Consolidation and support are needed for the South African aerospace and defence industry to survive, with Hensoldt South Africa aiming to take a leading role in ensuring the sustainability of this sector.
Hensoldt South Africa has two main business divisions – GEW Technologies and Hensoldt Optronics South Africa. GEW specialises in defence and security electronics, including spectrum dominance, electronic warfare, and radar solution. Hensoldt Optronics specialises in surveillance cameras, stabilized EO/IR gimbals, submarine periscopes and laser rangefinders. The company’s products are in service with the South African National Defence Force and South African Police Service, which Hensoldt says is an indication of the company’s critical strategic capabilities. Employing 600 people in South Africa and with a turnover of more than R1.5 billion a year, Hensoldt South Africa aims to grow its local presence dramatically, through initiatives like mergers and acquisitions, new investments, new technologies and product portfolio expansion.
Christopher Haines, Executive Sales Manager at Hensoldt Optronics, said the time is right to focus on the local market and support for local suppliers, especially small, medium and micro-enterprises (SMMEs), which are struggling due to the limited spending by the South African National Defence Force (SANDF). Hensoldt cannot exist without its smaller suppliers and these need to be looked after, especially since the challenges at Denel, as a key component of the overall defence industry, have left an unfortunate gap in the market and smaller companies exposed.
Haines therefore believes that consolidation amongst the smaller companies is essential for the South African defence industry as the market is small and hence unable to support too many players all ostensibly fighting for mostly export business. “I feel strongly that the local industry needs support but only if it’s sustainable and sees consolidation. We don’t need four, maybe five PCB (printed circuit board) manufacturers, for example,” he said.
Haines sees a need for the local industry to be supported, through a reinvigorated Denel; consolidation of many sections of the industry; and active government assistance for the aerospace sector. If the government can provide money to the automotive sector it can do the same for the aerospace sector as this would generate a huge return on investment. Haines said the wider industry has been pushing for the establishment of an aerospace investment fund and would like to see some investment drive from the Department of Trade and Industry (DTI), which already provides some support to the sector through initiatives like the Aerospace Industry Support Initiative (AISI).
“AISI is a start but more needs to be done for smaller entities in the aerospace and defence sector,” Haines said. “I’d like to see further support. There’s going to be a lot of companies that will close down, especially if the lockdown is further extended beyond the end of April…If small entities disappear that’s a problem for the local industry. The country probably needs to set aside R5 billion annually to support, sustain and grow the local aerospace and defence industry and bold and strategic decisions need to be made right now.”
This can be achieved through national flagship programmes, including collaborative aerospace programmes with other African countries, that would be of great benefit to the industry, such as a continental MALE (medium-altitude, long endurance) UAV (unmanned aerial vehicle) programme as there is great demand for this type of platform. Hensoldt would like to be the radar and gimbal supplier for a project like this, Haines said. “I like the idea of a collaborative HALE/MALE UAV programme designed in and for Africa. Why are African countries buying Chinese UAVs when there are clearly world class UAV companies in Africa?” he asked. Also buying gimbals locally for the SANDF further supports the local supply chain that benefits from Hensoldt Optronics’ export sales initiatives globally.
Another priority project Haines feels needs to be pursued is a maritime patrol/surveillance aircraft, particularly for the South African Air Force (SAAF), which had hoped to acquire a new platform many years ago to replace its obsolete C-47TPs, but which has failed to do so due to budget constraints. Haines said Hensoldt is inviting companies to support the development of a local aircraft sensor suite ideal for inshore maritime patrol and other related tasks, such as border patrol. It would be ideal for Cessna Caravan and Beech King Air type platforms. Hensoldt is already working on a sensor suite with several companies. It has also, for example, fitted its Argos II EOS gimbal to the Guardian 400 surveillance aircraft that is currently on a worldwide tour demonstrating its capabilities as a cost-effective maritime and border patrol solution.
This is in line with Hensoldt’s growing focus on the international homeland security and border protection markets as well as national key point/asset protection. Haines believes there will be significant and sustained interest in border protection after the coronavirus pandemic slows down.
The Middle East has long been a core market for Hensoldt South Africa, but with the drop in the oil price affecting defence budgets, Hensoldt is now looking to the BRICS countries, amongst others, in order to leverage the existing bilateral defence cooperation agreements in place with South Africa.
Hensoldt South Africa is actively expanding its electro-optical range. After focussing mainly on airborne solutions, the company is looking to grow market share in the naval and land spaces. It will also be launching two new laser/gimbal products in the near future as it enhances its portfolio, and will be strengthening an engineering hub that will have as systems integration onto various airborne platforms as one of its focus areas– nevertheless, at the moment the company is focussed on its core business of electro-optical/infrared sensors.
Hensoldt supports the South African security services in many ways and is looking at further strengthening this relationship through providing maritime surveillance sensors, police helicopter gimbal upgrades, etc. A wide variety of South African platforms already use Hensoldt Optronics gimbals, with the South African Police Service air wing able to fit the LEO 400, Goshawk 350 and LEO II on its BO 105 and AS350 helicopters as well as Pilatus PC-6 Turbo Porter fixed wing aircraft, and the SA Navy has been using periscopes from Hensoldt for many years now.
The South African Air Force uses the Argos Z on its Caravans equipped with the Coiler observation system while the Argos 410 can be fitted to its A109 Light Utility Helicopters and the LEO 400 can be fitted to the Oryx medium transport helicopter. Argos M systems are installed on the Super Lynx maritime helicopters and Hensoldt Optronics is the prime contractor for the EO/IR targeting sight on the Rooivalk CSH.
Haines sees a continued need for the latest generation sensors and optronics, integrated with mission and/or mapping systems, especially in light of the evolving coronavirus pandemic and a probable future requirement for better border security, and ongoing peacekeeping commitments which need effective equipment to support deployed forces.
The South African National Defence Force will benefit from locally sourced technology as this is cheaper than acquiring from overseas, especially with a volatile exchange rate, Haines said, with Hensoldt ready and willing to work with the SANDF and other South African partners in providing enhanced sovereign capabilities with local support aligned with Defence Charter goals of supporting SMMEs.