South Africa’s Denel Forced Into Strategic Shift – Now Paying Off

Base, Bleeding Out?

Back in July 2005 it was apparent India’s sanctions against Denel and possible disqualification from a $2 billion artillery contract could have a major effect on the South African defense firm as a whole. In August 2005, those sanctions came to pass, barring Denel from a contract it was likely to win and accelerating efforts already underway to radically restructure the firm.

CEO Shaun Liebenberg launched that shift in late 2005 with some frank discussion of the global defense market, and the position of small-medium players like Denel in it. At DSEI 2005 in London, UK, the outline of this new strategy was already apparent. Many of the products Denel is known for will no longer define the firm. But could it find a way to stanch the bleeding and survive in a globalized market?

And how has it done since?

• Denel’s Position
  
• Denel’s New Strategy
  
• Updates and Key Events [updated]
  

Australia’s M113 APC Family Upgrades

M113A1 & M1A1s, 1AR
(click to expand)

The M113A1 family of vehicles was introduced into service in Australia in the mid 1960s, and arrived in time to see service in Vietnam. Additional vehicle variants were added until 1979, and there are 766 M113A1 vehicles currently in the Australian Army fleet. By February 2005, however, only 520 remained in service.

A number of upgrades have been suggested for Australia’s APCs(Armoured Personnel Carrier) over the years, with a number of different reviews and upgrade proposals submitted. Many of Australia’s M113s remained in the old M113A1 configuration, though some had at least been repaired and overhauled at 25,000 km. Bushmaster wheeled mine-resistant vehicles have replaced some M113s in the ADF, but the M113’s lightweight, tracked, off-road mobility remains important to Australian mechanized formations, and to troops deployed in combat zones. A plan approved in the 1990s involved a “minimum upgrade” of 537 vehicles from 1996-1998, at a cost of about A$ 40 million in 1993 dollars, with a major upgrade to follow. That major upgrade did follow – along with schedule slips, and cost increases from around A$ 594 million to nearly A$ 1 billion.

Comanche’s Wi’ane: No New Armed Scout Helicopter

YRH-70 test, 2005

The US Army’s Armed Reconnaissance Helicopter (ARH) program aimed to replace around 375 Bell Textron OH-58D Kiowa Warrior helicopters, after the $14.6 billion RAH-66 Comanche program, was canceled in 2004. Instead, the Army would buy a larger number of less expensive platforms, with reduced capabilities. Bell Helicopter Textron initially won the ARH competition with a militarized version of its highly successful 407 single-engine commercial helicopter, but despite significant private investment after Army funding stopped in March 2007, spiraling costs killed the ARH-70 in October 2008.

What hasn’t changed is the battlefield need for on-call, front-line aerial surveillance and fire support. With its existing OH-58D stock wither wearing down, or shot down, the Army needs to do something. But what? The eventual answer: scrap the Kiowa fleet for a combination of attack helicopters and UAVs.

Ma Deuce Still Going Strong

M2HB: “Aroint thee!”

Built since the 1920s, the reliable, powerful, air-cooled .50 caliber (12.7 mm) M2 Browning Machine Gun (aka. “Ma Deuce”) is still one of the world’s most effective heavy machine guns. It can be carried by a team of soldiers, or mounted on vehicles and aircraft. Despite its age, its combination of reliability, durability, and kick-butt firepower has made it one of the most requested weapons on America’s front lines, and it remains popular around the world. Modern alternatives like FN’s M3M/GAU-21 have been introduced, and so have R&D efforts like the XM307/312 and XM806, but the M2 remains, as one of our correspondents put it, “the mounted lance of the US cavalry.” The USA has even had to ramp up .50 cal ammunition production, in order to keep up.

This article covers the venerable, and valuable, M2 machine gun, and associated contracts. The US government is still buying more, using both a multi-year contract, and a small business secondary supplier contract. They’ve also broadened the product line.

CVN-72 Carrier RCOH: Shall not Perish

Somewhere, over
the rainbow…

Nuclear reactors save a lot of diesel fuel on huge ships like aircraft carriers, but there’s a catch. Mid-way through the ship’s 50-year life, the nuclear reactor needs to be refueled. The resulting “Refueling and Complex OverHaul” (RCOH) is a long, complex, potentially hazardous, and very expensive process, which also includes widespread upgrades throughout the ship. Anyone who has ever done home renovations knows that the opportunity to make upgrades can be nearly irresistible in these situations. In truth, this stage in the carrier’s life is an excellent time for that kind of work.

The USS Abraham Lincoln [CVN 72] was built by Northrop Grumman’s Newport News sector. Commissioned on Nov 11/1989 and homeported in Everett, WA, CVN 72 is expected to remain in service until 2039. As it approaches its mid-life stage, however, its mid-life upgrade and reactor refueling likewise approaches. Its counterpart USS Carl Vinson [CVN 70] completed its RCOH at the end of 2009, and USS Theodore Roosevelt’s [CVN 71] is underway. CVN 72 will become the 6th American carrier to undergo this procedure.

