Swedish defence company SAAB says it may co-produce electronic warfare (EW) equipment in India, should talks with Hindustan Aeronautics Limited (HAL) come to fruition. But it labled as wrong a report in the Business Standard of India that it might close its South African production line for the equipment should the joint venture materialise.
Reporting from the Aero India air show in Bangalore last week, the paper said SAAB and HAL were planning a JV to manufacture an airborne EW system for the HAL Dhruv advanced light helicopter. SAAB International India AB country head Inderjit Sial was quoted saying both SAAB and HAL had received board approval for the proposed arrangement “and we are working on the nuances of the deal now. We will hold a minority stake of 26% as per present foreign investment regulations,” he added. “He also informed media persons that SAAB would close down its manufacturing unit in South Africa and move it to India after this arrangement.” the Business Standard said.
SAAB AB spokesman Erik Magni said the company “is not closing down its operations in South Africa for its EW products. That information is not true, the quote is incorrect.” Magni added he could “confirm that we are in discussions with HAL, but since the discussions are a matter of negotiations we are currently unable to confirm any details in those discussions.”
SAAB SA Vice President Communications & Public Affairs Florence Musengi gave a similar response adding SAAB “is continuously reviewing the need to meet market demand and can therefore not exclude the possibility that its products for EW could be produced in other countries as well”.
SAAB CE and president Håkan Buskhe added in Bangalore that the company would also set up a research and development (R&D) centre in India. This would employ 300 engineers over the next five years.
Defence analyst Helmoed-Römer Heitman says the move may again inflame concerns about the future of the South African defence industry generally and those with foreign shareholders in particular. Writing in the September 8, 2010, edition Janes Defence Weekly, he warned the “future of the industry essentially depends on two factors: the SANDF finding the funds to again begin placing long-term orders and to fund R&D; and whether the new foreign owners of the Denel divisions and bigger private companies will actually fund R&D in South Africa. That is a matter of some concern within the military, who fear that some of those companies may be turned into simple low-cost manufacturing arms.”
Commenting on the SAAB co-production move and the R&D centre this week, Heitman said one could not blame industry for exploring its options: “we have cut our defence funding to the level where there is no worthwhile local market and where there is no local R&D funding worth mentioning. That makes South Africa a bad place to develop anything – armed forces are reluctant to buy things not used by the home armed forces, and other countries do have healthy R&D budgets. And then of course, our labour legislation, current and pending, does not exactly encourage anyone to stay here; our education system is not producing a new generation of engineers and technicians, nor would they want to enter an industry clearly out of favour with government; our personal tax regime is not attractive; our national infrastructure is failing; and our growing reputation for corruption does not help.
“Other countries may be more corrupt, but they are buying equipment; they are funding R&D; they are focussed on real education; and their infrastructure is improving. … The mistake from the beginning was to allow control to slide out of SA hands, … unless , of course, one believes in the myth of ‘firewalls’ as an effective means of protecting the IP (intellectual property) of a small country. And no doubt others will follow.”