|
The Future of the South African
Armaments Industry
INTRODUCTION
South Africa's defence budget has been cut by almost 40% since 1989. The result has been a drastic reduction in the procurement of armaments by the Defence Force. This has had a major impact on the local armaments industry. The question which arises is whether the defence industrial base can be maintained or not.
This article will first briefly trace the history of the South African armaments industry, from its humble beginnings in the last century to the recent restructuring of Armscor. It will then consider the need for a local armaments industry from three perspectives and identify the factors that determine the shape and size of a local armaments industry. The article concludes with some remarks on the future prospects for the South African armaments industry.
HISTORICAL BACKGROUND
The roots of the South African armaments industry go back to 1806, when Johan Samuel Fredrik Botha, one of the first private gunsmiths at the Cape, imported gun parts such as locks, stock blanks and barrels from England and assembled the weapons with the help of Malay craftsmen, who finished the stock blanks and also made stocks from local stinkwood and yellow-wood. The Voortekkers prized a weapon from the Botha workshops, and many were used during the Great Trek of 1836.
With the outbreak of the First Boer War in 1880, the Boers had only a few antiquated cannons - even "Oude Grietjie", the Voortrekker cannon that was buried at Potchefstroom, was dug up and used against the British. Martinus Ras, a farmer and blacksmith, manufactured two cannons on his farm Bokfontein. The first, named "Martienie", was used against the British fort at Rustenburg. These were the first artillery pieces designed and manufactured in South Africa. During the Anglo-Boer War a limited amount of local weapons' manufacturing took place. The "Long Cecil" cannon manufactured by De Beers in 1899-1900 is a well-known example.
After the Union of South Africa was formed in 1910, the country had the status of a dominion of Britain. The general assumption was that, in case of war, countries such as England and the United States would supply South Africa with armaments. When the First World War broke out in 1914, South Africa found herself in a difficult position: as a result of the pressure on the British armaments industry, Britain was unable to supply weapons to the dominions, and the dominions were required to be self-sufficient in the manufacture of armaments for their own needs. This unexpected turn of events forced South Africa to manufacture some of its most urgently needed weapons. For example, in August 1914 a 15-pounder cannon, named "Skinny Liz", was converted into an anti-aircraft gun at the Soutrivier Railway Workshop and the Army Ordnance Workshop in Woodstock. After the war it was generally believed that there would be peace for at least a decade, and only the aircraft maintenance industry was retained.
The next effort to expand the armaments industry came shortly before the Second World War when training aircraft were assembled locally and the Pretoria branch of the Royal Mint manufactured small-arms ammunition. In the years preceding the war, South Africa had become an industrialized country. This enabled the country to design and manufacture a substantial amount of basic weaponry for the Union Defence Force and the Allies during the war; 5 770 armoured cars, 600 guns of various caliber and more than 30 000 military vehicles of 80 different types were manufactured. These included one-ton, three-ton and five-ton trucks, machine-gun carriers and command-and-control vehicles. Large quantities of bombs and ammunition were also manufactured. South Africa was one of the first countries to manufacture radar sets and four locally developed JB1 radars were used in East Africa and the Middle East. Most of these developments were discontinued after the war and virtually all the wartime armaments factories, with the exception of the AECI and SA Mint ammunition plants, reverted to their pre-war commercial business.
After South Africa left the British Commonwealth of Nations and became a republic in 1961, the country became increasingly isolated from foreign weapon suppliers. The first step to expand the local armaments industry was the formation of the Munitions Production Board in 1964. At that stage armaments production was largely in the hands of private industry. In 1968 the Cabinet decided that the Munitions Production Board, which had by then been renamed the Armaments Board, would be responsible for the acquisition of armaments for the South African Defence Force. At the same time the Armaments Development and Production Corporation of South Africa was established to supervise the manufacture of armaments.
THE RISE OF ARMSCOR
In 1976 it was decided to merge the Armaments Board and the Armaments Development and Production Corporation, and although this merger was effected immediately, it was only ratified by legislation on April 1, 1977 - the date on which Armscor (The Armaments Corporation of South Africa Limited) was formally established. This occurred six months before the imposition of the United Nations' arms embargo against the Republic of South Africa. The policy from the outset was to utilize the private sector industry wherever possible. Capabilities that already existed in the private sector, eg in the vehicle and electronics industries, were not to be duplicated. This resulted in a dual-sector armaments industry. The public sector armaments industry (Armscor) was primarily responsible for weapon systems development and integration, whereas the private sector armaments industry supplied materials, components, sub-systems and in many cases complete products. The major portion of the South African armaments industry has always been in the private sector. The ratio of employment opportunities in the private sector in relation to the public sector is roughly 5:1.
