Denel is back and redefining its future: Interim CEO

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State-owned defence company Denel’s interim group CEO, Michael Kgobe, says the company is resilient and retains the ability to innovate making it able to adapt and survive.

Speaking during a media briefing at the Africa Aerospace and Defence exhibition at Waterkloof Air Force Base in Pretoria, Kgobe said Denel was back as a significant player in the defence industry. It might be in a different shape and with different structures, but the essence of the company will remain.

He stressed that Denel is a national asset which plays a vital role in ensuring the country’s sovereignty. It was established in 1992, when the manufacturing divisions were split from Armscor.  Armscor then became the procurement agency for the South African National Defence Force (SANDF).

Kgobe said that while there was no denying the fact that Denel had become a prime target for those who wanted to capture the state and its assets, this will not be the end of the company.

To reinforce this, he said four factors were involved: the superior quality of the product, the range and level of service provided to clients, the intrinsic quality of the employees and support from government. He said many of these partnerships had survived the challenging times, and the foundations for future collaboration remain.

Government support was underlined by the presence of Public Enterprises Minister Pravin Gordhan at the briefing.  He emphasised that Denel is in the phase of stabilizing, sustaining, growing, and innovating.

Chief restructuring officer Riaz Saloojee, who was appointed in the position about three months ago, reiterated that with the interventions undertaken and with government support there was now a roadmap to a sustainable future.

He stressed the vital nature of Denel, saying it still had an incredible brand and there were still many enquiries about partnerships because the company was still relevant in the market. He said Denel was of key importance to the country because it provided national strategic independence and security of supply.

He pointed out that Denel had critical capabilities, saying there are not many countries in the world that have artillery capabilities like South Africa, as well as integrated systems capabilities which included the ground-based air defence system or GBADs capabilities for the national defence force.

Saloojee said: “If we fail in securing the future of Denel, we fail in securing the future of this industry and the sovereignty of our country and support of the national defence force.”

Denel recently announced a comprehensive plan to streamline and refocus operations and return the company to profitability. From being a stable state-owned entity, after 2016 the company began showing signs of financial distress partly due to state capture, mismanagement and poor project execution and contract management. It was also unable to pay salaries in full for almost two years – however, staff were finally paid outstanding monies in August.

The Aerospace and Defence Expo (AAD) returned after a four-year break due to the COVID pandemic. Defence Minister Thandi Modise opened the three-day defence expo on 20 September.

AAD 2022 will conclude with a public air show on Saturday and Sunday.