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RDM continues to grow at 20 per cent a year

The RDM mortar production line.Rheinmetall Denel Munition (RDM) aims to keep growing at 20% a year until at least 2020, and expand into a R4.5 billion company. It aims to reach R3 billion in sales in 2017, and has a number of big potential deals in the works.

At the moment RDM has an order book that accounts for one and a quarter years of production. CEO Norbert Schulze told defenceWeb that he is optimistic about the future, as RDM has been growing at 20% per year and increasing capacity – it has invested R1.1 billion in its facilities, and is investing another R550 million over the next three years. Much of this goes to replacing older machinery and acquiring new technologies.

The staff count has gone up as well, rising from 1 000 in 2008 to 2 000 at present. Another 200 will likely be recruited to deal with the increase in capacity brought on by the company’s continued growth. Some of these additional employees will come from the RDM Academy, which brings in qualified university graduates from different professions on a 12 month programme to gain practical experience. They are subsequently absorbed into RDM. Approximately 15 graduates are taken on every year.

Around 70% of RDM’s current production comprises artillery rounds and mortars, with the remainder products like 40 mm grenades. The company’s biggest export markets are the Middle East, Asia-Pacific and Europe. In addition to producing a wide variety of ammunition such as the 105 and 155 mm artillery shells, 60, 81 and 120 mm mortars, 40 x 51 mm grenades and 76/62 mm shells, RDM also manufactures bombs, rocket and missile subsystems.

Part of its business is the construction of ammunition filling plants for export. For instance, Saudi Arabia recently ordered an ammunition factory, and this has been handed over to the customer. At the moment RDM is commissioning a plant in North Africa. “One of the models we use to penetrate new markets is we supply ammunition and sovereign production capabilities,” Schulze said.

Although the South African National Defence Force (SANDF) is an important RDM customer – it gets almost all its ammunition from RDM – it only makes up around 6% of the company’s business. Nevertheless, “without the SANDF we wouldn’t sell anything anywhere else,” Schulze said, as getting orders from one’s home country is essential. In addition to the SANDF, 9% of RDM’s output goes to Denel and another 3% to the local civilian market.

Current business in negotiation includes a €28 million contract for Plofadder mine clearing systems, and a €65 million contract for ammunition from an international customer. Going forward, Schulze said RDM expects to win a R500 million contract for 40 mm grenades from the Middle East by the fourth quarter of 2017.

Schulze was speaking at the company’s annual Show and Tell event, which this year was held at its Boskop facilities outside Potchefstroom. He said the event is an important exchange with local industry to showcase what the company has to offer and what it is planning to do. Moreover, it serves to listen to the customer to evaluate solutions for the problems they are facing in their daily engagements.

Some of the big projects RDM is working on are a new range of hand grenades, insensitive munitions, and 40 mm medium velocity airburst ammunition. The company is also developing low cost aircraft bombs, which use cheaper RDX/TNT filling, rather than PBX109. Schulze said the demand for aircraft bombs is growing tremendously around the world.

The RDM Show and Tell day also serves to give feedback to the Defence Research and Development Board (DRDB), which assists with technology development. Current projects are on insensitive munitions and high explosives technology, terminal effect optimisation (Project Repose); aerial target missile technology (Project Soprano) and rocket motor technology to extend the range of the Umkhonto missile (Project Hetjou).