Boeing has bought US$365 million worth of parts from SA over ten years


US planemaker Boeing has bought parts worth US$365 million from South African companies Denel and Aerosud as part of an offset deal signed nearly ten years ago, and continues to source more components from the companies.

In March 2000 national flag carrier South African Airways (SAA) agreed to buy 21 Boeing 737-800 New Generation (NG) narrow body airliners, with deliveries starting in July 2000. As part of the agreement between Boeing and Department of Trade and Industry (DTI), the American company agreed to provide offsets worth 30% of the contract value and chose Aerosud and Denel to supply components.

In November 2001 Boeing signed an agreement with Aerosud to manufacture parts for a variety of Boeing models, notably the 737. This agreement came in conjunction with the opening of Aerosud’s new manufacturing facility adjacent to the Waterkloof Air Force Base in Pretoria, which became operational in mid-2002.
“Working together with Boeing will help develop one of the country’s most technologically advanced manufacturing operations in the Republic of South Africa,” Paul Potgieter, managing director of Aerosud said at the time.
“South Africa is very important to Boeing,” said Doug Groseclose, vice president International Sales – Boeing Commercial Airplanes. “Our strategic partnership agreement opened the door for Boeing to provide immediate opportunities that support the development of the local South African aviation industry, and we’re very excited to be working together with Aerosud to begin to accomplish this.”

Aerosud supplies cabin interior composite parts to Boeing, and currently manufactures nearly one million parts per year, including aluminium parts, parts in vacuum form plastic (mainly interior trim), and some composites. More recently Aerosud has launched strongly into a new technology business, the continuous fibre reinforced thermoform plastic, or CFRTP. The Aerosud Airline Interiors Division has been involved in interior designs for the Boeing 707, 727, 737, 747, 767 and 777 series, as well as the Airbus A300 and A320, and the MD9 and -11 airliners. Aerosud has also designed and produced closet units for the Boeing 777.

In July 2002 Boeing signed a nine year contract with Denel to supply 400 parts per month for the 747 and 767 aircraft. As part of the deal, Boeing transferred 30 tons worth of machining equipment to Denel Aviation (today Denel-Saab Aerostructures) in 2003. The equipment included more than a dozen milling and turning machines, a shotpeening machine and several coordinate measuring machines used to validate and test the quality of parts,

Boeing had ten years in which to fulfil its offset obligations, worth about US$197 million. However, it reached its target in 2006 and decided to continue sourcing parts from South Africa by giving out fresh contracts. Over the last ten years or so, Boeing has received US$365 million worth of South African manufactured components, the company’s Director for International sales (Commercial Airplanes), Miguel Santos, said. So far this has amounted to an extra US$168-million worth of purchases.
“We’re extremely pleased with the quality and the scheduled delivery of the parts manufactured both by Aerosud and Denel,” he stated. “So, even though we fulfilled our offset requirements some years ago, we will continue to purchase parts from both suppliers here in South Africa.”

Boeing recently received a boost from Comair, which confirmed its purchase of eight 737-800s for its Kulula brand. Comair is Boeing’s biggest customer in South Africa with 25 aircraft but low cost carriers 1Time and Mango also operate Boeings.

In 2006, on the reputation of the work Aerosud was doing with Boeing, the company was awarded a lucrative contract with Airbus, and was one of two key local industrial players to acquire a share in the African Non-destructive Testing Centre (ANDTC) and the A400M model, for which Aerosud has several packages today. The company manufactures wingtips, fuselage and cockpit linings as well as the galleys for the airlifter.
“We are unique,” says Potgieter. “Very few, if any, companies of our size, anywhere in the world, have the design and engineering experience normally only found in much larger companies,” he told Manufacturing Digital Magazine in 2009. This is a legacy of the era of indigenous development programmes in South Africa, such as Rooivalk, and makes Aerosud unique in offering ‘smart’ supply, not just low-level subcontract manufacture work – as witnessed by our selection as one of only two lead South African design/manufacture partners for the Airbus A400 programme.”

Denel-Saab Aerostructures (DSA) manufactures wing-to-fuselage fairings for the A400M as well as the centre fuselage top shells that fit in front of and behind the wing box, which joins the wing to the fuselage.

Aerosud also manufactures various parts for other Airbus aircraft, and is the exclusive supplier of A320 flap-track cans (housings). It also manufactures the A320 avionics bay racks and sheet metal parts for the wings as well as supplying parts for other Airbus aircraft like the A350. In September 2010 Airbus announced that it had entered into contracts worth R4 billion with Aerosud, Cobham-Omnipless and Denel-Saab Aerostructures (DSA). Of that, R500 million was for work related to the upcoming A350.