Budget cuts reduce industry’s capabilities, potential being eroded

22nd February 2013

By: Anine Kilian

Contributing Editor Online

  

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The South African defence industry has been heavily affected by budgetary cuts – its range of capabilities is much smaller and narrower, compared with what it was in the 1980s and 1990s, resulting in a loss of technological depth, states independent defence analyst Helmoed Heitman.

He adds that, although the industry is doing well in the export market, its potential is being eroded by the general failure to develop new products and technologies and by the inability of the South African National Defence Force (SANDF) to buy adequate quantities of the equipment and systems it needs.

“The SANDF’s inability to fund the development and acquisi- tion of new equipment or systems, or research into new technologies on a level that is anywhere near adequate, is one of the many challenges the local defence industry is facing.

“The Department of Defence’s (DoD’s) acquisition system has become seriously dysfunctional, owing to extended delays, a lack of decision-making and failure to actually implement the decisions that have been made,” says Heitman.

He also highlights a fixation with outdoing other government departments on the broad-based black economic-empowerment (BBBEE) front, even when there is no realistic potential for this – small private companies are forced by the SANDF to take on partners who cannot contribute but without which the companies fail to secure contracts.

“This is driving companies out of the industry or at least discouraging them from bidding for SANDF contracts, which has left South Africa with no local capability in certain fields,” notes Heitman.

He adds that there is unreasonable hostility towards the local branches of foreign defence companies, which risks driving them out of South Africa to the long-term detriment of the country. This will not promote the capabilities which the defence force, with its limited acquisition and research and development (R&D) funding, is unable to sustain.

“A shortage of engineers – particularly as a result of some being hired by foreign companies and others leaving South Africa because they see no future in the defence industry or even other industrial sectors in the country – and inadequate government support for defence technology exports, particularly into Africa, are too diminishing the capabilities of the industry and, indirectly, of the SANDF.

“For instance, the Democratic Republic of Congo (DRC) recently bought Russian mine-protected patrol vehicles. The South African government should stipulate that if the DRC government wants the protection of South African troops, as it has been afforded for some time, the country should buy South African products. That said, South Africa lacks new products and technologies to maintain continu- ous penetration of the international market.

However, Heitman notes that interesting R&D regarding simulators has been undertaken by system integration, prototyping and product development company Cybicom Atlas Defence and by mining, construction and military simulator manufacturer Thoroughtec.

“Technology group Saab South Africa continues to do well in the electronics self- protection field and also with its self-protection system for armoured vehicles and its radar warning system for submarines.

“State-owned defence industrial group Denel Land Systems has a potential winner in its long-range 105 mm gun, but it needs further funding to complete the development,” he states, also highlighting Denel Land Systems- owned defence firm LMT Holdings’ work in flat-bottom mine-protection technology.

Heitman states that, internationally, the most interesting developments are in lasers and related systems and in data fusion, but, unfortunately, there is currently no funding for that type of technology in South Africa.

Heitman notes that, in terms of value, there is potential for South Africa to increase its market share in small, smart weapons.

“If the country’s defence industry can develop weapons that are optimised for small and poor defence forces, there is potential for growth in that market.

“If the DoD kills off the small niche companies in the electronics field with excessive BBBEE requirements, this potential will not be reached any time soon. However, with government support for export, a potentially interesting niche can be developed in affordable simulator systems,” Heitman points out.

He adds that, in employment terms, the biggest potential for growth lies in adopting a long-term fleet plan for the South African Navy and having most of the ships built in South Africa.

“If this is carefully planned, it could provide the local defence industry with a never-ending baseline of Navy contracts. By the time the last ship is commissioned, the first that was built locally would be 30 years old and would be due for replacement.

That baseline should enable the shipbuilding industry and all the related engineering and electronics companies to develop an export market and commercial markets.

Edited by Creamer Media Reporter

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