ATC150811: Report of the Portfolio Committee on Public Enterprises on the oversight visit to Denel Aviation, dated 5 August 2015

Public Enterprises

Report of the Portfolio Committee on Public Enterprises on the oversight visit to Denel Aviation, dated 5 August 2015

 

1.         INTRODUCTION

 

The Portfolio Committee on Public Enterprises undertook an oversight visit to Denel Aviation, Kempton Park Campus on 5 February 2015. The purpose of the visit is to familiarise the Committee with the capabilities, operations and challenges facing the Denel Aviation. The Committee met with the leadership of Denel led by the Chairperson of the board, Ms M Janse van Rensburg. Denel made a presentation which gave an overview of the Denel Group, Denel Aerostructures, Denel Technical Training Academy and on transformation. The Committee undertook a visit to all the operations in the Kempton Park campus.

 

This report provides an overview of the visit, observations and recommendations emanating therein.

 

2.         COMPOSITION OF THE DELEGATION

 

The multiparty delegation consisted of the following Members:

 

Portfolio Committee on Public Enterprises:

• Ms D Letsatsi-Duba (ANC) (Chairperson)
• Dr Z Luyenge (ANC)
• Ms DZ Rantho  (ANC)
• Ms G Nobanda (ANC)
• Mr K Morapela (EFF)
• Mr N Kwankwa (UDM)

 

Committee Support Staff:

• Mr Disang Mocumi - Committee Secretary
• Ms Lee Bramwell - Researcher
• Mr Rodney Mnisi - Content Advisor
• Ms Yandiswa Cele - Committee Assistant

 

3.         MEETING WITH LEADERSHIP OF DENEL

The Committee met with the leadership of the Denel group led by the Group Chief Executive Officer, Mr Riaaz Saloojee, who welcomed the Committee and expressed gratitude to the support of the Committee. The following presentations were made to the Committee, before the Committee embarked on site visits:

 

3.1       DENEL TRAINING ACADEMY

Denel Technical Academy (DTA) is an Aviation and Engineering apprenticeship training institute, offering aviation and non-aviation technical trades to suit any high school leaver’s needs. DTA is an internationally recognised Apprenticeship Training Academy, with a large footprint on the African continent. The technical academy provides Training mostly for Aircraft Mechanics, where provision is made to develop the individual to a level where a license from the South African Civil Aviation Authority (SA-CAA) could be issued. The facility offers thirty seven (37) courses approved by the CAA and fifty (50) various advanced aviation courses accredited by the Aerospace Chamber reporting to the Transport Education and Training Authority.

 

DTA courses are approved and accredited by the SA-CAA, the Transport Education and Training Authority (TETA) and the Manufacturing, Engineering and Related Services Training Authority (merSETA) to offer training in accordance with the Competency-Based Modular Training system. This ensures that apprentices are adequately trained, both practically and theoretically, to allow them to continue with workplace training to qualify as artisans.

 

3.2        PRESENTATION ON DENEL AEROSTRUCTURES

Denel Aerostructures (DAe) uses advanced manufacturing technologies to design and produce complex composite and metallic aircraft structures. DAe is positioned as a Tier 1 and 2 supplier in the global aerospace supply chain, supply aerostructures to Original Equpiment Manufacturers (OEMss) and Super Tier 1 customers, such as Airbus. DAe is working with local Tier 3 and 4 parts manufacturing suppliers as part of developing and growing the domestic national aerospace supply chain. DAe is a current design partner to Airbus Military and also participates in commercial and military aircraft projects with original equipment manufacturers such as Agusta Westland, BAE systems, Boeing, SAAB and Gulfstream. The business unit has a full range of engineering capabilities such as design, development, test and certification.

 

The main range of products, services and activities include the following:

• The design, qualification, industrialisation, detail manufacture and assembly of the Airbus A400M wing-to-fuselage fairing and fuselage top shells, providing DAe with long-term base load order cover.
• The manufacture and assembly of the empennage for the Gulfstream G150 aircraft.
• Providing engineering support and parts manufacture for the Rooivalk combat support helicopter programme.

 

Denel Aerostructures, Aerosud Aviation and Airbus have finalised a new three-way collaborative agreement that will see the three companies jointly develop industrial projects which will enable the South African partners to jointly bid for larger scale manufacturing work packages on Airbus commercial airliner programmes than they would have been able to secure independently of each other. This will provide more long-term sustainable and profitable business for South Africa’s aviation industry while also supporting the development of Small, medium and micro suppliers. DAe is also intending to expand into the advanced manufacturing area of passenger rail rolling stock. The technology used in the manufacturing of complex parts of aircraft can be adapted for interiors of railway coaches. DAe intends to take advantage of government’s intended multi-billion overhaul of passenger rail rolling stock.

 

3.3      PRESENTATION ON DENEL AVIATION

Denel Aviation (DAv) is primarily a maintenance repair and overhaul (MRO) company for fixed and rotary wing aircraft including mechanical and avionic components. The company also provides systems integration, upgrades and retrofit installations. It is located adjacent to OR Tambo International Airport, which gives it direct access to the airports runway. It is a strategic partner to the South African Air Force (SAAF) and has expanded its capability base to support the African continent and selected markets worldwide.

