Singapore’s Global Player
ST Engineering Expands Worldwide Via Partnering
By WENDELL MINNICK
SINGAPORE – A country with a population of only 4 million would normally be an afterthought in a world of billion-dollar defense deals, but no one ignores Singapore’s defense industrial powerhouse.
ST Engineering has grown from a small ammunition manufacturer to a major player in both commercial and defense products and services. The company is divided into four sectors: ST Aerospace, ST Electronics, ST Marine and ST Land Systems, also called ST Kinetics. The key to its success has been partnerships and collaboration with regional and international companies, said Patrick Choy, ST Engineering’s executive vice president for international marketing.
“We started going really global in 2000 in the defense market,” Choy said. “We look for growth in the Middle East, India and Brazil for future markets as U.S. and European markets decline.” The company tries to avoid competition in markets against larger defense companies and instead looks to partnering options. A strategy of partnership and collaboration over the past 10 years has worked like a charm. The company, which got its start as a service provider to the Singapore Armed Forces (SAF), moved on to sell armed personnel vehicles to the U.K. military, and now has plans to manufacture earth observation satellites.
“As the SAF grew, so did ST Engineering,” Choy said. The company developed niche products, including a 40mm grenade that has remained a steady income earner over the years.
Partnerships also contributed. Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security, confirmed ST Engineering’s success at that aspect of its business.
“We have long and established partnerships with them across a number of product lines,” Muilenburg said.
Boeing has several initiatives with the company and “is not only training solutions, but technologies that go into platforms as well as innovative information solutions.” In 2010, Boeing signed an agreement to work with ST Engineering to supply the ground-based training system for the Singapore air force’s new jet trainers. Last year, Singapore bought 12 Alenia Aermacchi M346 Advanced Jet Trainer for $400 million.
Another key to success, though often short-lived, is ST Engineering’s acquisition of intellectual property (IP) rights.
“If you can own the IP, then you have a cheap manufacturing option,” Choy said. “IPs are only good for five to 10 years, and so by the time the competition catches up, we have moved on” with new products and services.
“We started off very Singapore-centric, but now we have a regional and international market,” Choy said.
Since 2001, ST Engineering has been building up its U.S. business arm with the creation of VT Systems, a subsidiary in Virginia to sell aerospace, electronics, land and marine systems to the U.S. market.
“The U.S. is one-third of our total revenue,” Choy said.
In 2002, VT Systems bought VT Halter Marine, a Mississippi-based shipbuilding company. Among the Tier II naval shipyards in the U.S., “I’d rate them middle of the pack,” behind Marinette Marine Corp.and Austal, but ahead of smaller yards like Swiftships Shipbuilders, said Bob Nugent, vice president of advisory services at Seattle-based AMI International.
So far VT Halter Marine is “a mixed bag” for ST Engineering, Nugent said. “They are doing well by all accounts executing the $2 billion plus Egypt Ambassador class missile craft program,” but have had problems with some U.S. government programs in which “they’ve lost a recompete for a hydrographic survey ship...and were fined for safety issues following a fatal accident at the yard a couple of years back.” The company is also pushing into new market sectors. Space is one; last month, the company announced plans to set up a joint venture with Singapore-based DSO National Laboratories and Nanyang Technology University to create ST Electronics Satellites Systems Pte. Ltd. to design, develop and produce earth observation satellites.
The company has also expanded into the unmanned systems market. At the International Maritime Defense Exhibition here last month, the company showed its Venus-9 and Venus-16 unmanned surface vehicles. ST Electronics worked with U.K.-based H-Scientific Ltd. to jointly develop a collision avoidance system for the Venus.
The company also has a new Autonomous Underwater Vehicle-3 with forward and side-scanning sonar and dual-frequency synthetic aperture sonar module.
“We just came out with it,” an ST Engineering source said.
All three platforms can carry a variety of mission payloads, she said.
ST Kinetics made inroads into the European market in 2008 when it signed a $250 million contract with the British military to supply 100 Warthog tracked infantry fighting vehicles. This was the first time ST Engineering had sold an armored vehicle to an NATO member. The Warthog is a variant of ST Kinetics’ Bronco All Terrain Tracked Carrier and was selected in response to an urgent operational requirement for British forces in Afghanistan.
“We delivered. The vehicle went to Afghanistan. When we signed the contract we felt the trust the British gave us in providing a vehicle to protect their troops was very serious,” Choy said. “We’ve learned a lot from it and are going forward on new developments.” ST Engineering will be bidding for a Swedish military tender for a Bronco-like vehicle to replace the Bv 206 all-terrain vehicles.
ST Kinetics also builds the eight-wheeled armored Terrex Infantry Carrier Vehicle, which it co-developed with Ireland-based Timoney Technology. The SAF began deploying the vehicle for training in 2010 and on May 31 the SAF’s first motorized infantry unit became operational with the Terrex.