SA defence industry needs to work together and consolidate – Paramount


It is now time for South African defence industries to work together as South Africa Incorporated, as there is no room for destructive competition, according to Ivor Ichikowitz, Executive Director of the Paramount Group.

“South Africa has to present an SA Incorporated face to the rest of the world,” Ichikowitz said yesterday during a media briefing. He was of the belief that the United Kingdom’s defence industry has been successful because UK companies work together. Rather than fighting each other for a contract, they decide by gentleman’s agreement who should receive the order. “That way the UK industry wins,” Ichikowitz said, adding that South Africa has lost business due to the way local defence companies compete.
“People said South Africa’s place was only in the developing world,” Ichikowitz said. However, he believes that “we can play on a global field,” but “often in South Africa we doubt our own success.” As an example of international competitiveness he mentioned the Paramount contract for security vehicles from Brazil, which the company won after a “global tender from hell.”
“The defence industry really isn’t a place in some countries like South Africa for a huge amount of competition,” he said, adding that it didn’t make sense for companies to duplicate efforts and invest in research and development where other companies have already invested.
“It is absolutely imperative that big players in South Africa look at consolidation. There is no option to compete in the international market,” Ichikowitz said. The Executive Chairman told journalists that Paramount will work with Denel to consolidate the rest of South Africa’s defence industry – not necessarily through acquisition but also by supporting smaller companies.

In addition, Paramount said it would restart negotiations with Denel on “synergies”, especially as Paramount and Denel complement, rather than compete with each other, in “90% of areas.” In particular, Paramount will actively engage with Denel on unmanned aerial vehicle (UAV) collaboration. “I have huge respect for Denel,” Ichikowitz said. “I think the new management has got the plot.”

He said that Paramount is smaller than Denel but approaching it in size. Over the last couple of years, Paramount has recorded a “significant growth curve”, but Ichikowitz was of the opinion that this “could have been better.” He noted that a growing market segment was helping governments fulfil peacekeeping capacity.

Ichikowitz was speaking yesterday during a press briefing announcing the takeover of Advanced Technologies and Engineering (ATE), which will become Paramount Advanced Technologies once the deal formally proceeds on Monday. ATE was taken out of business rescue by Paramount, which will establish a research and development facility at ATE’s Midrand facilities for land, aerospace and sea. “We have not rescued this business to keep as is,” Ichikowitz told journalists, as Paramount plans to greatly expand ATE’s product line and grow the entity, especially in the UAV, sensors, avionics, mission systems and system integration sectors.