months ahead, according to defence minister Linda Reynolds.
Reynolds said boosting domestic manufacturing capability and capacity would create a pathway through to manage the virus.
"This initiative will not only help boost the supply of face shields across the country, but also expand industry capability within Australia," she said.
"The Australian-made shield is lightweight so it can be worn comfortably for long periods, made from materials which Australia has ready access to, and is cost-competitive to manufacture compared to imported masks."
Reynolds said the initiative provided sovereign manufacturing capability to the medical industry.
Industry, science and technology minister Karen Andrews said there were several advanced manufacturers with defence contracts working at the cutting-edge to help in the fight against COVID-19.
"Whether it's expanding into medical supplies as we're seeing in this case or expanding into space or other precision manufacturing, our advanced manufacturers will help Australia come out the other side of this pandemic stronger than ever," she said.