Armscor and the private sector armaments industry expanded rapidly as the war in Angola escalated. Completely new industrial sectors were established, and the capabilities of the South African industry were vastly improved. Armscor expanded into one of the largest industrial groups in South Africa and by 1981 had assets of R2 000 million, a yearly turnover of R1 500 million and more than 25 000 employees. Armscor was also contracting more than 900 companies in the private sector, which employed about 150 000 people.
To maintain its preparedness and to safeguard its accumulated expertise and experience, Armscor entered the international market in 1982 and soon became successful. Export earnings grew to the point where the armaments industry became the largest exporter of manufactured goods in the country and one of the most extensive armaments industries in the world. In spite of the compulsory arms embargo against South Africa, the local armaments industry supplied the Defence Force with all the weaponry it required for its attempt to convince the enemy that a military solution to Southern Africa's problems would be unattainable.
Since the cessation of armed conflict in the sub-continent there has been a rapid decline in the defence budget. South Africa is now spending a modest 2,7% of its gross domestic product on defence. This has had a major impact on the armaments industry. The last three years have seen the cancellation or curtailment of a large number of contracts, retrenchment of personnel and even the closure of a few companies.
THE RATIONALIZATION OF ARMSCOR
The decreasing defence budget provided the impetus for a complete restructuring of Armscor. Aware of the fact that threats from beyond South Africa's borders had diminished markedly, but ever mindful of the fact that the armaments industry was the repository of the bulk of high technology in the Republic, Armscor made representations to Government to divide its expertise and facilities for the benefit of the country.
In essence it was felt that the high-tech manufacturing facilities of the Corporation could be utilized as valuable assets in the growth of the Republic's industrial base, while still being available as manufacturing resources capable of supplying in the needs of the South African Defence and Security Forces.
The Cabinet, after careful investigation and consideration, agreed that Armscor's proposal offered many advantages to the Republic, not least of which was the retention of the Republic's high-technology base for the benefit of generations to follow. On April 1, 1992, Armscor split into two separate parts. A new industrial group named Denel was established, under the Ministry of Public Enterprises, which would render high-technology manufacturing facilities to its clients, locally and internationally.
Armscor would remain part of the Ministry of Defence and, whilst it would no longer be directly involved in manufacturing, would provide an equally valuable acquisition function to the State. It would also promote the export of armaments on behalf of the broader South African armaments industry. The latter encompasses all the concerns that supply Armscor under contract, including the former Armscor subsidiaries now within the Denel group.
THE NEED FOR A LOCAL ARMAMENTS INDUSTRY
Why does South Africa, or for that matter any country, need a local armaments industry? Let us consider this question from three points of view, viz. the military-strategic, socio-economic and military-operational perspectives.
From a military-strategic point of view, the armaments industry is considered a strategic asset. If the security of the country were threatened and it could not obtain the weapons it required to defend itself, it would obviously strive to be self-sufficient as regards armaments production. The aim of its armaments industry would be to ensure the supply of weapons to the defence force. Secondary aims might include the supply of weapons to other local clients, such as the police, and the export of weapons to foreign clients. This function of the South African armaments industry has lost its priority - the immediate military threat to the country has virtually disappeared, while the arms embargo is becoming increasingly ineffective as many countries no longer feel morally obliged to comply therewith.
From a socio-economic point of view, the armaments industry is regarded as a source of employment and technology. The high-tech manufacturing industry is less labour intensive than the primary industries, but provides high-remuneration jobs. Ultimately the prosperity of any country will depend on its ability to produce high-value goods and services for its domestic and the international market that raise the per capita gross domestic product. An armaments industry also has the effect of raising the general standard of technical sophistication of the local industry, and this has played an important role in the development of the South African industrial base. New and advanced technologies have been developed, quality standards improved and experience gained in export marketing. The restructuring of Armscor was aimed at releasing these capabilities for commercial application.
