AFRICANGLOBE – Two senior former Armscor managers maintain South Africa’s defence related industry (SADRI) will have to increasingly concentrate on exports if it is to remain a viable sector in the national economy.
Jaco de Jager, a past general manager of the State’s security acquisition agency, and Hannes Steyn, director acquisition at Armscor until he left to join Altech Electronic Systems and subsequently Telkom as its managing executive: networks, still keep a weather eye on the SADRI.
The Tshwane-based analyst maintains the primary purpose of SADRI is to provide a practical degree of strategic independence to which De Jager and Steyn respond by saying there is no intent to regain the breadth and depth of the sector’s capabilities developed during the embargo years. This saw, among others, development of the G5 and G6 artillery pieces as well as South Africa becoming an acknowledged world leader in helicopter filters.
The Defence Review, the pair say, focusses on retain and rebuilding capabilities to support equipment and systems in service as well as manufacturing critical items, integrating equipment and systems. It also sees SADRI developing, manufacturing and supporting items of “sovereign importance” as well as niche items and mass produced items.
“The Heitman piece,” they say, “makes no mention of whether or not the Defence Review took the current state of play in SADRI into account and shuns the imperative of globalisation; industrial policy seems to have been formulated without much recognition of the status quo”.
De Jager and Steyn also point out in spite of the recent downturn in orders for MRAPs (Mine-resistant Ambush-protected vehicles) and mine clearing equipment and in spite of the dearth of local capital for SADRI, the industry has remained remarkably resilient.
“It holds its own, it remains innovative and its export propensity is still very high. Local SADRI sales are markedly lower than 50%, the rest is exported. Expenditure on research and development stands at 1,4% of sales for the industry despite severe cutbacks of DoD sponsored R & D.”
They assert SADRI has grown beyond the limited goal of “strategic independence” to an independent industrial force of meaningful geopolitical and economic importance.
Despite urging in the Defence Review for more money, De Jager and Steyn are convinced the Special Defence Account (capital budget) will essentially remain constant (and spent mainly on SOCs).The capital bow wave (backlog) will thus remain with SADRI for many years to come.
“As it was over the last decade, SADRI will have to look for its survival and success more towards foreign partners and clients than towards the local Department of Defence.”
They are adamant SADRI will discharge operational support duties for its customers “without fail”.
In conclusion, the pair note that the industrial policy changes in the Defence Review will hinder more than help SADRI in its quest for survival and growth.
“Rashly applied, it may even lead to SADRI’s isolation and decline, to the detriment of South African operational capacity.”
The South African Rooivalk