Archive: Aerospace strategy takes wing

A long-anticipated strategy to boost South Africa’s aerospace sector the way that the Motor Industry Development Programme (MIDP) bolstered the country’s car-making sector is about to see the light of day. South Africa’s Business Day newspaper reports a draft has been submitted to Trade and Industry minister Mandisi Mpahlwa for approval.
DTI deputy director-general Lionel October says the minister will be “looking at the strategy in the next month or so”. Government targeted the aerospace industry for accelerated development some time ago — based on its growth potential and in line with its aim of increasing value-added manufacturing and exports, the paper said. But analysts commenting on the Business Day report said the draft might be coming too late. They said the strategy intended to build on the all-but-now-abandoned Rooivalk attack helicopter programme and on the “successes” of the strategic arms package`s defence offset. But no sales of Rooivalk – beyond the original 12 to the SA Air Force – is now likely and government has persistently under-funded the programme. Although all 12 Rooivalk are in service, none are, as yet, operational as its weapons fit, principally the Mokopa long-range anti-armour missile was not yet mature. Part of the problem that the AAF never wanted the rotorcraft. It was forced on them in order to lay a foundation for foreign sales – which never followed. Despite being a major beneficiary of the arms deal, five years of offsets have not helped state-owned Denel out of its financial hole and the company remains, by its own admission, near bankrupt. Like rounding up “double the number of suspects” to solve a murder mystery, throwing double the amount of offsets at it might not help.        
There was also growing unease in the SAAF that the Rooivalk saga is about to repeat itself with the A400M. Some other A400M contributors are apparently also getting cold feet about the South African involvement.
According to press reports, the new plan would not be a replica of the 10-year-old MIDP. The programme saved the vehicle industry from collapse and turned it into a large contributor to South Africa`s gross domestic product. But the MIDP goes against the grain of World Trade Organisation rules and was recently challenged by Australia, Business day pointed out. DTI has not yet disclosed details of the new aerospace industry plan, called the Aerospace Industry Support Initiative, but indications are it will aim to achieve improved co-operation and organisation in the industry. Francois Denner, chief director of strategic competitiveness at the department says several strategies have been developed to bolster the aerospace industry since 2000. But the new initiative, developed together with the six largest aerospace companies in SA, is aimed at linking all previous initiatives to provide a comprehensive implementation plan.
It also proposes the formation of an organisation to lubricate the engagement between industry and government, similar to the Motor Industry Development Council, which has proved to be a highly effective interface between government, industry and labour. Denner told the paper the A400M was a key component of the new plan as it would fast-track local component suppliers` integration into global supply chains. The aim is to incorporate guaranteed contracts for local suppliers to provide components for the lifetime of the A400M, which is not yet in production. “If there is one programme that will change the face of the industry, it will be SA taking part in the Airbus Military project, but it won`t be the only programme,” Denner says.
It would enable local suppliers to leapfrog the average 10-year period it took to become a first-tier supplier, he says. South Africa was looking to secure about 5% of the design and manufacture of all components for the Airbus A400M. Denner says DTI has targeted the aerospace industry for accelerated development to illustrate South Africa`s hi-tech capabilities on a significant scale. Job creation is not the main driver as other sectors have higher job creation potential, he says.
Too little, too late … or a new dawn? Time will tell.

31 March 2005