The British government was looking for South African defence companies to bid for contracts under Britain’s lucrative £9-billion (R108-billion) annual procurement programme, and to seek partnerships with British concerns, the United Kingdom Minister for Defence Procurement, Lord Willy Bach, said last week.
In an exclusive interview in Cape Town, Bach said: “I’m here to show support and encourage the South African [defence] industry to consider bidding for British defence contracts.
“Where we think we can get value assets for the British armed forces, we will compete globally … It was an invitation, and a reminder really, to encourage them to invest, preferably from our point of view, with a British company, in the hope of winning some programmes or parts of programmes.”
While much of the annual procurement funding was tied to existing projects, Bach said there was technical expertise in the South African aerospace and land systems industries.
The British Ministry of Defence was already using South African products. These included the Denel-manufactured heads-up display on pilot helmets for both the Gripen and the Eurofighter “Typhoon”; and tenting from a KwaZulu-Natal company.
“There’s more than can be done. On our side we want to advertise more of the contracts that are becoming available. We’ll do that through the High Commission and on our website.”
The focus would be on partnerships and joint ventures. The days of big defence equipment producers were over, Bach said.
Bach’s remark comes in the wake of Denel declaring net losses of R377,5-million for the 2003/04 financial year. The blow was softened by the successful bid for a R13-million contract to supply aircraft tooling to the Indian Air Force’s new Hawk trainer aircrafts.
During his visit, Bach led a government and business delegation to the African Aerospace and Defence trade show in Pretoria. This coincided with the publication of research critical of the UK’s arms exports policy.
According to The Guardian, three UK security think-tanks claim that the British government exaggerates the importance of the defence industry in maintaining jobs, while British taxpayers subsidised arms exports to the tune of between £450-million and £930-million last year.
Bach’s public affairs adviser, Adam Thomas, said it was incorrect to have a war of words in the media, as there was an agreement to disagree over such research.
Bach said Britain had won international defence contracts averaging £5-billion annually over the past five years. In recent years it had implemented a stringent defence industrial policy to ensure legitimate transactions.
“The aim is not to protect the British industry, but to make sure that the base of the defence industry is looked after and continues to be competitive,” he said, adding it provided crucial and high-tech jobs.
In South Africa, British Aerospace Systems (BAE), in conjunction with Saab, is supplying the Gripen fighter aircraft and Hawk trainers under the controversial strategic arms procurement package.
In return for the successful bid, BAE, at $2,3-billion, is also responsible for the largest obligation under the national industrial participation (NIP). These are civilian off-sets undertaken by the successful bidder, measured over 11 years at various deadlines.
BAE has started 37 projects reportedly valued at about $600-million to date. One of those is Silplat, the Cape Town-based platinum jewellers, opened earlier this year.
The joint venture between Saab-BAE Systems, Italian jewellery designer Silmar, Impala Platinum Holdings and local jewellers SA Link is expected to generate $100-million in annual sales, with exports accounting for about 85%. It is expected to secure 120 SA Link jobs and create 33 new ones.
Bach was optimistic after visiting the project. “Although it’s early days, the NIPs and DIPs [defence industrial participation] seem to have started well.”
The off-sets have hit flak for not meeting expectations. When the arms deal was signed in 2000 the government heavily touted the spin-offs — 65 000 new jobs and investment of well more than R100-billion were expected.
However, two years ago the Department of Trade and Industry radically revised the job creation figures.