Publication: Cape Argus
Reporter: Michael Schmidt
Top-Notch Armoured Military Vehicles are Coming Straight Out of
away behind the scrap-metal dealers and used-car lots of southern Benoni on the
East Rand, behind doors opened by finger-print locks, is a hi-tech facility
where armoured military vehicles are being built for US military use in Iraq and
This is the main South African plant of BAE Land Systems
OMC, a local subsidiary of global arms company BAE Systems, and it has just
landed a $55.4 million deal to supply 90 armoured troop-carriers to the US Army
and Marine Corps.
This is evidence of the growing reputation of
Benoni-designed, mine-protected vehicles, a reputation cemented last year when
an RG31, known as the Nyala, drove back to its base in Kandahar, Afghanistan,
with its crew of four Canadian soldiers unscathed after it was rammed by a
suicide bomber whose vehicle was obliterated.
Last March, 50 vehicles
were delivered to Canada and another 25 ordered. The RG31 is also in service
with the US armed forces in Iraq, Kuwait, Saudi Arabia, the United Arab Emirates
army and Dubai police, and Italy's paramilitary Carabinieri police force.
Last week, General Dynamics Land Systems Canada announced it had won an
$11m contract to produce 20 vehicles based on Benoni's "highly successful" RG31
for the US Marine Corps.
US forces had previously acquired 424 RG31s
that the company, which boasted revenue of $24.1 billion last year, said had
proven its mettle in protecting US and allied forces in Iraq and Afghanistan.
BAE Systems has an agreement with General Dynamics under which it
markets the vehicles to North America.
The growing demand for OMC's
products in North America, Europe, the Middle East and Africa has forced the
Benoni plant to increase its production-line factory space by 20% over the past
few months and increase its staff to 630. OMC has seen its turnover quadruple
from R300m three years ago to R1.2bn last year, said company spokeswoman Natasha
However it is not just the vehicles' battle-proven toughness -
refined over four decades in Africa's harsh conditions - that has seen the
market for South African armoured cars snowball: the purchase of Alvis OMC by
BAE Systems in 2004 gave OMC the global reach of BAE Systems' marketing budget
of up to $40m a year.
Most of the bolting and welding going on at OMC
today is for the export market, but the company is also busy with several major upgrades of South African Army equipment. And
there is also a lot of SA Army equipment at the plant undergoing routine
OMC is involved in a consortium with Denel, EADS and Patria to
bid for Project Hoefyster, the SA Army's Ratel-replacement
programme, Tony Savides, the company's director of international business
development, told me last year.
OMC is also bidding for Project Wistula, which aims at a new fleet of "several hundred"
army trucks to replace its ageing Samils, he said.
and development, said OMC plant manager Willem Davies, kept the company
innovative and allowed it to quickly produce prototypes for clients to test.
We went to OMC this week to check out the US military equipment, and
found RG31s rolling off the production line at an impressive rate of one a day
in service of a $63m contract for the US Army.
On February 15, the
company announced the $55.4m award for 90 RG33 armoured personnel carriers for
the US Marine Corps. The company received an initial order of four vehicles for
testing and they passed with flying colours.
Although the RG33s will be
built in York, Pennsylvania, and not Benoni, OMC will earn royalties off each
vehicle produced in the US because it owns the design copyright - a largely
unrecognised way in which the South African defence industry
is coining it.
The American requirements are pretty standard,
said Davies: as long as the vehicles were well-built and reliable, and had
interchangeable parts, they were happy.
OMC's Pheiffer said most of the
profit generated by these contracts had been put back into upgrading and
expanding the Benoni plant.
With acknowledgements to Michael Schmidt and Cape Argus.
*1 The South African defence
industry is certainly not coining it.
Most of the South African defence
industry is on its knees pleading for either direct cash baleouts as in the case
of Denel, or increased local capital expenditure by the SANDF.
point worth noting :
The BEE partner in OMC is a company called DGD
The shareholders of DGDT are, inter alia, Moeletsi Mbeki
(brother of Thabo Mbeki), Dr Diliza Mji (ex ANC Treasurer-General of
kwZulu-Natal) and Seth Palatsi, (disgraced executive of the Central Energy Fund
and CEO of Armscor for a week).
Dr Mji was also CEO of the Industrial
Development Corporation (IDC) and while such, awarded himself a R23 million odd
loan to enable him to purchase his shares in DGDT and consequently those of
OMC is also a beneficiary of the Arms Deal in that one of its
subsidiaries or divisions is an entity known as Gear Ratio.
Frigate Consortium selected a Swiss company Maag to supply the corvettes' gear
boxes in competition with a German company called Renk. Maag was selected
because its product was less expensive, less risky and less noisy, the latter
being a very important tactical attribute of a surface warship. However Renk had
teamed with Gear Ratio and therefore both Gear Ratio and DGDT would lose out -
big time. OMC and Gear Ratio were doing very badly at that time because of the
downturn in the local armoured vehicle market.
But, Gear Ratio/DGDT
pulled the right strings with Armscor and Chippy Shaik, the latter personally
coming in to bat for Renk and Gear Ratio.
Completely contrary to
oft-stated DoD and Armscor policy, the GFC's Maag selection was overturned in
favour of their own selection of Renk/Gear Ratio on "strategic" and DIP grounds,
despite Maag's product being lower cost and lower risk.
ironically, completely opposite to the case of CCII's Information Management
System (IMS) for the corvette combat suite.
The IMS had been selected by
the DoD and Armscor and was conformant to specification, was lower cost and was
entirely indigenous. Yet Thomson-CSF claimed it was more risky, although a later
DoD/Armscor/GFC study it to be no more risky and far higher in performance and
so added on a 125% price premium. So on entirely converse grounds as to the
Maag/Renk case the IMS was de-selected and the non-conformant product of
Thomson-CSF Detexis selected in its place at 25% higher cost (and after
Thomson-CSF Detexis had had sight of CCII's IMS price).
These facts were
not lost to the investigators investigating the Arms Deal, but to be sure,
nothing came out in this respect in the JIT's Joint Report.
But Thabo had
already appointed Thomson-CSF as the anointed one in November 1997 (confirmed in
December 1998) to supply the corvette combat suite (refer to the Arms Deal
Virtual Press Office at www.armsdeal-vpo.co.za under Organograms/corvette
business) and clearly his brother was one of the anointed BEE ones when it came
to carving out the future of the South African armoured vehicle business (refer
to the Arms Deal Virtual Press Office at www.armsdeal-vpo.co.za under
Organograms/armoured vehicle business).