South African privately held defence group Paramount believes that the local defence industry needs to consolidate and cooperate to compete successfully in the increasingly competitive international market. “Paramount is always open to cooperation,” group chairperson Ivor Ichikowitz has affirmed.

“If we are able to present a consolidated ‘SA Inc’ face, we can compete with the big [global] players. We have the capabilities, we have the flexibility.” He was speaking at a recent press briefing at which he confirmed what had long been suspected – that Paramount would be taking over troubled local aerospace and defence company Advanced Tech-nologies & Engineering, better known as ATE. The takeover came into effect on June 10 and ATE now trades as Paramount Advanced Technologies.

“In the defence industry, in a small country like South Africa, there isn’t really room for much competition. The only customers for legitimate defence companies are governments, and governments want to know they’re getting an offer from a country,” he highlighted. “Today, there are two dominant players in the [local] aerospace and defence industry – ourselves and [State-owned] Denel. In terms of scale and size, we are much smaller than Denel but we are quickly approaching the same size.” Ichikowitz pointed out that, in about 90% of the areas in which his group operated, it did not compete with Denel. And where there is competition, he would like to investigate the opportunities for cooperation. “I have huge admiration for Denel,” he said. “The new leadership has got the plot!”

One of ATE’s areas of competence is unmanned air vehicles (UAVs), which are also a speciality of Denel group business Denel Dynamics. “The UAV area is one space in which ATE’s competence is huge. Unfortunately, very little [research and development] money has been spent on UAVs in the recent past,” he reported. “But we don’t want to duplicate capabilities which already exist in South Africa. That doesn’t make sense. One of the things we’re going to do in the near future is to engage with Denel and see where we can cooperate in UAVs in the future.”

For Paramount, hitherto predominantly a land defence systems group, the acquisition of ATE marks a major diversification. “From Paramount’s point of view, this is a big step,” he said. “It focuses our attention on the aerospace sector as much as on land systems. We have no plans at all to exit any of the areas in which ATE has competence. If anything, we are going to enhance these.”

Regarding the former ATE itself, Ichikowitz noted that it had “been in the South African defence industry for 30 years”. “It is a company that represents some of the most important defence capabilities that South Africa had historically and has currently.” It had been created to support and supply the then South African Defence Force – now the South African National Defence Force, but had been hit by defence budget cuts. “It was not able to achieve critical mass outside South Africa. The business fell on hard times.” It went through business rescue twice, with Paramount becoming involved during the second business rescue attempt, which ended with the takeover. All 230 people employed by ATE were incorporated into Para-mount and Ichikowitz is optimistic that this staff complement will be increased. He emphasised that the group had a very strong focus on mentorship programmes to attract young people into the industry.

“In the last six months we’ve been actively involved in engaging clients. We’ve reached agreement on every single one of the [existing] contracts. We are on the very good footing with our clients,” he assured. “We will engage with those clients that ATE had but which disengaged when the company went into business rescue.”