From a military-operational point of view, a local armaments industry has important operational advantages for the Defence Force. These fall into four categories:
- The technological advantage. If all the world's defence forces had free and equal access to the same weapons, it would only be through the superior employment thereof that a combat advantage could be achieved. When one party has access to superior weapons which its adversary cannot obtain, it will have a definite advantage. This advantage can often only be achieved through own research, development and manufacture of new-generation weapon systems. South Africa achieved such an advantage in artillery during the Angolan war with its G5 and G6 guns.
- Tailor-made equipment. Every country has a unique environment. Climatic, geographic, demographic and doctrinal differences make it difficult to develop universally suitable weapon systems. Unique circumstances require unique weapons which can often be developed or modified locally only. During the insurgency war, the South African Police and Defence Force encountered a unique landmine threat. In response, the local armaments industry developed a range of unique mine-resistant vehicles.
- Logistic support. Many modern weapon systems, like fighter aircraft, are highly complex and require frequent industrial repair, maintenance and upgrading. War damage would require even more substantial repairs by industry. An efficient and prepared Defence Force therefore requires a supportive local industry. This becomes even more vital when the country is situated far from potential suppliers and their industrial complexes.
- Vulnerability. Whenever weapons are purchased from foreign suppliers, the purchaser becomes dependent on the supplier for spares, technical support and consumables like ammunition. International restrictions on the armaments trade, especially in times of crisis, render a country without a local armaments industry vulnerable.
In conclusion, it seems clear that the existence of a local armaments industry can be viewed from various angles. These factors have determined the shape and size of the South African armaments industry for almost two decades and will form the basis for assessing its future.
FUTURE PROSPECTS FOR THE SOUTH AFRICAN ARMAMENTS INDUSTRY
The history of the South African armaments industry has been one of expansion in times of conflict and contraction in more peaceful periods. Armscor's mission has always been to meet South Africa's fluctuating demands for armaments and related products/services and to maintain key industries and technologies for this purpose.
The future of the armaments industry will now be determined primarily by military-operational factors, the most important of these being logistic support. Since the early sixties, the local armaments industry has been supplying a large variety of locally designed and manufactured weapon systems and other items of equipment to the Defence Force, the police and to international clients. Most of these systems will still be in operation well into the next century. The continued supply of spares, ammunition and maintenance support is essential.
Life-cycle support entails more than the supply of consumables and maintenance services. Many modern weapon systems also require upgrading and life-extension reconstruction during their life-cycles. Some systems will reach the end of their lifetime by the end of this century and will have to be replaced. Most of the Navy's vessels, the Alouette helicopters and the Impala aircraft are a few examples. Design, development, systems integration and testing capabilities therefore need to be retained in selected areas.
Based on the factors elucidated in the foregoing, Armscor, in a joint effort with the Defence Force, has analysed the future need for the capabilities of the local armaments industry. This has enabled us to formulate policy guidelines for future procurement and technology development. We will no longer strive for complete self-sufficiency, as this is neither affordable nor necessary any longer. In certain areas the policy will be to purchase overseas, in other areas to procure on a competitive basis, while in the strategic areas self-sufficiency will be maintained. As circumstances change, this analysis will have to be updated, but for the present the following areas have been identified as the most important ones to retain:
- the logistic support capabilities of most segments of the armaments industry; and
- the design, development, systems integration and testing capabilities of the military electronics industry and a number of other segments of the armaments industry.
The following policies are currently employed by Armscor to ensure that the defence industrial base is maintained:
- Preferential procurement. Preference is given to key prime contractors in the strategic areas whenever contracts are awarded.
- Exports. Armscor encourages and supports the international marketing of South African armaments and plays a facilitating and coordinating role for the armaments industry.
- Commercial application. The armaments industry is encouraged to apply its capabilities in the commercial sector, and the development of dual-use technology is supported.
- Counter trade. Counter trade agreements are negotiated whenever armaments are procured overseas. Part of this counter trade must be in goods or services supplied by the local armaments industry.
- Research and development. Research and development projects are aimed at remaining at the forefront of technology in the strategic areas. Prototypes of new weapon systems will be developed but production will commence only when there is a need for replacement due to age or obsolescence. Partnerships with overseas industries will be sought in appropriate areas.
CONCLUSION
This paper has described the development of the South African Armaments Industry and the factors currently shaping its future. The industry has already been downsized and further reductions will probably take place. The logistic support capabilities will remain intact and the industry will become much more focused on certain strategic areas. Commercial business and exports will become more important, as will alliances with other industries, both locally and internationally.
|
|
|