In November 1996 Elbit, one of Israel's major manufacturers of electronic systems, was separated into three independent companies. Defence operations were transferred to a new company, Elbit Systems (ESL), the operations of which include the development and manufacture of defence systems, and the performance of upgrade programmes.
ESL president Joseph Ackerman says that its independent status will allow the company to acquire other companies, or merge with them. If this happens, it will be a direct continuation of Elbit's original policy. In the past seven years, the company has purchased the electronics-manufacturing plant of General Dynamics in Fort Worth, Texas, and half of Israel's unmanned-air-vehicle manufacturer, Silver Arrow. These have been crucial for the future.
The Elbit Fort Worth plant has increased the company's sales dramatically in North America, and the Silver Arrow shares purchase has enabled Elbit to become prime contractor of one of Israel's most secret defence programmes, believed to be a high-altitude, long-endurance, reconnaissance vehicle. "When the market shrinks, you need critical mass to succeed and that's exactly what we've done," says Ackerman.
In 1989, when the acquisition policy began, Elbit's annual defence sales totalled $150 million. In 1996, sales hit $300 million, and prospects for this year, says Ackerman, look even better.
This process has already begun. The co-operation with Romanian Aerostar in upgrading the Mikoyan MiG-21s of the Romanian air force recently led to a joint venture between the two companies which has already resulted in the setting up of a components plant in Romania.
The new ESL will be as aggressive as the old Elbit. The company, which managed to snatch the Romanian contract "from the mouth" of Israel Aircraft Industries, is operating a worldwide marketing policy and is engaged in negotiations in many countries. Analysis of ESL's sales backlog proves that the company's reach is global. While 33% of the $600 million backlog is generated by the Israeli defence ministry, 26% is for the US market, 19% will be paid for by South-East Asian customers and 22% by European buyers.
The company's marketing drive in the international arena is spearheaded by its efforts in the USA. "This is our biggest potential market," says the ESL president, adding that co-operation is seen as a key factor in achieving the company's aims in the USA. Developing what it claims is the most advanced pilot-navigation and targeting helmet, the DASH, is not enough. To take advantage of the US market, ESL has signed a joint-venture agreement with its closest competitor, the California-based Kaiser Aerospace and Electronics group. The DASH technology, combined with the US company's ability to reach the decision makers, is working. ESL/ Kaiser is competing under the name Vision Systems International to supply the helmet-mounted display system for future US Air Force fighter aircraft.
ESL has also developed a night-vision-goggles head-up display (NVG-HUD) and, to achieve maximum penetration in the US market, has signed a co-operation agreement with Tracor Technology Resources in Maryland. This has already led to a contract which includes the sale of 3,600 NVG-HUD systems for US Army Marine Corps .
To keep its edge over the competition, ESL is investing 8% of its turnover in research and development. Ackerman points out as evidence of the rewards in this area that the company's moving-map system has been selected for the Bell Boeing V-22 tilt-rotor aircraft, and that ESL has performed a comprehensive avionics upgrade on Israeli air force Sikorsky CH-53 helicopters. The firm's net profit in the first nine months of 1996 was more than $11 million.
ESL has invested in the development of weapon systems, resulting in the Ofer, an add-on kit which turns iron bombs into smart weapons by using an infra-red (IR) seeker. "We have developed a new version ," says Ackerman, refusing to reveal more details. "We may go into the air-to-air-weapons business by co-operating with a company already in this field," he adds, emphasising again EST's attitude that, if a market is defined, any type of co-operation, acquisition, or merger will be considered.
Source: Flight International
