Defence Industry

Israel Aerospace and India
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Issue Vol 26.1 Jan-Mar 2011 | Date : 13 Oct , 2012

What is the secret of its striking success? The company credits its revenue growth to higher sales of airborne systems, electro-optics and C4I (command, control, communications, computers and intelligence) systems. Apart from organic growth, it has profited from a series of well-judged acquisitions within Israel and elsewhere, in consonance with global defence trends. It strives to be number one or at least in the first three of whichever field it enters into, focusing strictly on technologies where it maintains a competitive edge like helmet-mounted displays and advanced avionics systems. The country of origin of the equipment has never been a constraint. It is equally at home with the Russian MiG29 and the world’s most advanced fighter, the US F35.

Elbit believes that the changing nature of military operations in recent years, including low intensity conflicts and terrorist activities, has resulted in a reorientation of defence priorities. There is greater demand for C4I, as well as intelligence, surveillance and reconnaissance (ISR) systems. Elbit also feels that in a few years, perhaps 40 per cent of Israeli military air missions will be mounted by UAVs. Eliminating the pilot means less operator training, fewer countermeasures and no aircrew losses, possibly reducing UAV costs to just 5 to 10 per cent of those for an equivalent F16 mission. Besides it permits the mounting of far riskier missions than with manned fighter aircraft. For UAVs, high endurance and low loiter speed are important; hence jet engines are meaningless.

Elbit’s new Hermes 900 is an improved version of the Hermes 450 tactical UAV. It is a medium sized multi-payload vehicle designed for medium altitude long endurance (MALE) tactical missions.

The Israeli Defence Force (IDF) recently selected Elbit Systems’ Skylark 2 as the infantry’s brigade-level UAV and completed a series of operational tests on it.

Advantage Rafael

Established in 1948, Rafael Advanced Defense Systems Ltd is a state-owned firm that designs and manufactures a wide range of high-tech defence systems for air, land, sea and space applications. The company made attempts to enter the UAV market but abandoned these efforts last year. Most of its current projects are classified. According to Rafael, when setting up an armament production or sales facility, it seeks to create local jobs, transfer technology needed to upgrade and maintain the equipment and, finally, leverage local industry’s participation to secure sales.

The strategy is working as in 2009, sales jumped 16 per cent from a year earlier, while its order backlog climbed nearly 30 per cent to $3.2 billion. Rafael offers a broad spectrum of advanced products and capabilities, including Iron Dome and David’s Sling, protection systems for land combat vehicles (such as the Trophy active protection system against sophisticated anti-tank missiles), electro-optical systems for target acquisition, laser designation and reconnaissance purposes, and C4I systems for net-centric warfare.

However, the programme most responsible for Rafael’s high growth is probably the Spike family of missiles. Spike is a fourth generation man-portable fire-and-forget anti-tank guided missile with tandem-charged high explosive anti-tank (HEAT) warheads, currently in service with a number of nations. It comes in various versions including Long Range, Medium Range and Extended Range.

In aerospace circles, however, Rafael is practically synonymous with its Python family of missiles that has passed through five generations, including the first two versions which were named Shafrir. Python 5 provides the pilot engaging an enemy aircraft with a revolutionary full-sphere launch capability. The missile is also available in an air defence configuration. With the Python 5 now in production for several years, speculation about the next evolution of Rafael’s premier missile is growing.

If Rafael needed more fame, a US diplomatic cable recently released by WikiLeaks listed Rafael’s Haifa weapons development facility as a site of vital security interest to the US, due to its role in providing materials for sophisticated American cluster bombs. At Aero India 2011, the company is likely to display a limited range of products, including air defence and communication systems, reconnaissance and targeting pods as also tactical missiles like Spike.

IMI Inches Forward

Israel Military Industries Ltd (IMI) is the smallest of the “big four” of the Israeli aerospace sector. It manufactures firearms, ammunition and military technology mainly for the Israeli security forces especially the IDF. IMI’s Uzi is arguably the world’s most popular submachine gun on account of its compact nature and reliability. IMI also produces aircraft flares, decoys, electronic countermeasures control systems, rockets, guided missiles and heavy aerial weaponry. The company employs 3,200 personnel in five divisions. In 2008 it generated a turnover of $650 million. IMI’s current orders backlog is $4 billion, 70 per cent of which is for export. Fully owned by the government, the firm is considered by some to be the neglected child of the defence establishment. It has been in trouble for several years. The management has prepared a two-stage privatisation plan: first the sale of 49 per cent of the company to the public and later the sale of the government’s remaining stake. But negotiations on privatisation have remained deadlocked for months, even as IMI limps along.

Consolidate or Cringe

What makes Israel’s aerospace industry tick? It could be the country’s technological culture, its impressive number of science graduates. It could be the relatively lower price tags of Israeli products when compared with similar equipment produced by larger Western companies. It could be that most products offered for export are battle-tested and already shown to work by the IDF. This applies especially to weapons for asymmetric warfare. Israel’s experience since the mid-1980s in countering insurgents and terrorist groups, rather than large conventional forces, has spurred its arms industry to invest heavily in appropriate weapons and technology. Such technology is biased towards networks, situational awareness and precision attacks, rather than brute firepower. Equipment of this kind is now greatly desired by other armed forces faced with shadowy opponents, as well as by homeland security agencies.

But the technology most likely to define the aerospace industry of Israel for years to come is unmanned systems. Indigenous UAVs make Israel less dependent on US military assistance which often comes with strings attached. Israel is among the world’s most experienced countries in the use of military UAVs. It does not publicly confirm or deny the widespread suspicion that many of its UAVs are armed. Neither does it reveal too much about its future UAV plans, a likely pointer to considerable activity taking place behind the scenes. With its Air Force now betting heavily on unmanned aviation, Israel’s major aerospace companies are hoping for a large slice of the cake.

But it seems to be the Israeli government’s policy to pit its companies one against the other. Lack of cooperation between them has already spoilt some lucrative aerospace orders. Israeli defence exports to Colombia reportedly suffered a major blow last year after bitter rivalry between IAI and Elbit Systems over the sale of UAVs to the Colombian Army. For years, IAI executives have been quietly lobbying for the company to absorb its state-owned competitors IMI and Rafael. Rather than privatising IMI, it might indeed make sense to merge it with IAI or Rafael, but will the government bite the bullet? In the meantime, private sector Elbit may not find it easy to sustain its high-growth trajectory because there’s practically nothing left for it to take over in Israel.

The relatively small Israeli firms have spiritedly taken on the aerospace giants of the West, but are finding the going increasingly tough. There are signs that the Israeli government is finally awakening to their plight. In December it allowed Elbit Systems and IAI to collaborate on a Ministry of Defence tender for the procurement and maintenance of a new jet trainer that is due to replace the Air Force’s obsolete Skyhawks. Most experts agree that consolidation is the need of the hour; however consolidation within the Israeli aerospace industry is a leisurely process. The question is will the current pace be enough to keep these companies competitive against the global aerospace giants?

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Gp Capt Joseph Noronha

Former MiG-21 Pilot and experienced IAF instructor before he turned to writing articles on aviation.

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