Israel’s Defense Exports Reached $4.4B in 2006
In a January 9, 2007 release, Israel’s Ministry of Defence has confirmed that the country’s 2006 Defence Export contracts broke all records, reaching over $4.4 billion in 2006 and making Israel one of the top-5 defense exporters in the world behind the USA, Russia, Britain & France. Israel’s tight deploy-design-deploy cycle in an environment where many of the designers can expect to personally use the equipment in battle has made their equipment very popular, and signature global successes like the LITENING pod have helped raise the profile of Israeli firms. Maj. Gen (res.) Yossi Ben Hanan observed that more then 75% of Israeli defense production is currently for export, while only 25% goes to the IDF. He is head of SIBAT, the Foreign Defense Assistance and Defense Export Department – a very important job in a small but threatened country that has a strategic need for defense self-sufficiency in many areas, but not the population base and economy to sustain all of the capabilities it needs through local procurement.
In a separate release, Ben Hanan also provided some interesting geographic figures. India was Israel’s biggest customer with purchases reaching $1.5 billion; the biggest sale to India was the IAI Barak naval anti-missile system partnership ($450 million), covered here at DID. Another key sale, also covered by DID, involved 50 large Heron UAVs for land and maritime surveillance after they showed excellent performance post-tsunami. Ben Hanan sees little competiton from the ongoing US entry into India’s defense market; the USA generally sells complete major systems like fighter jets and naval ships, while Israel largely sells compatible ancillaries. Israeli sales to the USA itself also continued a positive trend, reaching $1 billion in 2006 compared with $300 million back in 1999. European countries accounted for another $800 million in contracts during 2006, leaving $1.1 billion in total defense sales to Asia, Africa, and South America.
Meanwhile, a concurrent release from Israel Aircraft Industries, the country’s largest exporter, sheds more light on both Israeli defense contract trends and a less-remarked evolution toward significant civilian business…
A January 9, 2007 IAI release gives a figure of $4.088 billion dollars in signed contracts during 2006, compared to $3.4 billion in 2005 (+22%). This marks the first time in IAI’s history that they have broken the $4 billion barrier. Fully $1.8 billion (45%) was for civilian products and services, compared to $1.45 billion in 2005 (+26%). Combining military and civilian contracts, export contracts rose to $3.6 billion vs. $2.7 billion in 2005 (+35%), and accounted for 88% of IAI’s total 2006 contract volume. As an interesting sidenote, all of this happened while IAI was realigning its marketing organization in 2006.
Mr. Itzhak Nissan, IAI’s President and CEO, offered a sense of the diversity of work involved when he said that IAI’s marketing organization “is operating in 30 countries around the world to support the sale of products and services offered by IAI including: business jet aircraft, conversion of transport aircraft from passenger to cargo configuration, maintenance of aircraft and engines, development and production of missiles, development and production of unmanned air vehicles (UAVs), development and production of satellites, radar systems, systems-of-systems, integrated control and command systems, and other classified products and services…”