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Johannesburg - Saab Grintek Defence (SGD) is expanding its presence in sub-Saharan Africa and will be doing a lot of work for the new Gripen E jet fighter.
SGD chief executive Magnus Lewis-Olsson was optimistic last week about the company’s longer-term business prospects. He said its order intake for this year was “fantastic”. The South African defence and security company is majority owned by Swedish defence technology group Saab.
“Our biggest concern is not to get new clients but to produce everything we’ve sold and get paid for it. So we are increasing personnel again and hiring [people],” he said.
In the shorter term there were certain “barriers” in South Africa that were absent in other parts of sub-Saharan Africa, particularly company ownership criteria and broad based-black economic empowerment (BEE).
All these things took a while for a foreign company to learn, appreciate and understand and were “an extra burden” that had resulted in a new level of human resource interaction it was not used to, he said.
But Lewis-Olsson admitted many countries had similar burdens; India, Thailand and Brazil required that companies hire a certain number of local workers for every expatriate.
SGD had a BEE grading of level five, he said, but more stringent codes were being introduced. “It’s challenging for a hi-tech company like ours to find empowered companies that can deliver electronic components to us. We are working with the Department of Trade and Industry and with other stakeholders to try to find a way of empowering companies to fill the void.”
Lewis-Olsson said an active black partner had a 28.75 percent shareholding in SGD but declined to identify it. “It’s always been Saab’s policy not to talk about our shareholders. There’s nothing fishy about it at all,” he said.
Saab acquired telecommunications and defence manufacturer Grintek for about R334 million in 2005.
Lewis-Olsson also declined to comment on whether Amandaba Investment Holdings still had a stake in SGD.
In 2012, Amandaba sought an urgent high court interdict to stop Lewis-Olsson’s appointment and direct SGD under the Broad-Based BEE Act to appoint a black person as chief executive, among other things .
Amandaba also claimed it was used as a front by SGD, which must be referred to the BEE Advisory Council for investigation. SGD gave notice of its intention to oppose and denied the allegations. Amandaba removed its application from the urgent court roll.
SGD told the court last March that it appeared Amandaba had lost interest in and abandoned its application, and applied for it to be formally finalised. Amandaba’s application was dismissed with costs.
Lewis-Olsson became chief executive of SGD in 2012 when it was making a loss and did not have the order intake to support the size of its workforce. A restructuring resulted in about 230 people leaving.
Lewis-Olsson said SGD now had a workforce of about 850, was back in the black and exceptionally profitable this year, but Saab did not disclose financial figures separately for its South African operations.
The Brazilian government announced last year it had selected the new Gripen E for its next fighter system.
SGD would be doing a lot of work in South Africa for Saab for the Brazilian contract, Lewis-Olsson said. There was a possibility of additional orders for the jet fighter for Sweden and maybe another country.
“That is a big feather in our cap. It is going to be challenging because of its advanced systems but it’s a great honour that South Africa is doing it.”
The group was looking to the future and saw big opportunities in sub-Saharan Africa, where it was already exporting its products in small numbers to Botswana, Namibia, Kenya, Ghana and Angola.
It opened an office in Botswana last month and also had an office in Kenya that supported the UN.
Lewis-Olsson said products manufactured by SGD were made exclusively in South Africa, with between 75 percent and 80 percent of them exported. About 80 percent of turnover came from its electronic warfare and aircraft avionics product lines.
“SGD is a definite pearl in South Africa’s industry. There are not many companies that compete with the best,” he said. - Business Report