AMD BRIEFING TO THE PORTFOLIO COMMITTEE ON DEFENCE: 2 NOV 04 SOUTH AFRICAN AEROSPACE MARITIME AND DEFENCE INDUSTRIES ASSOCIATION (AMD) 2018/09/19

ROLE PLAYERS AND THEIR PERSPECTIVES SIZE AND SHAPE OF THE SADRI CONTENTS INTRODUCTION ROLE PLAYERS AND THEIR PERSPECTIVES SIZE AND SHAPE OF THE SADRI CHALLENGES 2018/09/19

ROLE-PLAYER PERSPECTIVES SADRI; shareholders need growth and profit, whilst accepting their social responsibility Denel; Sustainability and transformation The dti; Stimulation of SA industrial base DFA; Mutual support for foreign initiatives DoD; Turnkey systems at lowest cost; operational and logistic support -- peace and war; maintain essential technologies, capabilities and capacities Continued 2018/09/19

ROLE-PLAYER PERSPECTIVES, CONT Armscor; Manage DoD acquisition contracts; ensure that SADRI performs within contract. Arms Control Authorities (NCACC & NPC); Responsible operations and trade in armament – Post 9/11 concerns Summary Satisfy essential DoD requirements Sustainable profitability of industries 2018/09/19

THE SOUTH AFRICAN DEFENCE RELATED INDUSTRIES The South African Defence Related Industries (DRI) are: Companies in the public and private sector That provide products and services to security forces. The DRI forms one of the strategic industrial sectors of the South African economy 2018/09/19

SA AEROSPACE, MARITIME AND DEFENCE INDUSTRIES ASSOCIATION (AMD) AMD is the representative association for companies from the DRI. AMD represents the collective interest of its members. AMD as an association strives to ensure a sustainable and responsible South African Defence Related Industry. AMD members elect the Board of Directors to direct the activities of AMD. The Board ensures that AMD is managed by its members for its members. The dti and the DoD recognise AMD as the Industry Association representing the interests of the SADRI. AMD is self-funded by its members 2018/09/19

AMD CONSTITUENCY Representation Represents 90% of defence related business in South Africa Represents 97% of all defence related exporters 2018/09/19

MEMBERSHIP 44 Members “Big Six” (Denel, Grintek, ATE, Reutech, African Defence Systems and BAE Systems Land Systems OMC) Armscor Small and Medium enterprises (29) Historically disadvantaged enterprises (5) International memberships (BAE Systems-RSA; Boeing International Corporation-Africa). 2018/09/19

AMD MEMBER COMPANIES African NDT Centre Aerosud AMS ASET Aztec Components Contactserve Epsilon Eng Flightcraft Aviation IFS-Defence LMT Sediba Network Siemens Sinjana Eng cc Thales Adv Eng VRG Electronics Waymark ATE ADS BAE Systems Land Systems OMC AMT Ansys Integ. Sys. CCII Systems CyberSim Demco GISCOE Internex M-Tek Paramount Log Parsec (Pty) Ltd TAU Aerospace Volt Ampere PRIVATE COMPANIES STATE OWNED Denel (17 units) Armscor CSIR - Defencetek ASSOCIATE MEMBERS BAE SYSTEMS BOEING AFRICA HDI/BEE Lechabile Quality Systems FBS Kgorong Investment Bohlabela Wheels Emzansi Eng Consultants JSE LISTED Grintek Tellumat Reutech IST Dynamics 2018/09/19

ESTIMATED SIZE OF THE SADRI (2003) Turnover Defence-Electronics Rm 4.2 Rest of the SADRI Rm 2.8 Total SADRI Rm 7.0 SADRI Exports Rm 3.7 Total Personnel 15 300 2018/09/19

SADRI PERSONNEL Black White Directors 31 115 Senior Managers 52 300 Middle Managers 156 1201 Junior Managers 559 1937 Skilled personnel 5148 4692 Unskilled personnel 1050 61 Total 6996 8306 Equity ownership, share of economic benefits: 20% (ave) Preferential procurement from BEE firms: 16% (ave) 2018/09/19

SA DEFENCE INDUSTRY SHARE OF DEFENCE TURNOVER 2018/09/19

DEFENCE EXPORTS 2002 2018/09/19

DoD REQUIREMENTS Support to SANDF’s operational and logistic capability, both in times of peace and war Support of the SANDF to remain strategically independent in their expanding responsibilities on the continent (AU, Standby Force, Peacekeeping, NEPAD, etc) Unaffordable to subsidise retention of strategic capabilities and technologies within the local industrial base Therefore focus on Export to: Achieve economies of scale. Be internationally competitive. Expand the export base through international cooperative ventures. 2018/09/19

CAPABILITIES Upgrades and life-extensions of major systems World class artillery systems and mine protection Air defence systems Armoured vehicles Air-to-air missiles Air-to-ground weapons Unmanned Aerial Vehicles (UAVs) Radar systems Command, control, communications, computers, intelligence, reconnaissance and surveillance (C4IRS). Electronic warfare systems – Air, Land and Sea 2018/09/19

CAPABILITIES (Cont) Combat suites for ships and armoured vehicles Avionic suites for military aircraft Submarine periscopes Simulation, war gaming and training systems Sensors and signal processing Gun Turrets Laser rangers and designators 2018/09/19

CAPABILITIES (Cont) Systems Engineering and Program Management Geographic Information Management Quality and Configuration Management Logistics engineering, documentation and Integrated Logistics Support        2018/09/19

MAIN CHALLENGES FACING INDUSTRY Ensuring sustainability of SADRI by complementing local sales with export Ensuring more coordinated government support In export promotion In R & D and Human Resource Development Joint strategic planning, in a government/industry partnership 2018/09/19

MAIN CHALLENGES FACING INDUSTRY (CONTINUED) Developing and retaining essential industrial capabilities, capacities and technologies to meet the requirements of the DoD, through efficient utilisation of all available resources. Responsible operations and trade in armaments, while enabling optimum commercial business Develop industry to become more price, performance and schedule competitive Adapting the SADRI to support the requirements caused by the expanding role of the SANDF in Africa. 2018/09/19

MAIN CHALLENGES FACING INDUSTRY (CONTINUED) Creating more industrial opportunities through outsourcing and in doing so, to make the industry more accessible to small and medium companies. Developing a new source of PDI technical human resources, aligned with the technology programs. Developing and Implementing the SADRI BEE Charter. Consolidating and growing globalisation successes of the SADRI. Ensuring sustainability for the SADRI after the SDPs. 2018/09/19

Thank you for your attention Questions? 2018/09/19