Reutech engaged in meaningful transformation in the South African defence industry


As a privately owned South African company participating in the South African defence industry, transformation is at the core of Reutech’ strategy as an imperative to the growth of the industry and contribution to the South African economy at large.

This is evident in the company’s procurement spend as well as the enterprise and supplier development programmes which includes, amongst others, the incubation of black-owned SMMEs (small, medium and micro-enterprises) like MND Technologies, Sovereignty Systems, and RLDC in its facilities.

Luleka Sotuku, Divisional Director: HR & Transformation and Chairperson of the Reutech BBBEE Governance Council, said the Reutech Group of Companies (Reutech Communications, Omnigo, Nanoteq, Fuchs Electronics, DoppTech, Reutech Radar Systems, Reutech Solutions, Ryonic Robotics and Terra Firma Solutions) go beyond compliance in ensuring the meaningful participation and long-term sustainability of black SMMEs.

“Due to the niche, highly-specialised nature of the South African defence industry, establishing initiatives with previously disadvantaged small, medium and micro enterprises is extremely challenging. You often find that long periods are required to transfer specialised knowledge and skills to enable independent, effective and efficient operation of these SMMEs,” Sotuku said.

Reutech has an established process of identifying and assessing SMMEs for either enterprise development or supplier development. This is critical in ensuring the type and level of support that is required as no SMME is the same. Some of these SMMEs have graduated from enterprise to suppliers upon being fully developed. The support provided, whether it is mentorship, coaching, financial, place to operate etc. continues.

The companies include MND Technologies, Sovereignty Systems and RLDC. These SMMEs are involved in manufacturing. MND Technologies is a designer and manufacturer of radio communications audio and antenna products. Sovereignty Systems specialises in electronic warfare and radar products. RLDC is an enterprise developed on RFID (radio frequency identification) technology. Sotuku said Reutech Communications has RFID expertise, which is being transferred to RLDC. These three SMMEs are operating on rent-free facilities at Reutech Communications.

Reutech has a few other SMMEs across the group that are under either supplier development or enterprise development. There are other SMMEs for development in the pipeline. Sotuku said Reutech furthers transformation through the conversion of 100% white-owned companies into more than 51% black owned entities, as one must recognise the importance of retaining skills whilst increasing black people participation in the sector. “This we do through proper facilitation of both parties and continue to support post ownership changes.” One example of a change of ownership is Durban-based Kinetic Designs, which specialises in powder coating and CNC machining that is now 51% black women owned from previously being a 100% white owned business.

Through Reutech’s different initiatives, the company has ensured participation of military veterans through shareholding in some of the SMMEs, to the enrolling of military veterans’ children in learnerships and support for the Socio Economic Development Initiatives that benefit military veterans.

Sotuku said other initiatives on the socio economic development side to be proud of are:
• Continued annual financial support to the South African National Defence Force Education Trust.
• Financial support to Reunert College which continues to make a difference in the lives of children that come from disadvantaged communities by giving an opportunity to improve dismal matric results so they can be admitted into institutions of higher learning.
• Computer centres across different communities, which continue to make a difference in the lives of those living in those communities.

There are a number of challenges facing transformation within the South African defence industry. Sotuku said the biggest of which is the transferring of skills from the ageing workforce with a wealth of knowledge and expertise. Budget cuts within the Department of Defence & Military Veterans are another challenge. The sustainability of suppliers to the local defence industry is being severely threatened to the point that some SMMEs are faced with the reality of ceasing their operations. “You can’t promise long-term work to your SMMEs,” Sotuku said. “Reutech continues to improve its export business so we can continue to support local suppliers especially SMMEs.”

In April 2019, the BEE Defence Sector Code was officially launched. This stipulates that companies doing business with the state must procure at least 60% of locally produced defence materials, as well as locally produced technologies. Private sector entities in the defence industry must sub-contract no less than 30% of any contract exceeding R30 million to companies owned by black designated groups.

Sotuku said Code compliance has been attainable, but it may get more arduous in the second year as specific sector code targets get more difficult to achieve. Sotuku said it will “take another concerted effort” to achieve compliance with the Code in coming years, but “Reutech is certainly up for the challenge.” She added that the industry as a whole needs to participate in transformation.

The most important transformation objective for Reutech is the direct and indirect jobs for young people it continues to create thorough establishment and continued support of the SMMEs.

Transformation must move beyond compliance; local suppliers must be involved not just in local orders but international orders as well. “A lot of black owned SMMEs are solely dependent on Reutech business. We almost feel we have an obligation to ensure they succeed but we need all key stakeholders’ hands on deck,” she said.

Sotuku attests Reutech’s transformation success to decisive and transformative leadership by its Segment CEO Peter van der Bijl. His whole undertaking on transformation is remarkable. “It’s certainly encouraging to be part of this group as we continue to make a lasting contribution to this economy,” Sotuku said. “Seeing companies grow and transitioning 100% white ownership to more than 51% black ownership is not easy but it is encouraging,” she said. “Only when you have decisive leadership will you see such things happen.”