Liebenberg calls for more commercial approach and fewer international partnerships

South Africa’s Denel is poised for a shake-up under new chief executive Shaun Liebenberg, who wants to install a more “commercial culture” at the state-owned aerospace and defence company and concentrate on fewer, more profitable international partnerships.

Rooivalk

The new strategy could include equity sales of parts of the company to the likes of EADS or Saab. Denel is assembling Saab Gripen fighters for the South African air force on behalf of the Swedish company, and will carry out work on the country’s Airbus Military A400M transport aircraft. EADS is also interested in Denel’s helicopter activities.

Liebenberg, who will present his plans for the company to the board on 30 June, believes Denel is too “engineering focused”. He says: “We need to move from an engineering culture to a commercial culture. I would like the Denel guy to wake up in the morning and say ‘I am a businessman with an engineering qualification which helps me in my job’.”

Liebenberg, who visited the Paris air show earlier this month for the first time in his new role, says Denel has failed to exploit its wide-ranging capabilities on the world market. “There are only four or five other companies in the world that can offer the breadth of product solutions that we can – the likes of General Dynamics, Thales, BAE and EADS. Yet our revenues are only 5% of any one of them.”

EADS will not comment on a possible purchase of a stake in Denel, but says it is “committed to partner with South Africa and its industry” and that after signing a memorandum of understanding at Paris on helicopter activities “we expect further development in our co-operation”. Saab declines to comment.

Denel’s strengths – and problems – stem from the era of anti-apartheid sanctions in the 1980s when Pretoria demanded that its defence industry was self-sufficient. Huge amounts were invested in training engineers and building up capabilities. However, it has led to a business with too many programmes and in too many sectors where Denel battles to make profits against global competitors. The company’s Rooivalk attack helicopter, for instance, has struggled to find a market beyond the country’s armed forces.

Liebenberg says the solution could be to seek “domain-based, equity relationships” with international industry rather than “project-based joint ventures” where partners have “been able to come in and cherry-pick profits”.

Rather than trying to have its own offering in as many areas as possible, he says the company “will be more humble and specialise where we are strong”.

MURDO MORRISON/PARIS

ADDITIONAL REPORTING BY HELEN MASSY-BERESFORD IN LONDON

Source: Flight International

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