Product support and solid business opportunities from the Middle East are driving revenue and profitability at Denel Vehicle Systems (DVS), which is also positioning for future growth by developing new vehicle turrets and taking aim at quintessential vehicle projects like the Africa Truck and also diversifying its portfolio towards the commercial sector.
Mxolisi Makhatini, CEO of Denel Vehicle Systems, told defenceWeb that most of the company’s foreign business comes from the Middle East, where it is pursuing a number of lucrative vehicle and artillery opportunities. DVS has delivered a substantial number of N35 vehicles to the United Arab Emirates (UAE) in 4×4 and 6×6 versions. DVS has also recently delivered on a contract for RG31 vehicles in the UAE.
DVS currently has an order from the UAE for the supply of a first prototype RG12 Mk6 internal security vehicle, with further opportunity to supply additional vehicles. The Mk6 is the latest version of the RG12/Nyala with modernised interior, communications, electrical system and other equipment. Makhatini said DVS should conclude this contract by December and is positioning for other contracts in the region.
Although the Middle East provides good business for the company, Makhatini cautioned that clients in the region are looking to establish indigenous capabilities, which could negatively affect long term business with DVS. He noted that customers in this region are generally price sensitive and yet demand serious value for their expenditures.
Elsewhere on the vehicle side, Makhatini said DVS is ready, willing and able to produce the Africa Truck for the broader South African market. “We can’t wait to be involved in this programme,” Makhatini said, but noted that Armscor and the relevant acquisition authorities will take the lead in giving guidance to the industry. “If Africa Truck were to come off, it would benefit the whole SA defence industry.”
Another future vehicle project could be a light tactical vehicle for Special Forces and reconnaissance. Makhatini said many companies are producing armoured personnel carriers, but not light tactical vehicles and this is something Denel Vehicle Systems is looking into.
Further DVS business comes from the Mechatronics division, which specialises in turrets, fire control systems, sights, simulators, target drones and small arms training equipment. This side of the business is expected to increase as Mechatronics provides commander and gunner sights for the Badger infantry combat vehicles destined for the South African Army.
Makhatini said the Badger programme is going to be very important to DVS as it will keep the factory busy and its spinoffs will help it gain further business elsewhere.
Within the Denel Group, Makhatini said consolidation across Denel Land Systems, DVS, Mechem and Land Mobility Technologies (LMT) may happen in the future as there is some duplication across these divisions and it makes sense to consolidate landward vehicle capabilities in one place. There have been focussed and robust debates around this possibility and the potential merits it stands to bring.
DVS division Denel Gear Ratio (DGR) specialises in design and manufacturing of driveline components like transfer cases, connector gearboxes, differentials and axles to mention a few. DGR also does maintenance/refurbishment of Rooikat and G6 power packs, Casspir and Mamba axles, Olifant transmission systems etc. In addition, DGR does commercial work, mainly for Transnet, Matimba, Bell and Clark/DANA repairs (as an authorised agent). Makhatini told defenceWeb that DVS is aiming to increase business at DGR, particularly with Bell, Dana and the broader mining industry, and hopes to get involved with state entities like Transnet and Prasa.
Makhatini is optimistic about the future of DVS, as the company is able to offer combat proven, cost effective and modular vehicles. He said that in spite of the interim but transient liquidity challenges, DVS has managed to deliver on its contracts and is optimistic DVS can be a sustainable and viable entity as demonstrated by its extensive product range.
DVS plans to double its revenue within four years. Focus areas will be cost containment, programme execution, supply chain efficiencies and rapid prototyping development. The African market will be targeted with a focus on upgrading and maintaining vehicles in use. DVS also aims to diversify, and work with the police, the mines, government departments and the cash in transit industry.