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Ansys positioning itself to take advantage of defence sector growth

14th July 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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The South African defence sector is poised for growth on the back of the 2014 Defence Review, creating an opportunity for private companies to assist the State in meeting its targets, engineering and electronics firm Ansys CEO Teddy Daka told Engineering News Online on Monday.

He said while the State had indicated that it wanted to increase its defence expenditure from 1.1% of gross domestic product (GDP) to 2.4% of GDP, it did not have the capacity to do so on its own.

Therefore, South African companies, such as Ansys, had to position themselves to take advantage of this to ensure that the country did not find itself “once again importing products that should not be imported”, he said.

Daka explained that this tied in with Ansys’ strategy of becoming an intellectual property- (IP-) led company and an original-equipment manufacturer (OEM) in its own right.

“From an electronics point of view, South Africa is well positioned, relative to other countries in the world. We have good engineers, but we haven’t exploited it enough as businesspeople. We have become complacent, [because] it’s much easier to represent another vendor or OEM when some things actually require a South African solution,” he stated, adding that this was what Ansys was aiming to change.

Daka added that in the defence sector, it was a good thing that government had realised that there were certain strategic assets and IP that should not be in foreign hands, such as command and control systems.

While not many local companies had the capacity to easily move into manufacturing these systems, Ansys was able to manufacture these systems, he said.

“We have [produced] command and control [systems before]. We worked on the communications system for ground-based air defence systems, we are already working on GPS-based technology and a global system for mobile communications technologies [albeit in the rail sector],” Daka noted, stating that, therefore, aggressively moving into command and control systems would be easy for the company.

Ansys was also considering the option of acquiring a few smaller companies to augment its skills in this regard; however, Daka said, even should these acquisitions not happen, the company would still be able to develop the systems.

“Now is the time to get into defence,” he stated.

Meanwhile, Daka pointed out that the company was following a similar strategy in its other operating segments, namely telecoms, rail and mining.

With regard to telecoms, for example, Ansys was still representing OEMs in areas where it would not make sense to develop South African capabilities, such as passive connectivity, but in the active connectivity segment Ansys was focusing resources on IP development, he explained.

Meanwhile, aside from growing its business organically through the development of new IP, Ansys was also looking to acquisitions for growth.

However, Daka noted that Ansys would not simply acquire a business for the sake of the acquisition, explaining that a company acquired by Ansys would have to add further capacity or IP to the group, or would have to offer increased market access penetration.

Further, he pointed out that Ansys was definitely looking towards expanding its business into Africa and even globally through the OEMs it supported in South Africa, while in the telecoms sector Ansys was deliberately partnering with large operators as a result of these companies’ African footprint.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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