Singapore’s Global Player; ST Engineering Expands Worldwide Via Partnering

Defense News

06/20/2011

Biz Watch

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.

New Markets

“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.