Rafael employees boast that nearly every Israeli unmanned air vehicle contains the manufacturer's equipment - as do many built outside the nation.
While its communications equipment generates the highest volume, Rafael makes a variety of electronic systems, including electronic intelligence (elint) and signals intelligence (sigint), ground stations and imagery analysis tools.
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| © Rafael Rafael has progressed to the second generation of its Derby active-seeker, medium-range missile |
As a state-owned company, its primary mission is to build equipment for Israel. Yet, because Israel is a comparatively small and competitive market, Rafael is compelled to look abroad. It is profitable, if just barely, and subject to the same political problems as Israel Aerospace Industries and IMI, the Israeli state's other major ventures into international defence. Sixty-five percent of Rafael's business comes from international sales - as does 100% of its profit.
Rafael has settled into its niche, counting some of the most difficult markets in Latin America and Africa among its stomping grounds. Rather than build the highest technology product possible and compete head-to-head with larger companies, Rafael has taken the second-tier approach, marketing mainly outside highly developed and competitive markets, and selling equipment, with a primary focus on cost and adaptability rather than cutting-edge technology - though certain pieces of equipment, notably the Litening targeting pod, have found broad appeal.
Rafael continues to be a successful supplier to regional, namely Brazil, Chile, South Africa and Singapore, rather than world powers. Its prospects have been boosted by the migration of wealth from traditional powerhouses, like the USA, EU and Japan, to non-traditional markets; Brazil, for example, now has a larger economy than the UK.
TRUST ISSUES
"India... they still don't trust the Americans," says Lova Drori, Rafael's executive vice-president for marketing. "They understand that whatever they buy from the USA, the Americans will have to sell to Afghanistan or Pakistan, or it is compensating Pakistan with the same or countermeasures systems. When they buy from us they will know for sure that this system will not be in Pakistan. They want our technology, and we give it to them. And we need to win the competition."
In electronic systems, Rafael's focus is to strengthen the bandwidth to keep up with increasing requirements from payloads. In its quest for maximum flexibility, Rafael has introduced the RecceLite system, a payload/transmitter system that can either be built into an aircraft or carried by pod. One major innovation came when it allowed its systems to run on internet protocols, moving away from expensive, cumbersome one-off systems requiring specialised equipment to use. Making data transmission systems talk to each other has been a difficult problem to resolve, particularly between allied nations operating in co-operation.
"This is something that really broke the rule that everything should be according to traditional standards not available to us because we are not a NATO country. So we have gone in a different way," says Yossi, an electronic systems manager who declined to give his last name citing company policy. "Since IP [intellectual property] has established itself in the open world and a lot of work had been done already, we put it all in one."
Rafael has long been a player in air-to-air missiles, now selling the fifth generation of Python passive-seeker short-range missiles, and the second generation of Derby active-seeker, medium-range missile. Despite a need for nations to replace aging current-generation beyond-visual-range missiles and a growing worldwide fleet of UAVs - Israeli aircraft have shot down Hezbollah drones - Rafael is sceptical on Derby's export potential.
"Usually, we told [customers], 'Okay, since you have air-to-air missiles, it makes sense you would purchase an air defence system,'" says Joseph Horowitz, marketing manager for air defence and missiles. "But right now, we are doing it the opposite way. 'Since you have an air defence system, because we've sold to more countries air defence systems, it makes sense you should purchase air-to-air missiles.'"
SPYDER SUCCESS
The manufacturer sees a role for lightly modified air-to-air missiles, having sold its Spyder system to over five different nations. But the real money is to be made in dedicated air defence systems. Rafael continues to sell the Barak-1 naval surface-to-air missile and has developed a new version, the Barak-8, in co-operation with India. The first battery of the Iron Dome - a defence system to counter very close airborne threats like mortars and Katyusha rockets - entered Israeli service in March 2011. David's Sling, a longer range missile system to counter endo-atmospheric ballistic threats, is under development with US behemoth Raytheon.
The potential market for Iron Dome is limited. According to Drori, the only nations with a need for such capability are those fighting insurgencies within their own borders, or those needing to protect forward operating bases - circumstances where threats can be expected close to the base.
"As for David's Sling, every country will need such a system. It is just a matter of time when every country, even in Europe, can be threatened by medium-range ballistic rockets."
As the global defence market shrinks and shifts, Rafael's future is staked not on new systems, but on the incremental improvement of its current products. Despite rumoured programmes in advanced propulsion, directed energy and innovative sensors, which company officials decline to discuss on the record, disruptive technologies are not on Rafael's list of immediate priorities.
"When we talk on new systems, I would say it will be mainly in the same kind, or same use, but more advanced," says Drori.
Meanwhile, Rafael is looking to tailor its product range to the trend in airborne electronics: more processing power and more sensors, smaller and lighter.
Source: Flight International
