Acting Denel group CEO Zwelakhe Ntshepe has assured that the State-owned defence industrial group will not be changing its strategy. He was giving the opening address at the group’s recent 2015 Aerospace, Maritime and Defence Conference, in Pretoria.
Late last month, Denel group CEO Riaz Saloojee, group CFO Fikile Mhlontlo and group company secretary Elizabeth Africa were placed on special leave by the newly appointed board (installed in July). The board is reportedly investigating several issues, including recent business acquisitions by the group.
“Denel – the direction and the course will not change,” affirmed Ntshepe. “I repeat, the direction and the course will not change.”
Regarding the conference, he observed: “We organised this conference for the sake of getting the [South African defence] industry together. The defence industry globally is under the microscope because of the changing nature of warfare . . . We trust this conference will lead to a rejuvenation of the South African defence and high-tech sectors.”
South African defence companies must be able to both compete and cooperate with one another. So affirmed Saab Grintek Defence (SGD) senior VP Micael Johansson in his address to the conference. “In South Africa and on the continent, we need to get the balance right between competition, which is necessary and healthy, and cooperation,” he said.
“We must cooperate where it makes sense, particularly in the high-tech areas we, [the South African defence industry], are good at,” he urged. “Where it makes sense, we must pool resources in those niches where we are excellent.” Thus, there could be the possibility of joint bids between South African companies for contracts in Africa. “[but] not stopping competition – we need to be extremely competitive if we are to win contracts”
.The South African industry also has to strike a balance between the domestic market and export markets. “I do not think South Africa can support us fully if we are not exporting high-tech products,” he affirmed. But the South African National Defence Force is the local industry’s reference customer and the industry needs to show success in supporting it. “There is an almost symbiotic relationship between export success and local deployment.
“We live in a rapidly changing world which is not getting any safer,” he pointed out. Worldwide, there was now a trend of rising defence budgets. “But we will not return to the days when we had privileged relationships with our home governments. It’s a very tough market. Governments are demanding more bang for the buck – definitely.”
“I think, for us as an industry, we have an environment in which we have to put more money into research and development,” he averred. The industry had to embrace new methods and technologies.
SGD had its own, indigenous capability, not imported from Sweden. Its local shareholding was recently increased and it obtains 80% of its revenues from exports and only 20% from the domestic market. “We are confident we produce excellent, competitive products,” asserted Johansson.
This conference was Denel’s second, the first having been held in 2014. That was a great success. “Our decision to repeat the conference was based on very positive feedback from the stakeholders and participants [in the first conference],” reported Ntshepe, adding that he hoped it would lead to the development of new relationships, partnerships and business.