Opinion: Aerospace & Defence Masterplan – Maximum Impact?


defenceWeb has offered an insight into the Aerospace and Defence Masterplan. defenceWeb has also taken the initiative to arrange a webinar to gain traction for the Masterplan. The Masterplan is the output of cooperation between industry, organised labour, government agencies, various finance institutions and R&D entities.

This wide ranging group has come together to determine the actions necessary to stabilise the Aerospace and Defence (A&D) industry and halt its decline. The masterplan roadmap aims to take the A&D industry from Good to Great.

The Masterplan states that “A game changing vision – encompassing a vision of an Entrepreneurial State and focused collaborative action to move forward into growth, is supported.”

People reading this could say that this is a lofty goal. Some would further query, is this even possible?

The Masterplan provides the opinion that it is possible. A&D is an apex ecosystem that can provide a successful transition to the fourth industrial revolution, which is anchored by digital technology.

Within this apex ecosystem context the A&D Industry vision proposed is: “Repurposing Aerospace and Defence to improve South African lives for generations to come.”

The masterplan is targeted at the A&D industry, which offers a wide range of opportunities for a business to make money. There are different degrees of difficultly to enter the A&D industry environment based on what you would want to offer.

A least complex mechanism to enter the A&D industry environment would be to enter through the largely services-based Products System Management domain. This is nice sector for local employment, but difficult to extract export income.

A second, slightly more complex mechanism would be to offer services in the Support environment. There are a wide range of Maintenance, Repair and Overhaul (MRO) opportunities for existing products operating in the local A&D market. This is a nice sector for local skilled employment. There is an opportunity to extract export income. There is scope to unlock foreign income by servicing foreign entities in the local market, and then also regional support capability. Support is easily expanded into the Product System Management domain. As example, a number of Public Private Partnership (PPP) initiatives could be build around this model.

A third option is to offer production capabilities. There is a higher level of capital investment required. The benefit is larger scale employment and ability to start accessing wider export markets. The benefits of this approach are well documented in the SA motor industry action plan. There is good scope for expanding the A&D industry through this approach. The downside is that the industry is beholden to the entity supplying the right to produce. Production capability could be combined with Support and/or Product System Management for a more comprehensive market solution.

Production opportunities can be unlocked at various levels. The defence industry offers a good breakdown of Matériel supply opportunities in terms of system complexity. Level 1: Raw material; Level 2: Component level; Level 3: Product sub-assembly; Level 4: Products; and Level 5: Products system.

There are some R&D opportunities to expand the sector capabilities within the production environment, but generally limited within the scope of the licencing party.

There is a fourth option of offering a Design & Development capability. This is the most complex mechanism of entering the A&D industry. Yet this would be the most lucrative in terms of achieving the vision of repurposing the A&D sector.

Design and development can be offered throughout the matériel supply range. The highest return for the country is to have a set of market leading Level 5 Products System solutions to offer to the market. The A&D Masterplan highlights the benefits of this approach through the Rooivalk example. Many like to highlight the development cost as this is easily measureable. The benefit of the development of the world class system, which had a ripple effect throughout the supply chain, was more difficult to measure.

The Rooivalk unlocked local opportunities throughout the Level 1 – 4 design and development domain; through to the full production scope of supply; into the support environment and the products system management domain. Many of the business entities applied the skills unlocked in the Rooivalk supply programme to benefit in many other domains. Mr Helmoed-Römer Heitman is correct with his statement that the Rooivalk benefit to the country can be conservatively measured as R18 Billion return from an R9 Billion investment.

The A&D Masterplan provides a mechanism for expanding the A&D industry over a 60-month time frame. I would like to rather put forward a Products System approach that leverages the current capabilities of the whole A&D industry. This approach meets the needs of all three of the A&D Industry Masterplan pillars, i.e. Pillar One: Increase Market Access; Pillar Two: Localisation; and Pillar Three: Industry Competitiveness.

A Level 5 Products System level programme has the capability to focus, and drive R&D. This level of product supply also has the capability to stimulate and reinvigorate STEM resources to want to be involved in the A&D industry. The Level 5 products system delivery can provide impetus to move forward with competitively selected systems and sub-systems.

Maximum Impact

Can SA find, fund and market the future Rooivalk-type programmes that can be launched within the next 60 months?

The South African A&D Industry has the capability to supply dual-use solutions in the following specialised operations A&D Products System domains to unlock future defence and commercial export revenue:
1. Connected Forces for Rapid Reaction: This encompasses the Level 5 integrated C4IRS capabilities using the Level 3-4 suppliers in the well established Electronics industry, as well as the new burgeoning UAS and Space domains. The AI and Machine Learning future environments can be catered for in this segment and rolled out to other segments below.
2. Air Lift Capability: There is an opportunity to leverage the Aerospace industry in the Regional Air Mobility (RAM) domain. RAM has the potential to develop into a large market that should warrant dedicated exploration alongside other related applications such as Unmanned Aircraft Systems (UAS) and Urban Air Mobility (UAM). This can be expanded to offer programmes for the Oryx and the Cessna Caravan replacement from the local industry. The Pegasus VBJ is an example of future aspirations of this segment.
3. Close Air Support: The SANDF has a need for air cover when deployed. The local A&D industry has the capability to offer various manned, remotely piloted, and even future autonomous systems in this domain.
4. Sea-Landed Capability: The sea-landed capability supply by SADI is a stretch goal. This is required by the SANDF for regional force projection, and it offers expansion of capabilities in line with the Operation Phakisa goals. The requirement is that a South Africa design house has to provide the future sea-landed vessel design. Thus this needs to have a mature acquisition entity that does not require proven design that inherently excludes the local option.
5. EEZ Patrol and Fire Power Capability: The MMIPV and Hydrographic Vessel Projects have established a basis for larger vessel supply, but we are not yet fully local on the Level 5 basis of design. The MMOPV project needs to include the requirement that a South Africa design house has to provide the design. This would bring the larger vessel capability in line with the well established boat and small vessel supply capability.
6. High Mobility Infantry Capability: The SADI vehicle segment can be seen to be competing with the world leaders. Future Infantry mobility acquisitions for SANDF need to be local designs for the full system. The Infantry Fighting Vehicle programme missed a trick when it did not progress with the local vehicle solutions that were designed for Armscor as a R&D project.
7. Enhanced Fire-power, Manoeuvre and Protection for Landward Forces: Various projects are available. The LEO 105mm is highlighted in A&D Masterplan and is an example of the potential within this domain. These product systems stimulate the related ammunition domains.

The wise man Solomon stated:
One person gives freely, yet gains even more; another withholds unduly, but comes to poverty. A generous person will prosper; whoever refreshes others will be refreshed. (Proverbs 11:24-25)

What is needed is government buy-in.
Is it possible for Government and industry to align and give resources “freely” to achieve the A&D Masterplan vision of unlocking prosperity and “Repurposing Aerospace and Defence to improve South African lives for generations to come?”

Written by James Kerr, Orion Consulting CC, which provides Market Entry Strategy and Bid & Proposal services to the Aerospace & Defence related industry and assists international SME mission system product suppliers to gain traction in South Africa. Kerr has assisted various companies to enter, or expand footprint in, the defence industry with air, land and naval systems. He also served as a navigator, and completed an engineering degree, while in the South African Air Force for 13 years.

Click here to read the complete Aerospace and Defence Masterplan document.

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