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Aerospace and Defence Industry

About the Sector

The aerospace and defence cluster comprises private and public sector organisations (including commercial companies and business units) that are directly or indirectly involved in the provision of goods and services to security forces and civil society.

The aerospace industry in South Africa consists of a range of stakeholders in general, commercial and military aviation; air traffic management; aircraft materials, parts and components; system manufacturing; integration; propulsion avionics; sensors; ICT systems; maintenance, refurbishment and overhaul; and research and technology, including university- and science-council-based fundamental research into new technologies and materials (e.g. titanium and composites for light structures).

Given the increased overlap between products intended for defence and civilian use, both nationally and internationally, the aerospace industry includes companies that produce defence equipment or products by making use of civilian technologies, or which manufacture dual-use products that are saleable in both defence and non-defence markets. The technological intensity of the aerospace and defence sector acts as a driver for new technologies and technical skills that are diffused to other sectors thereby intensifying industrialiition and contributing to evolution towards a knowledge economy.

In 2014, the turnover of the defence industry increased to R15.8 billion, with R9.1 billion of this attributable to high value-added export contracts. This impacts positively on the country's balance of payments and foreign reserves and positions the industry as a sector with one of the highest export propensities in South Africa. The industry also contributes significantly to employment and skills development, employing about 15000 highly qualified and experienced technical personnel. The aerospace industry continues to nurture engineers, technicians and artisans who often go on to play valuable roles in transport, construction, space and power-generation projects.

Key opportunities

  • Ramping up cluster development and investment in the CAV aero-mechanical cluster and special economic zones.
  • Forging synergy with national champions or state-owned companies in leveraging on their acquisitions to boost local manufacturing and broaden their supply chains.
  • A programme led by the dti to scope capabilities, supply chains and opportunities for RFP/NIP localisation in civil and defence procurement and in support of exports through the Export Council.
  • Increasing the strategic profile and business relationships with original equipment manufacturers (OEMs) such as Airbus, Boeing, Embraer, etc.
  • Unlocking current incentive programmes to support the aerospace and defence industry.
  • Integrating the sub-tier suppliers into the local and global supply chain by developing industry-wide manufacturing capabilities and competitiveness in engagements with integrators.

Key constraints

The primary and most significant constraint in the aerospace and defence industry is the pervasive and persistent insufficiency in the pipeline of skilled personnel to absorb current knowledge and experience. Other notable constraints include:
  • Lack of large development programmes to build technology capabilities and skills pipelines and enable knowledge transfer from international to local firms, and between knowledge-generating entities (science councils, universities) and industry. This is also related to recent reductions in research and development spend, shortage of technology demonstrators and less than optimal capacity development and skills retention.
  • Lack of a comprehensive aerospace and defence industry support programme, including export support, compliance skills and a 'South Africa First' philosophy, which would put a much stronger emphasis on localisation of technology.
  • Lack of diversification into export markets, increased foreign ownership in key strategic technological areas, reduction in the size of the industry and insufficient product diversification (civil and commercial).

Achievements

  • South African defence, civil security and telecommunications company Saab Grintek has secured orders to the value of almost R1 billion for the installation of its integrated defensive suite on the Dhruv advanced light helicopter of the Indian Army and Air Force.
  • Denel Group has secured an order book of R35 billion, the state-owned entity's largest, which will be executed over the next five to 10 years.
  • A 10-year multibillion-rand Armscor contract, which would see state-owned Denel produce morethan 200 armoured vehicles for the South African National Defence Force (SANDF) is expected to "significantly and permanently" change the South African defence industry. The production of the Badger is expected to create about 2 000 jobs during its production period.
  • Inclusion of the sector under the Manufacturing Competitiveness Enhancement Programme (MCEP)
Aerospace Industry Initiatve support http://aisi.csir.co.za/ is an initiative of the dti some of its achivements are listed below
  • New technology development for unmanned aerial systems in both local and international markets.
  • Development of UAV portable ground station that has networking capabilities for the UAV market, with international market interest.
  • Enabling SMMEs to design amd manufacture avionic components resulting in import substitutions and the growth of SMMEs.
  • Suppliers using a web-based procurement portal linking an OEM with its supplier base.

Contact Details

Ms Nokwanda Fipaza
Director: Aerospace and Defence
Tel: +27 (0)12 349 5567
E-mail: NFipaza@thedti.gov.za