The innovative product line for the coming years that Israel Aerospace Industries Ltd. (IAI) is planning is just part of the comprehensive strategy that CEO Itzhak Nissan is leading to turn the government defense company into a relevant player in the major leagues of the world’s arms companies.
The plan’s first fruits are due within three years. In addition to next-generation unmanned aerial vehicles (UAVs), command and control systems, missiles and combat systems needed by any army seeking to win a war, IAI will expand its products portfolio with the goal of providing clearer responses to its private-sector rival, Elbit Systems Ltd.
“We will go strongly and clearly into the land-warfare segment, where we previously had almost no presence, certainly not on the scale we’re planning,” an IAI source familiar with the matter told Globes. “Although it’s too late to rival the digital land-army control system of Elbit, we’re heading in the direction of very advanced communications systems for land forces – systems that will be breakthrough systems by any measure.
There is a great deal of thinking about advanced missile systems for
land forces, innovative and revolutionary robotics and other
After positioning itself as a leading global exporter of UAVs and
satellite and missile systems, ground forces is not the only area in
which IAI is setting its sights.
Company teams are in close contact with foreign companies for the
development and production of innovative wind-energy turbines, which
will ensure big money.
“There are feverish talks with foreign partners, and we’re putting in a
lot of human capital,” the source said. “This is a new field for a
company like IAI, but we’re not afraid of the challenge, and we’re
working hard on developing the most advanced turbines that can generate
the maximum energy from wind. These turbines can be deployed at sea or
on the coast, and their power output will be very high. We’ll bring to
this industry a great deal of innovation, and within three years, we’ll
probably be able to make deals.”
Advanced wind turbines will be just one item in a complete basket of
products that IAI plans to offer the civilian environmental market.
This basket, which just recently secured a specialized development place
at IAI, also includes the Taxibot, a high-powered electric vehicle for
the safe and accurate towing of passenger jets at airports, which will
save expensive jet fuel and greatly reduce noise.
Nissan declined to discuss specifics of development plans that are currently being reviewed in internal company discussions.
“We are examining the basic feasibility of products, and there are teams
thinking about a lot of things,” he told Globes. “It would be premature
for me to comment on most of them. However, we are known for attack,
defense and decision systems. We are determined to keep it that way.”
Trouble at the top In addition to marking new target markets with high
profit potential, IAI plans Nissan’s response to the prolonged crisis at
one of the company’s flagship divisions, the Commercial Aircraft
Division, which builds executive jets. However, it is an albatross
around the neck of the entire company.
In its financial report for the first quarter of 2011, IAI left no room
for doubt. The nosedive in orders for executive jets, which began with
the outbreak of the global economic crisis, is continuing and is costing
IAI money. The market is saturated, prices are plummeting, and IAI has a
problem because it has an entire division that is only partly working.
On the eve of the financial crisis, IAI sold more than 70 executive jets
a year, but current sales are just 15-20 jets in its partnership with
Gulfstream. The numbers indicate just one thing: trouble.
“We’re currently focused on the production of two executive jets: the
G-150 and the newer model, the G-250, while we wait for the global
economy to recover and emerge from the crisis,” Nissan said. “We’re
still far from the conditions in 2006, when this industry’s sales
peaked. It’s hard to launch new products in a market in such dire
conditions. When the crisis began, we had orders that were canceled one
IAI is also getting no relief from its Commercial Aircraft Division
project to develop subsystems for the next-generation Boeing airliner,
the 787 Dreamliner. The Boeing 787 is supposed to be revolutionary,
bordering on the futuristic, built entirely of composite materials that
will slash its weight. This fact has far-reaching consequences,
including substantially lower fuel consumption compared with other
jetliners and smaller, more-efficient and quieter engines.
“This is the general plan of the plane, which has been delayed at Boeing several years,” Nissan said.
“All the project’s subcontractors feel it, including us.”
Privatization necessary The troubles in the executive jets do not make Nissan lose his equanimity.
He believes that the Commercial Aircraft Division’s problems are
solvable and that IAI’s pockets are deep enough to absorb them, at least
for now. Looking forward, he sees conditions developing that will
enable the privatization of the company, and he talks about a “deep
willingness” by all the parties involved.
“What needs to be done now is to start the negotiations,” he said.
Nissan believes only privatization will release IAI from the
restrictions that hinder its attempts to operate in the playing field of
the global arms giants and to be a key player on it. When the problems
are solved, Nissan has a vision of thriving foreign subsidiaries that
can raise the capital needed to develop new breakthrough products.
Nissan sidestepped a question about the stormy pending departure of IAI
chairman Yair Shamir, only saying, “I am working on what I started when I
came to IAI over 30 years ago: doing and developing.”