 

DAv identified a need to diversify the products and there are efforts to collaborate with other SOCs and government departments, also to produce for the civilian market. 70% of revenue is from the South African Air Force. Denel and the SANDF have agreed to upgrade and modernise the Rooivalk.  

 

3.3.1     PRODUCT RANGE

DAv is the original equipment manufacturer (OEM) of the Rooivalk combat support helicopter and design authority of the Oryx medium transport helicopter and the Cheetah multi-role fighter aircraft. DAv is an accredited and certified provider of aircraft MRO solutions (including upgrades and systems integration) for both fixed and rotary wing aircraft, associated components and ground support equipment. DAv is an Eurocopter-accredited MRO service centre for Super Puma AS332, Puma SA330, Squirrel AS350 and Bo105 helicopters. Lockheed Martin-accredited Hercules Service Centre for C-130 and L-100 aircraft with a sound and well-positioned infrastructure offering a wide range of MRO services for both transport and tactical fixed-wing aircraft, including the Cheetah and Mirage fighter aircraft platforms.

 

DAv is also an accredited Eurocopter dynamic repair and overhaul centre offering depot-level maintenance of avionics, electrical, oxygen and hydro-mechanical components. The facility is also accredited to carry out repairs and calibration of ground support and test equipment. The facility is an accredited MRO centre for Russian helicopters in Africa for the Mi-8 and Mi-17 variants of helicopters. DAv is also approved by the South African Civil Aviation Authority (SACAA), the European Aviation Safety Agency (EASA) and the Aircraft Maintenance Organisation (AMO) for civil registered aircraft. Denel also intends to establish a South Africa National Training and Simulation Centre (SANTSC) that will offer pilot and technical training for military and commercial aviation as well as emergency and disaster management training.

 

3.4      TRANSFORMATION AND CORPORATE SOCIAL INVESTMENT

 

3.4.1     Skills Development

The Denel Training Academy trained 231 apprentices and 764 learners in various advanced and type training during the 2013/14 financial year. DTA offers rudimentary training opportunities for the first year of apprenticeship in the following fields:  Aircraft aviation,  Aircraft instrument mechanic, Aircraft radiotrician, Electrician, Machine tool millwright, Turner and machinist, Aircraft electrician, Aircraft mechanic, Aircraft structural worker, Fitter and turner, Tool-and jig-maker and  Welder.  

 

 

4.       OBSERVATIONS

The Committee made the following observations:   

4.1        A concern was raised regarding the low representation of women in the organisation in relation to training and technical job categories.

4.2        Appreciation was expressed at efforts to advance transformation, but a concern was raised regarding the slow pace of creating black industrialists and full participation of black businesses in the value chain.

4.3        Appreciation was expressed at efforts to trade in the African continent.

4.4        A concern was raised regarding the tracking of all students who have benefited from the high school programme, to ensure that they have opportunities to study further or secure employment.

4.5        A concern was raised regarding the lack of access of opportunities for rural communities.

4.6        An acknowledgement that Denel is globally competitive was made, and the Committee encouraged the leadership to maintain and sustain the standard.

4.7        There is a need for a more co-ordinated approach to skills development, in conjunction with the Department of Trade and Industry, the Department of Higher Education and Training and all other SOCs.

4.8        The Committee encouraged Denel to aggressively market products internationally.

4.9        The Committee expressed concerns regarding lack of opportunities to export the

            Rooivalk and the declining market prospects for the Cheetah.

 

5.         RESPONSES

In response, Denel provided the following responses to the observations of the Committee:

5.1        Denel has a dedicated programme to assist learners to study maths and science, and create awareness regarding the engineering fields among women.

5.2        The school outreach programme targets young women with Denel employees tutoring over weekends.

5.3        Denel has improved on the BBBEE and women representation. Denel employed a supply chain executive to support and develop competitive black companies.

5.4        Denel will conduct a market and feasibility study on the viability of the South African Regional Aircraft.

5.5        There is a need to deal with beneficiation through the value chain, and there are efforts to improve the localisation of raw material, which has been too low due to restrictions and insufficient approved suppliers.

5.6        Denel has the required policies and procedures in place and they are adhered to.  

5.7        There is a Corporate Social Investment forum for all SOCs which is being co-ordinated by the office of the Deputy Minister.

5.8        DPE will convene an audit and governance forum to share good governance practices among SOCs.

 

6.         RECOMMENDATIONS

The Committee recommended that the Minister of Public Enterprises should:

6.1    ensure that Denel is well marketed to educate the country regarding opportunities

         and the contributions of Denel to the development of the country.

6.2    ensure that Denel makes a deliberate effort to recruit youth in the rural areas to

         ensure that they access opportunities in the company.

6.3    ensure that there is adequate business support from within government and from

        international markets in order to sustain and grow the company.   

 

 

Report to be considered.