Denel has said it is making good progress with the process of exiting its aerostructures manufacturing business and is attempting to limit resulting job losses.
The Divisional Chief Executive of Denel Aeronautics, Mike Kgobe, said in a statement on Thursday the company has concluded consultation as required by the Labour Relations Act Section 189A with relevant stakeholders including organised labour and representatives of non-unionised employees.
“The consultation process was facilitated by a Senior CCMA Commissioner and will result in retrenchments based on operational requirements,” Denel said. Last year it estimated that 230 employees would be affected.
“We have really worked hard in trying to keep job losses to a minimum and some of the employees will be transferred to other positions within the Denel group while voluntary severance packages have been offered,” Kgobe said.
Denel applied to both the Departments of Public Enterprises and Finance to wind up the business of Denel Aerostructures SOC Ltd in terms of Section 54 of the Public Finance Management Act. Formal approvals were granted during 2019.
This follows the mutual agreement by Denel and its customers to transfer the manufacturing of aircraft parts to alternative suppliers as the business was no longer sustainable for Denel. In 2019 Denel said exiting the Airbus A400M Atlas aerostructures contract would save up to R250 million a year.
Denel Group Chief Executive Officer Danie du Toit said the decision to wind up the company is in line with the broader long-term strategy to reposition Denel and return it to profitability.
The winding up of the Aerostructures manufacturing business will not affect other businesses conducted by Denel Aeronautics at the Kempton Park campus. This includes the support given to the Rooivalk combat helicopter, the Oryx medium transport helicopter, the C-130 Hercules transport aircraft together with the export business for the Cheetah multi-role fighter aircraft and Puma helicopter and various maintenance, repair, and overhaul (MRO) services provided to both the SA Air Force and other customers.
Denel Aeronautics, along with Aerosud, was one of the main two aerostructures manufacturers in South Africa, having designed and manufactured parts for military aircraft like the Saab Gripen and Agusta A109, as well as tail planes for the Gulfstream G150, engine pylons for GKN and winglets for the HondaJet. Its main activity was manufacturing components for the A400M after South Africa’s abortive acquisition of the type. Denel was responsible for the design, certification and manufacturing of the A400M Wing to Fuselage Fairing, which is the largest single aerostructure component ever produced in South Africa.
In early 2019 Denel announced it was divesting from the A400M programme in order to cut costs as part of its turnaround strategy, as the A400M programme has been historically loss-making. Due to liquidity challenges, Denel subsequently lost its other aerostructures work.
Denel retains the capabilities it acquired with the acquisition of Turbomeca Africa (TMA). TMA manufactures engine components – including gears, gearbox casings, shafts and couplings – for Safran Helicopter Engines. The company supports 40 customers in 20 countries, including the SA Air Force, the SA Police Service and a number of civilian air operators.