Second wind
Brian M Walters
South Africa’s Denel accounts for more than half of the country’s industry, and in the post-apartheid era quickly established a reputation for innovative design, quality manufacture and competitive prices that boosted exports. However, although many potential customers had a positive attitude to the new South Africa and respected its defence products, the initial sales momentum began to falter, while Denel was also beset with financial problems.
So when Shaun Liebenberg was appointed Group Chief Executive Officer, his task was to turn the company around and restore its place in world markets. Having joined the company 18 months ago, Liebenberg concluded that it was over-centralised and introduced a multi-pronged turnaround plan in August 2005 and he told the IDEX Show Daily yesterday that considerable progress has been made in its implementation. Not that previous sales successes in this region have been forgotten, as support for the G6 self-propelled howitzer supplied to some Gulf armies continues to be an important source of revenue, as indeed is the sale of ammunition for these guns. But it was the link with the International Golden Group (IGG) here that resulted in the development of the AGRAB (Scorpion) 120mm mobile mortar system, which is the subject of recent orders for 48 examples. The IGG link led to the partnership with ST Kinetics and BAE Systems that contributed to the AGRAB design. This is in the spirit of Liebenberg’s turnaround strategy, which calls for formal alliance partnerships and the creation of equity-based relationships.
The overall plan requires Denel to be ‘unbundled’, with former divisions that previously reported to head office, encouraged to sell equity or form partnerships. The sale of 70 per cent of the Optronics Division to Zeiss and the Aerostructure deal with Saab last year are prime examples of this ongoing policy. The eventual aim is for Denel Investment Holdings to draw together the disparate elements in an orderly manner.If a Denel Division proves to be unsaleable but remains active at government insistence despite making losses, Liebenberg would expect the SA government to invest the necessary capital. As part of the tough new policy, Liebenberg expects Denel’s elements to raise productivity and capabilities to world-class standards and after evaluation either get into shape or exit the business. “We are clearly on the road to improved fortunes,” declared Liebenberg confidently.
 Confident: Liebenberg says considerable progress has been made in implementing Denel’s turnaround plan |