Deal adds R125m to firm's turnover

Cape Town - Maritime defence contractor Avitronics has landed a lucrative contract from the German Submarine Consortium to supply electronic surveillance systems to the three submarines being built for SA and for others in the Greek and South Korean navies which are being refitted.

The companies have hailed the deal as a success at a time when the whole procurement programme is under fire again for alleged discrepancies between the draft report of the three investigating agencies and the final report that was made public.

The programme was expected to generate investment of more than R100bn and about 65000 direct and indirect jobs.

Details on the progress of all the investments involved in the programme are expected to be made public in government's next report due out on June 10.

The submarine contract is worth millions of rands a boat and the deal adds R125m to the company's turnover as a result of the industrial participation strategy that obliges the successful defence contractors to source civilian as well as defence equipment from domestic industry.

"The industrial participation requirements are a great door opener for us, and because we have the operational knowledge, technology and products, we are able to walk through to important international markets," Avitronics MD Ben Ash said.

Programme provisions gave the company the chance to demonstrate its "cutting-edge, cost-effective technologies to the German Submarines Consortium members", said Ash.

He said the export growth path which Avitronics was now on would create R350m in business in the next 10 years.

Wolf von Toll, MD of Ferrostaal SA, one of the consortium's members, said the decision to integrate the SA-made systems in the Greek and South Korean boats was "an international seal of approval for Avitronics and a indication that the SA government's offset strategy is working". The consortium has offset obligations of à 175m.

The target of offsets for January next year is about à 66m and this target has already been reached almost a year ahead of schedule. The offset estimates have often been criticised and opponents of the arms deal claimed it was too easy for the defence contractors to default on their obligations with only small penalties built into the contracts.

Ash said as a result of the decision to re-equip the navy the staff at Avitronics had more than doubled, from 40 to 90 highly skilled workers.

He said the turnover of the maritime division had grown from R19m in 1997 before the contracts were signed to a projected R128m this year.

The Avitronics products enable to submarines to run electronic surveillance systems with one mast fewer than conventional designs

With acknowledgements to Wyndham Hartley and the Business Day.