The aerospace and defence business is greatly affected by fluctuations in the global economy.
Companies have to adapt their type of business, or rather the volume of each type, according to the numbers, which are known fully only to the board of directors and top management.
A recent assessment by Israel Aerospace Industries (IAI) has resulted in a decision to make a strategy change.
I understand it is based on increasing the company’s sales in the civil market, mainly by subcontracting to aerospace companies around the world.
In the first nine months of 2012, IAI sales totalled $2.45 billion, compared with $2.61 billion in the same period of of 2011, a 6% decrease.
The sales of the company’s civil aircraft division totalled $349 million compared with $356 million in the same period of 2011.
The sales of IAI’s Bedek division was $373 million compared with $478 million in 2011.
The decrease in sales of the civil aircraft division was mainly because of the lower sales of business jets made by the company and marketed by Gulfstream.
The decrease in sales of the Bedek division was affected mainly by fewer conversions of old passenger aircraft to a cargo configuration.
The new strategy will focus on getting more subcontracting from other manufacturers around the world. IAI will also offer its design capabilities, testing services and assistance in certification processes, to different manufacturers.
While IAI is perceived as a defence company, it has a very strong civil arm. IAI is manufacturing business aircraft for Gulfstream and is a leading centre for the conversion of old passenger aircraft to cargo-configured aircraft.
So, without giving up any of its diversified defence activities, the Israeli state-owned company will dive deeper into the civil aerospace market.