BOTTOM LINE IN THE SAND

Saudi Arabia 2020 | INDUSTRY & DEFENSE | INTERVIEW

From ships to aircraft, SAMI provides a range of weaponry for the Kingdom.

Andreas Schwer
BIOGRAPHY
Andreas Schwer is an internationally acclaimed military industries expert who was appointed CEO of SAMI in 2018. He was previously CEO of the Combat Systems Division and Chairman of the Board and President of Rheinmetall International AG. He also served as EVP for the Manitowoc Company in the US, and VP for Airbus Defence & Space and Airbus Helicopters. He holds a master’s in aerospace technology from the University of Stuttgart, a master’s in systems engineering from the Technical University of Delft, and a PhD in aerospace technology, during which time he worked at the European Space Agency.

How does your recent MoA with Hanwha and the acquisition of AACC embody your strategy, and what do they mean for your future plans?

At SAMI, we are pursuing ambitious business strategies in line with our objective to build a sustainable and self-sufficient military sector that would significantly contribute to Saudi Arabia's economy and provide job opportunities to its citizens. Accordingly, our business is being built on two pillars: the consolidation of national industry and finding companies that we would like to take under the SAMI umbrella. We have already acquired two companies; Advanced Electronics Company (AEC) and Aircraft Accessories and Components Company (AACC) and are in the final stages of acquiring two others before the end of 2019. This will be complemented by a set of greenfield company joint ventures that will we enter into with foreign partners to bring new technologies into the Kingdom. What is more, we have already signed agreements with 28 companies. Over the next 12 months, we will announce more of them, and by the end of this year, we will have completed all of our collaborations. We will then cover all the product domains from aviation to naval activities so that SAMI will be engaged not only in aircraft building but also the entire range of defense activities. Hanwha will continue to be one of our key partners in several domains.

What is your preferred format for JVs?

Our joint ventures are built on the 51:49 equity structure, where SAMI owns the majority ownership interest and the remaining 49% is owned by its foreign partners. We have an understanding with all our partners that every major decision be consensus-based. We guarantee to protect the business interest of our foreign partners and in return require them to bring their technology, skill set, and know-how to the Kingdom. They will not only gain access to the local market, but also to several export markets. Given the complexity of the products and the broad spectrum of activities, we are modest enough to say we cannot do it on our own and want our foreign partners to stay here to ensure the company is sustainable and successful many years from now.

What is unique about this market and the current approach that allows you to attract so many partners?

Saudi Arabia presents enormous opportunities for military-industrial companies. The Kingdom has the fourth-largest defense budget in the world, and the budgets of the Ministry of Interior, the Presidency of State Security, and the Saudi Arabian National Guard add up to more than USD100 billion.

Will you make any changes to the local companies you have acquired?

We have a plan to set up a large aviation cluster at King Abdulaziz International Airport in Jeddah where we will combine commercial and military aviation. This cluster will not only focus on system-level activities but also encompass a few companies working on subsystem and component levels, both in production and maintenance, repair, and operations.