South Africa’s largest private-sector commercial aviation aerostructures manufacturing company, Aerosud Aviation (a wholly owned subsidiary of Aerosud Holdings), warns that the local aerospace industry is going through tough times and is not receiving the kind of support that competitors in other developing countries, including elsewhere in Africa, are receiving. “[The year] 2017 was a tough year and this year will be more tough,” affirms Aerosud Aviation MD Johan Steyn. (Even so, his company won the Exporter category of the fifth South African Annual Business Awards for 2017; in 2016, it won in the Manufacturer of the Year category.) The local industry is suffering from a number of different challenges and problems.

One problem, which may now be resolved, was the poor image of South Africa created among the major global original-equipment manufacturers (OEMs) by the scandal-ridden Presidency of Jacob Zuma. But, realistically, it is too soon for the OEMs to make up their minds about recently elected President Cyril Ramaphosa or the ruling African National Congress’s endorsement in Parliament of the principle of expropriating land without compensation.

Paradoxically, under the Zuma administration, the weakness of the rand on global currency markets had helped local aerospace companies in export markets. The strengthening of the rand since Ramaphosa assumed office is now making things more difficult. “We see things getting tougher for South African exporters,” said Steyn.

“Also,” he adds, “there is no market here. African commercial aviation growth is slower than anticipated, and South African Airways growth is completely in the balance. The OEMs and associated opportunities go to where the market is. That is elsewhere in the developing world. In Africa, that is Egypt, Ethiopia, Morocco and Nigeria. The South African aviation sector has not grown in ten years! It is frustrating to see how other countries, including other African countries, invest in their aerospace and high-tech industries.”

Morocco has developed a significant aerospace industry over the past 15 years, which now employs thousands of people, he said. The country achieved this in part through the creation of specialist aerospace industrial zones with low or even no taxes, “coupled with a clear vision and the associated ability to execute that vision – none of that is visible in South Africa”. And other countries offer even greater incentives than Morocco or India or China. Even major developed economies, like France, the UK and the US, have significant incentives for aerospace investment.

“South African incentivisation is nowhere near the same scale and hinges largely on offset policies that are only working if you are buying and if a significant minimum capability and capacity already exist,” he laments. “There seems to be a lack of understanding in South Africa about what the local aerospace and associated high-tech industry could provide. The commercial aviation manufacturing sector is employing more than 3 000 skilled people and has a local added-value content of 40% – and owns significant intellectual property (IP) in this field. South Africa, with proper policies and incentives, could develop a significant aerospace industry – an industry that would have a lot of local IP.”

On top of everything else, it is difficult and expensive for local aerospace companies to get financing. This puts them at a grave disadvantage in comparison to their international competitors, who can access funding from their national development finance institutions at below-market-rate interest charges. In comparison, Aerosud had to borrow from local institutions, such as the Industrial Development Corporation, to fund a major production technology upgrade, at interest rates above prime.

It is true that a country like Morocco can market itself to international aerospace investors on the grounds that it is located very close to Europe and can provide cheap labour. But South Africa also has strong “selling points”: advanced skills and high technology, including additive manufacturing (3D printing) aspirations, as well as proven design and development capability. And, while South Africa is not a cheap place to manufacturing, it is not a high-cost one either. “We provide an excellent balance between skills and cost. That should be how we market ourselves as an industry. We can play an important role in international supply chains.

“Our cultural compatibility, time zone, English-speaking ability (including the lowest level of production worker), nonaligned position with respect to trade agreements, are all positive attributes,” he observes. “A recent study published by the World Economic Forum identified South Africa as a country of innovation, early adopters and risk takers – those are the attributes that we should be promoting in a coordinated and sustained business offering. We need a bigger ecosystem in South Africa to support each other. The opportunity is to stay in business and grow as part of the global commercial aviation manufacturing supply chain, which will be delivering more than 32 000 large aircraft in the next 20 years.”

Consequently, Aerosud remains optimistic and is steadily forging ahead with its business, investing in new technologies and new products, focused on exports and always seeking new opportunities, assures Steyn. Indeed, continual investment in new production technologies is required to ensure the renewal of existing production contracts. Thus, over the past two years, the company invested R20-million in developing the latest aviation welding technologies and systems. It has also invested R30-million in setting up a medium-sized, but fully-equipped, modern composites facility, which will be used for both research and development and production. The company is in the process of acquiring aerospace certification for this facility. Already, Aerosud has an agreement to supply composite parts, to be made in this new facility, for a new small business jet. The customer cannot yet be identified.

Currently, Aerosud has contracts with Airbus, which accounts for about 40% of the local company’s business, for parts and components for the A320, A350 and A380 airliners. And this business is growing. Another 20% for Aerosud’s business comes from Boeing, but this business is “fairly stagnant – we’d love it to grow”.

The South African company is the single-source supplier for track cans for both the A320ceo and A320neo single-aisle and the A350XWB wide-body programmes. (Track cans house the drive mechanisms for the leading-edge wing slats; there are several on each wing.) It also produces other important, mainly metallic, structures for both wings and fuselages. The components and parts for the wings are actually shipped to Spirit Aerosystems, in the UK, while avionics racks and related equipment for the cockpit and fuselage go to Safran Electrical Power, in France, Morocco and Mexico. In turn, Aerosud itself manages a complex supply chain of more than 200 overseas companies and about ten subtier manufacturing companies in South Africa that form an integral part of the manufacturing process here.

One programme that has “impacted the company negatively” is the Airbus A400M military airlifter. Since its launch, this programme has been plagued by various schedule and technical problems, which has now again seen Airbus announce a significant production slowdown to below one a month.