SanDock Austral is South Africa’s largest Black-owned defence company
DEFENCEWEB / 07 AUGUST 2020 - 11.45 / GUY MARTIN
SanDock Austral has been established as South Africa’s largest black owned defence company, covering air land and sea capabilities and technologies.
According to Dr Mthobisi Clyde Zondi, Executive Chairman of SanDock Austral, the current shareholders in 2018 registered SanDock Austral in line with its historical predecessor. In the 1970s and 1980s SanDock Austral was a defence conglomerate renowned for shipbuilding and armoured vehicle manufacturing and saw the construction of the SAS Drakensburg for the South African Navy, and the Ratel infantry combat vehicle fleet and G6 artillery system for the Army.
The Project Hotel hydrographic survey vessel being built by Sandock Austral.
In the early 1990s the company was de-conglomerated and several companies acquired components of SanDock, thereby leaving the original a defunct shell company. “The shareholders of the current SanDock Austral had always shared a vision of building an indigenous defence entity whose capabilities would cover the majority of military requirements locally and abroad,” Zondi said in explaining to defenceWeb that the SanDock Austral name captures the spirit and form of the original entity.
The SanDock Austral Group includes SanDock Austral Aerospace, SanDock Austral Shipyards, SanDock Austral Defence Engineering Systems and Torpedo South Africa. It aims to harness local talent and to consolidate it into a sizeable transformed defence and commercial technology company.
“SanDock Austral has positioned itself as a preferred partner for multinational defence contractors that aim to enter the regional and international markets. The partnership model involves co-investment in the region, technology transfer, localised product support and indigenisation of customised product systems,” company literature states.
Defence capabilities cover remote control weapons stations, low-cost active protection systems, missiles, systems engineering, assembly and maintenance of torpedoes, radars and subsystems and radar testing. Broad engineering and fabrication solutions are also offered.
On the marine side, the group offers the construction of small to mid-range steel and aluminium vessels and marine structures, repairs to all sizes of vessels and marine structures and construction and maintenance services to the offshore oil and gas industry. Shipbuilding and repair capabilities are offered through SanDock Austral Shipyard, formerly Southern African Shipyards (SAS). This is the largest shipyard in southern Africa and has built both naval and commercial vessels. It is currently constructing a new hydrographic survey vessel for the South African Navy under Project Hotel and has done frigate refit work for the Navy.
Aerospace capabilities cover an electronic warfare jamming pod, electronic countermeasures, maritime surveillance aircraft and aircraft maintenance. Airport security is another capability offered, including personnel recruitment and training, airline and airport security audits, and airport security planning, design and upgrades.
SanDock Austral has a factory in Springs east of Johannesburg that manufacture precision mechanical components for weapon systems. It also has partnerships with numerous local companies in the fields of radar and electronic warfare, amongst others.
Zondi told defenceWeb that SanDock Austral seeks to provide a platform where South African companies can showcase their combined complementary capabilities through packaging integrated defence solutions that appeal to international markets. “Such a business model inherently requires collaborations and co-operation with several roleplayers to ensure the sustainable provision of integrated products and services. We are therefore continuously engaging defence companies and organisations of all sizes, locally and globally, on potential cooperation and/or collaboration.”
One of the collaborations is with Italy’s Leonardo, which is part of the Torpedo SA joint venture. “Given the strategic trajectory of SanDock Austral, it made sense for us to reach out to them in late 2017 and explore collaboration opportunities. One of the opportunities identified was the lack of torpedo maintenance, repair and overhaul (MRO) facilities in the country, and the Original Equipment Manufacturer was committed to jointly establish this with SanDock Austral,” Zondi explained.
“The vision is for this capability to eventually service the entire region, focusing on torpedoes and related maritime warfare technologies. In addition, we have discussed opportunities around the 76 mm Oto Melara, maritime surveillance aircraft, systems integration for naval vessels, etc. Leonardo has also introduced an innovative small and affordable submarine for promotion on the African continent for construction at our shipyard in Durban.
“Our focus is to be a technology developer and primary systems integrator, and in the future, whilst we do have plans to expand our manufacturing facilities, we will work in a cooperative and collaborative manner with manufacturing partners,” Zondi said.
SanDock Austral’s target market is countries that have defence relations with South Africa or who are looking for alternative defence suppliers outside the West. Prime focus areas are Africa, Asia, South America and the Middle East.
SanDock Austral is the largest black owned defence company in South Africa, both in terms of revenue and facilities owned. This is an advantage when pursuing local contracts as according to current South African law, after a bidder has met the minimum technical compliance threshold, companies with higher Broad-Based Black Economic Empowerment scores fare better when compared with those with lower scores. The Defence Charter and the Defence Review also give priority to South African black owned defence organisations.
Zondi outlined some of the numerous challenges facing the local industry, including limited government support and an unstable Denel. “The local defence industry has been under strain for the last five years, at least. The latter events such as the challenges faced by Denel, the erosion of the defence capital budget, and more recently, the COVID-19 pandemic, have merely exacerbated an already precarious state of affairs.
“The fact that there are challenges with the National Conventional Arms Control Committee (NCACC) that are not understood by key decision-makers in government, simply because they are not close to defence, is indicative of government not making deliberate efforts to provide government-wide support to the South African Defence Industry,” he said.
“Defence products are sold on government-to-government transactions mostly, and hence the importance of government support to ensure local products get the exposure they deserve when interacting with other countries. This has not been adequately done in the case of the South African defence industry and hence the struggle to get local products out there.”
The instability at Denel is another cause for concern. “This entity has a huge impact on the survivability of the industry given the role in played in the value chains of many locally manufactured products. If it is left to collapse there will be even more casualties than we have seen in the last three years in the industry,” Zondi said, as Denel is intrinsically crucial for the South African Defence industry.
“Over the last 40 years the South African government poured billions of rands in the generation of significant defence intellectual property, most of which sits with Denel. Furthermore, for the last ten years Armscor has consistently spent almost half of its budget on Denel-led projects, thereby making Denel an important pillar in the structure propping up the local defence industry. Given its state-owned entity status however, Denel has always been vulnerable in terms of its long-term capacity to sustain performance and technical capability. It was for this reason, amongst others, that the shareholders of SanDock Austral had been grooming the vision of a privately-owned indigenous defence conglomerate for some time now. SanDock Austral is therefore not positioned to fill the gap left by the decline of Denel, but rather to work with Denel and other local companies in a complementary fashion to ensure long-term survival and eventual thriving of the local defence industry.
“Locally, the demand is expected to further decline with government spending far less in defence acquisitions, maintenance and research and development than it did ten years ago. Local companies are therefore expected to review their service offerings with intention to diversify their product/service base so as to appeal to new markets, consolidate their capabilities and rationalise value chains to contain costs, and forge complementary partnerships with like-minded entities. Growth to local production within the defence industry will be driven by the increase in exports,” Zondi said.
“The survival of the local defence industry does not lie in the increase of local defence spending; but rather in ensuring that government and industry work together to position, present and promote South African defence products and services for exports markets. This will need a mindset change from industry players, whereby they would prioritise cooperation and collaboration more than competition. By collaboration we don’t mean collusion, but rather placing together complementary capabilities to present South Africa Inc defence solutions that will compete with the best in the world.”
Zondi firmly believes the industry has to re-invent itself. “Any crisis will provide an opportunity for re-invention. It is up to the entities and other role-players to exploit this to the benefit of the defence ecosystem.”
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER