3 May 2002
Mr d'Arcimoles,
Ambassador Cadet
Mr Zungu, Mr Botha
Mr Thomas
Members of the Denel board of directors and executive management,
Members of Turbomeca management
Members of Airmotive management
Representatives of labour,
Representatives of the French Embassy
Representatives of the prime customers of Turbomeca Africa from the South
African Airforce, Rolls Royce, General Electric and the aviation industry
Ladies and Gentlemen of the press,
the list is a long one because many people have played a role in bringing into being this new company, Turbomca Africa, that we are gathered here today to formally launch. It gives me great pleasure to welcome you to this auspicious occasion, as we have reached an historic milestone for Denel and the restructuring of State Owned Enterprises that we have been working towards for a long time. I feel privileged to be able to share with you the celebration of this event.
Addressing a large group of invitees at the opening of Denel's pavilion at the Africa Aerospace & Defence Exhibition about two years ago, I pointed to the Government's vision for Denel and our defense-related industry. At the time, I highlighted the restructuring of the state-owned enterprises, of which Denel is one of the "big four". Today we have made much progress on Government's agenda for the Restructuring of State Owned Enterprises in the electricity sector, transport sector and remain on track for the Telkom IPO so that the fruits of restructuring that flow from increased business efficiencies, wider ownership structure and improved contribution to our country's growth and development can be enjoyed by all our people.
Denel operates in the tough world of an increasingly globalised aerospace and defence industry. It has risen to this challenge by improving its structures, turning around its financial performance from several negative years and sharpening its core competencies to become a company with world-class niche products and capabilities.
An important part of the restructuring process, in fact, an important element of achieving the global positioning of Denel, was to identify Strategic Equity Partners for the Aerospace group and for the Ordnance group. In the case of Denel Airmotive, the Government's preferred partner was Turbomeca, part of the SNECMA group in France.
The manner in which we wanted to restructure that particular niche business within Denel, was to offer a majority equity holding in Airmotive to Turbomeca to position the business for long term growth and extend Airmotive's capabilities as a manufacturing facility. Denel Airmotive's capabilities were - and are - of high-standing, recognized as world-class by the likes of SNECMA and Turbomeca with whom we have had a relationship for may years, as well as other leading companies such as Rolls-Royce and GE Aircraft Engines for whom we manufacture civil aircraft gearboxes and other parts.
What we are signing today, namely the agreement to form the new company, Turbomeca Africa, is the culmination of a long process, albeit a productive one with several important dimensions. As I indicated when we signed the Heads of Agreement in February: "This event is an important example of the growth of bilateral relations between South Africa and France in a high-technology field, involving technology transfer, training and development of South African skills."
As you will appreciate, the birth of this new company is in line with Government's overall objective to develop our country and our continent. Whereas Denel Airmotive will cease to exist under that name, the rebirth of its capabilities in a rejuvenated form - under the name of Turbomeca Africa - will strengthen South Africa's position in the global aerospace environment. This business, appropriately named Turbomeca Africa is a practical example of European and African cooperation in the spirit of the New Partnership on African Development.
The strategic partnership we are cementing here today will be mutually beneficial to Denel and Turbomeca. In the partnerships the companies will establish a facility to service helicopter engines for the entire African continent. It is our understanding that where Turbmeca finds it more cost- effective or otherwise beneficial from the business perspective to undertake maintenance and manufacturing from this base in South Africa, we in turn will reap the benefit of enhancing our industrial base securing existing jobs and providing new job opportunities for our people. In addition there are possibilities for Turbomeca to apply its propulsion technology to applications in the transport sector that could be explored in the future.
In March I signed a MOU with organized labour on the restructuring and transformation of Denel whose positive contribution has been invaluable throughout the entire process. This is one the many concrete examples of the workings of the NFA to secure consensus on the implementation of Governments restructuring programme.
Finally I want to take this opportunity to thank the Turbomeca and Denel management who worked diligently over many years to bring us to this point. Long months of negotiation and many hours of drafting transaction documents preceded this occasion. It was surely only a firm belief in the advantages of forming this new company that kept the respective parties going. My congratulations and heartfelt appreciation on behalf of the South African Government.
I Thank you.