Publication: Business Day Issued: Date: 2006-09-13 Reporter: Linda Ensor

Defence Industry Plea for Helping Hand

 

Publication 

Business Day
Date 2006-09-13

Reporter

Linda Ensor

Web Link

www.businessday.co.za

 

Cape Town ­ The defence industry made a strong plea to government yesterday to develop a comprehensive local defence sector strategy to bolster its long-term sustainability.

Industry representatives warned that the survival of the local defence industry was threatened. It would require major investments in research and development for it to remain competitive and maintain its export momentum.

The local industry has long complained that government has sourced its defence requirements from foreign companies, spending minuscule amounts on local procurement *1.

The industry’s representative body, Aerospace, Maritime and Defence, made a presentation to Parliament’s defence committee, saying local defence companies were sustainable but not profitable. There was a need for a pro-active, unified, state-developed strategy to operate in conjunction with the industry. This would bring together the disparate policies being followed by different government departments.

The research and development of the defence companies should be aligned, it said.

While this strategy was being worked out, the industry could be assisted by its participation in supplying logistics for the equipment acquired in terms of the multibillion-rand strategic defence package. It should also supply goods for peacekeeping efforts in Africa.

Aerospace, Maritime and Defence representative Simphiwe Hamilton stressed that significant investment in research and development was required if the local industry was to retain its immense value-added and technological capability.

He said 74 companies were operating in the defence sector, supplying the South African National Defence Force as primary contractors or subcontractors.

Aerospace, Maritime and Defence represented 44 of these companies. They generated 92% of industry turnover and 97% of exports. Local production tended to concentrate on defence electronics and logistics.

Hamilton said empowerment deals had resulted in 12% of the equity of companies being transferred to blacks and 22% to foreign companies. Foreign ownership was set to rise further in the restructuring of Denel.

Hamilton said government would have to decide whether it was comfortable with foreign ownership. Foreign-owned companies were driven by pure business imperative, not the strategic needs of the country *2.

With acknowledgement to Linda Ensor and Business Day.



*1       Foreign defence companies have sufficient reserves to pay any amount of commissions to secure their deals.

South Africa defence companies have been driven into the ground since the early 1990s and have nothing to spread about.


*2      And have little compunction about spreading a little wonga about in order to drive their pure business imperatives.

The chickens have come home to retire and expire.