Despite COVID, Israel’s defense companies say 2020 was a good year

In 2019, Israel ranked as world’s 8th largest arms exporter.

Heron  (photo credit: IAI)
(photo credit: IAI)
The coronavirus pandemic hit Israel’s economy across the board, from small business owners who were forced to close their shops to big companies that faced challenges due to the restrictions on traveling abroad.
Among the second group are Israel’s defense industry companies, such as Rafael Advanced Defense Systems, Israel Aerospace Industries (IAI), and Elbit Systems.
This industry is considered both successful and powerful. A report published by the Stockholm International Peace Research Institute said that between 2015 and 2019, Israel was ranked as the world’s eighth-largest arms exporter.
These companies, which are among the biggest in this industry, which are used to constantly meeting with clients, presenting their latest technologies and new developments, were forced to look for new marketing methods.
So how did it go for them?
At this point in the year, the companies are gathering all the needed information to summarize their financial years. While official numbers are not yet public, these companies say that despite the challenges, they managed to have successful years.
An example of the success of these companies can be seen even these days.
On Tuesday, Elbit announced that it was awarded a contract valued at approximately $172 million to supply light tanks to the army of a country in Asia.
On Monday, IAI said it signed two deals – one to sell and one to lease two Heron MKII UAV systems to a central Asian country. It added that the deal is valued at tens of millions of dollars.
IAI’s executive VP of marketing, Eli Alfassi, told The Jerusalem Post on Tuesday that during the first nine months of 2020, the company had more profits than the entire year of 2019.
Asked how IAI overcame the challenges throughout the corona-impacted year, Alfassi said that an entire operation was set up to make contact with clients easier.
This operation was based on two main steps: first, reinforcing and expanding the different branches of the company around the world, and granting greater authority to them in order to advance deals; second, using advanced communication technologies in order to overcome the physical distance for the client.
“We rapidly advanced tools that would help us with what we call distant marketing,” Alfassi said. “[During this period] we developed in no time both apps and systems that will allow us to sit here in Tel Aviv and talk to our clients.
“We set up a studio that looks like a TV studio and, through it, we not only talk to the client but also show him and guide him to use, set up, fix and take care of the [IAI] system,” he added. “We can use this system online, off-line, and we also developed a 3D system so that our marketers can sit here and demonstrate how our IAI systems work.”
Alfassi also commended the IAI workers and said that their ability to engage with the time’s difficulties was one of the primary reasons that they managed to thrive.
Elbit Systems is another company that showed signs of satisfaction during these difficult times.
Speaking to reporters two months ago, when the company released its financial report for the third quarter of 2020, Elbit Systems’ president and CEO, Bezhalel “Butzi” Machlis said: “I am pleased with the third-quarter results, particularly with the improved operating performance in this challenging COVID-19 environment.
“We are encouraged by our backlog of orders of around $11 billion and the volume of opportunities we are facing around the world, which provides us with confidence in the company’s future prospects,” he added.
Since then, Elbit announced billions of dollars in new contract awards, of which more than $2.5b. is to supply training and simulation capabilities, digital communications, and target acquisition systems to European countries, including Switzerland, the Netherlands, the UK and Greece.
Rafael’s EVP of marketing and business development, Ariel Karo, said that despite the challenges and the difficulties to meet with clients and partners, the company managed to close significant deals in the fields of air defense, active shields, drones, intelligence, and others.
“We managed to deliver [our systems] on time to the IDF and to our foreign clients,” he said. “We also held a significant number of experiments and tests and broadened our partnerships with clients in the different fields.
“Our financial strength allows us to maintain significant research and development, and in 2020 we kept on recruiting excellent candidates to keep on developing groundbreaking systems – which Rafael is known for,” he added.
However, despite what might seem like a major success, Eitay Mack, a human rights attorney who follows Israel’s defense industry closely, said that the focus should be on the future, and what will happen in 2021.
Mack said that just as the Israeli economy was severely hit by corona, other countries that signed deals with these companies might not be able to deliver.
“Everyone is worried about what will happen in 2021,” he said.
Mack added that “[a reason to be worried] is the model [in which the companies] sign deals with a country, and the payment is being deployed over several years. What happens if the country’s budget runs out? They can’t pay anymore.”