The low level of the South African defence budget means that local defence companies cannot survive on domestic orders alone. Not only that, but local defence research and development (R&D) spending has also gone down over the years.
“The decline in local defence spending in difficult defence budget conditions does not allow for sustainment or growth locally,” pointed out Saab Grintek Defence VP: business development and strategy Dr Nivan Moodley. “This is evident in the low number of surviving defence companies compared to two decades ago.”
These factors have impelled local defence companies to seek relationships, of diverse kinds, with global major defence original equipment manufacturers (OEMs), to access markets and R&D funding. “These types of international partnerships which enabled Saab Grintek Defence to benefit from being part of a multinational company with a global business footprint, are vital in order to boost the local defence industry’s future growth and development,” he highlighted.
Saab Grintek Defence originated as a purely local company, Avitronics, but was taken over by the Swedish Saab group in 2006, as a consequence of the strategic defence re-equipment programme that South Africa was then implementing. This required that the overseas prime contractor OEMs involve local companies as suppliers and subcontractors in the delivery of these ‘Strategic Defence Packages’.
“The Strategic Defence Packages approach has greatly enhanced access to international defence markets and modernised production facilities, which may not have materialised without this acquisition,” he reported. “Going forward, the local defence industry needs to establish and invest in these types of long-term relationships, allowing parties to share risk and accountability, to leverage off the international OEM marketing efforts, thereby providing regional diversification and access to global business.”
Regarding R&D, local companies are either having to fund their own, or obtain funding from overseas partner groups. “In some cases, foreign companies approach local defence companies with known [intellectual property] and expertise to partner with for development of technology creating a win-win solution for the company,” observed Moodley.
Saab Grintek Defence is a South African company that, because it is a subsidiary of the Saab group, serves the global defence and security markets. Products developed and manufactured in South Africa are currently fitted to platforms in more than 30 countries.