Partnerships and joint ventures in the spotlight at AAD 2022

The Africa Aerospace and Defense (AAD) 2022 exhibition to be held in Pretoria next week represents a golden opportunity for foreign companies to partner with South African entities so that capital and market access can be supplied to local industry.

International partnerships, which can access international markets and help local companies develop new products, have been key to keeping the South African defense industry afloat and there are several examples of successful joint ventures that continue to operate today. today. Some of these partnerships, such as with Saab, were the result of the Strategic Defense Procurement Packages (SDPP) of the 1990s and its offset requirements (Saab supplied 26 Gripen fighters to the South African Air Force , with local production of components in South Africa).

Saab Grintek Defense employs hundreds of people and generates hundreds of millions of rands a year, the majority from exports – it supplies aircraft self-protection systems particularly well (its IDAS has generated billions of rands in foreign revenue) and Saab Grintek Defense has won the Exporter of the Year award in recognition of its achievements. Other successful SDPP partnerships have seen Atlas Elektronik partner with Cybicom in South Africa to establish Cybicom Atlas Defense (CAD) to support South African Navy submarines and undertake other naval work for on export.

Denel has entered into several successful partnerships and joint ventures, including Al Tariq, Rheinmetall Denel Munition, Hensoldt and Pioneer Land Systems. Al Tariq started in 2012 as Tawazun Dynamics, a joint venture owned 51% by Tawazun and 49% by Denel. It was established to provide precision-guided weapons manufacturing and integration services to the UAE Defense Forces and international customers. Since its inception, several air-launched weapons have been acquired by the UAE, starting with the Umbani (Lightning) guided bomb, known as Al Tariq by Tawazun Dynamics. More than a thousand Al Tariqs were ordered by the United Arab Emirates from 2011 under a R5 billion contract, with the weapons integrated into the army’s Mirage 2000-9 fighter jets. air and deployed operationally.

Tawazun Dynamics changed its name to Barij Dynamics in October 2018 after an investment from the Emirates Defense Industry Company (EDIC), which was established in 2015 to produce air, land and sea weapons, training and maintenance services ( Barij is now part of the Edge Defense conglomerate and in 2019 changed its name to Al Tariq). The company also offers the Sejeel (P3/Orca) Guided Bomb Kit in its product portfolio. The Sejeel has been in production since 2017 for the United Arab Emirates Armed Forces, but is also promoted for export. At the larger end of the scale, Al Tariq also offers a guidance kit for the Mk 84 (P4) series bomb.

Another UAE-based partnership is with Pioneer Land Systems (49% owned by Denel and 51% owned by the International Golden Group) which markets, sells and manufactures land vehicles and weapon systems and provides services auxiliaries in support of these products. Through the International Golden Group, Denel has supplied a large number of RG31 vehicles to the United Arab Emirates.

One of Denel’s most successful partnerships is with Germany’s Rheinmetall. Rheinmetall Denel Munition (RDM) was established in September 2008 when Denel entities including Somchem, Swartklip, Boksburg and Naschem became part of the Rheinmetall Defense Group. The company became known as Rheinmetall Denel Munition, with Rheinmetall Waffe Munition being the majority shareholder at 51%, while Denel holds 49% of the shares. The company employs 2,500 people and has a turnover of over R2 billion per year. RDM manufactures a wide variety of medium and large caliber ammunition, such as 105 and 155 mm artillery shells, 60, 81 and 120 mm mortars, hand grenades, 40×51 low and medium velocity grenades mm and 76 to 62 mm naval shells as well as aerial bombs, and the Plofadder Demining System. RDM supplied all rocket engine thrusters for Denel Dynamics products such as A-Darter and Ingwe. The company has also won contracts to establish new heavy munitions factories in other countries, most recently in Indonesia, Egypt and Saudi Arabia.

Hensoldt Optronics is another successful partnership with Denel, which owns a 30% share in the company (in September 2019, Hensoldt Optronics and its sister company GEW Technologies became Hensoldt South Africa, although they remained as divisions sales within the new company). GEW has focused on spectrum dominance and electronic warfare systems for decades, while Optronics is one of the world’s leading suppliers of optronics, covering airborne gimbals (such as the Northern Goshawk and Argos ), underwater periscopes and laser range finders. Their products are in service with the South African National Defense Force and the South African Police Service. Hensoldt Optronics and GEW have a combined workforce of 600 and annual sales of around R1.5 billion. Hensoldt South Africa is expanding its offerings in the areas of radar, datalink, identification friend or foe (IFF), customer services and business development, among others. Denel, however, is in the process of selling its stake in Hensoldt Optronics.

Partnering with international companies allows parties to share risk and liability, leverage international OEM marketing efforts, providing regional diversification and access to global business. It is often possible for South African companies to bid for large European Union or NATO contracts if they are a supplier to a major OEM, such as Saab, which has successfully bid for large contracts of helicopter self-protection systems in India. Once a company is a supplier to a manufacturer, it often means repeat business.

As South Africa is non-aligned and its products are not subject to United States International Traffic in Arms Regulations (ITAR) controls, it is very attractive to global markets and has facilitated sales to Middle Eastern countries. International companies have also used South Africa’s position to export to countries to which they themselves do not have access.

These and other opportunities will be highlighted at the 2022 edition of AAL, which attracts more than 200 foreign companies and thousands of delegates. Several national pavilions at the AAD represent a new opportunity for the South African defense industry to engage in partnerships and collaboration.

AAD 2022 takes place September 21-25 at Waterkloof Air Force Base outside Pretoria.

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