Uncle Sam’s Sale: M1 Tanks for Morocco

M1A1 Abrams

In June 2012, the US DSCA announced Morocco’s formal request for upgrades and refurbishment of 200 M1A1 Abrams tanks, which are being provided as Excess Defense Articles from US stocks. Used tanks have become very popular around the world, and Germany’s Leopard 2 has become ubiquitous as a direct result of sell-offs by Germany and the Netherlands. American M1s haven’t been part of that dynamic so far, but the US Army does have a significant backlog of armored vehicles needing reset and repairs after hard use in theater.

Having allies pay for that work, in exchange for the tanks, does 3 important things. It removes some of that maintenance overhang from American budgets. Second, it helps keep the Lima, OH busy until American M1 modernization work is set to begin in 2017. Finally, it keeps the tanks “useful” to the USA in a geo-strategic sense. This proposed sale is a classic example.

• Morocco’s M1s: Benefits All Around
  
• Was the Chinese Tank Rumor an Information Op? [NEW]
  
• Contracts & Key Events
  
• Additional Readings
  

Chile Buying American for Air Defense

Avenger

Chile presents interesting challenges for an air defense network. Its geography is long, thin, and extremely mountainous, which greatly complicates attempts at full coverage. Tensions over the last couple of decades have been centered on the relatively narrow border with Peru, which represents a simpler problem, but mountainous areas will still introduce “shadows” into radar coverage. Mobile systems are extremely desirable, and to date, Chilean missile defenses have consisted of Blowpipe and Mistral shoulder-fired missiles, and short-range MIM-72 Chaparral tracked systems based on AIM-9 Sidewinder missiles.

In November 2009, Chile submitted a pair of purchase requests to the US DSCA whose net effect would be to create a mobile short-range air defense system for its army. Chile’s Ejercito currently relies on MBDA’s shoulder-fired Mistral missiles for this role, but the addition of Avenger fire units and Sentinel radars would offer big steps forward in mobile battlefield awareness and defense. In June 2010, reports emerged that this would be followed by a purchase of longer-range AMRAAM-based systems. The $200+ million question is whether any of this has moved forward, as of May 2012.

BAE’s Turret to Deploy in CV-22s, MV-22s

RGS for V-22

In the past specific and detailed allegations were made concerning the V-22 Osprey‘s performance, testing flaws, and survivability issues in anything beyond low-threat situations like the Anbar deployment in Iraq. Despite direct offers, US NAVAIR chose not to respond or address any of those allegations. One of the flaws that appeared headed for correction, however, was the issue of 360 degree covering fire. This capability is useful for fire support. It is especially helpful when entering or covering landing zones, where rotary aircraft are most vulnerable.

The Osprey’s huge propellers and the positioning of its engines had created obstruction issues for normal machine gun mounting locations, but AUSA 2007 saw BAE Systems promoting a retractable belly turret solution based on a 3-barrel 7.62mm GAU-17 minigun. Special Operations Command has ordered some, and now the US Marines have deployed with them.

Chile Requests a Mechanized Artillery Battalion

Spanish M109A5,
Brite Star 2001

In June 2009, Chile’s formal request to buy a variety of artillery-related systems and equip a new mechanized artillery battalion was cleared by the US state Department, and allowed to go forward. The request centered on BAE’s M109 tracked self-propelled howitzer, but it also includes necessities like shells, tracking radars, and accompanying personnel carriers. Chile already operates the M109 self-propelled howitzer, and this order could double its available fleet, to a total of 48.

Chile’s current stock of 24 M109s are the KAWEST version, which were upgraded by Switzerland’s RUAG and sold to Chile at the end of 2004 (Cooperativa.cl, in Spanish). The Swiss upgrades included an L47 gun with 27 km/ 36 km assisted range and 3-round burst capability over 15 seconds, 6 crew members instead of 8, carriage of 40 rounds and 64 charges, improved electrical systems, an integrated inertial navigation and positioning system, day and night capability, and added protection against fire, nuclear EMP (Electro-Magnetic Pulse radiation), and NBC (Nuclear, Biological, Chemical) threats.

US Ammo Shortage: GD Now A Second Source Prime as it Delivers Guns, Ammo

Ma Deuce, raising demand…

In July 2005, “Pass The Ammunition: Army Taking Action on Small-Cal Shortages” began covering some of the steps the US Defense Department was taking to address this issue. Few reserves, a low production rate, and some of the oldest assembly-line machines on the supply side, coupled with skyrocketing demand, had made for a difficult situation. The Us military went on the invest substantial funds, in order to help modernize the World War 2 era Lake City ammunition plant, which had become the USA’s sole source of small caliber military ammunition.

Even so, the situation was creating both front line shortages, and strategic risk. In 2005, therefore, the Army took steps to move General Dynamics into an important second source supply role, and awarded GD OTS a substantial contract…