South African defence companies need partnerships with overseas OEMs to survive

26th October 2020

By: Rebecca Campbell

Creamer Media Senior Deputy Editor

     

Font size: - +

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.

Edited by Creamer Media Reporter

Comments

The functionality you are trying to access is only available to subscribers.

If you are already a subscriber, you can Login Here.

If you are not a subscriber, you can subscribe now, by selecting one of the below options.

For more information or assistance, please contact us at subscriptions@creamermedia.co.za.

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION