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Aviation History
1993
1993 - 0019.PDF
BUSINESS ANALYSIS FRUITS OF SUCCESS Elbit, the Israel-based advanced-weapon-delivery and navigation-systems developer, has become a success story by stealing a march on its Western competitors in upgrading the avionics of eastern European air forces. Israeli defence companies have stolen a lead on their Western rivals in securing business from eastern European nations anx ious to upgrade their obsolete, largely Russian-equipped, air forces. Elbit is at the forefront of this early Israeli success, and is enjoying the fruits of its work with the Israeli air force in penetrating export markets. Two weeks after the Romani ans selected Israel Aircraft In dustries (IAI) to upgrade 100 air force Mikoyan MiG-21s, a letter was received from the Romani ans by the company's headquar ters. They re-affirmed the award of the contract, but added the condition that "...we want Elbit to supply some of the systems". The demand angered IAI top management, but senior com pany officials admit that it was almost expected. The rivalry be tween state-owned IAI and its privately owned defence rival, Elbil, has resulted in some major clashes in the past. Elbit was one of the first Israeli defence companies to dis cover the potential business op portunities in eastern European countries. Because it has good contacts in most of these coun tries, it was no surprise that the Romanians wanted it in the deal. "We are not an aggressive com pany. Aggressiveness has a nega tive connotation. But we are a very active one. We don't wait for the potential clients to come to us. We go to find them in every corner of the world," says Emmanuel Gill, Elbit president. Trained as an electronics engi neer, Gill served in the Israeli air force for 19 years. Since 1985, he has been president and chief executive officer of Elbit and the man responsible for the policy which has made the Israeli com pany such a success. Based in Haifa, the port town in northern Israel, Elbit develops and manufactures advanced weapon-delivery and navigation systems, as well as diversified night-vision systems for pilots. Elbit is a major partner in the upgrading of the Singapore air force's Northrop F-5s, with Singapore Aircraft Industries as the prime contractor. The Israeli company is also the prime sales arm for the upgraded Czecho- advantage in the competitive up grading market — proved again recently when Elbit won a con tract to upgrade the IAR 330L Puma helicopters of the Roman ian air force. All the Israeli air force's F-16C/D's carry a digital avionics interface computer de veloped by Elbit. In early November 1992, Elbit surprised many in the defence industry when it announced that "We don't wait for the potential clients to come to us. We go to find them in every corner of the world." slovakian Aero L-39 trainer which has been selected by the Thai air force. "We realised the potential in a combination of this very good airframe and en gine with advanced avionics. We negotiated with some other po tential clients," says Gill, but he is reluctant to disclose any de tails which might endanger the ongoing negotiations. The extensive experience in developing avionic systems for a demanding client such as the Israeli air force is now a big it intends to purchase the elec tronics manufacturing centre of General Dynamics at Forth Worth, Texas. "We hope to finalise the deal in January. The fact that Lock heed purchased the Fort Worth tactical-aircraft division will not affect the acquisition," says Gill, revealing that Computer Cross roads of America will be a "stra tegic partner", which will assist Elbit to market the products, but will not put money into the purchase of the centre. "If we have similar opportunities, we will take them," says Gill. The financial results of the company, which employs 3,400 people, prove that, while Is rael's state-owned defence indus tries struggled to stay afloat, Elbit expanded. In 1991, the company's revenues totalled $410 million, of which $171 million came from the sale of defence systems. The company also manufacturers medical im aging systems and is involved in other industrial and commer cial activities. Net profits in 1991 were $35.5 million, an increase of 61% compared with that of 1990. Gill says that 1992 was also a very good year. "In the first nine months of the year, revenues totalled $332 million and net profit was $22.4 million, proving that our strategy of diversified activity is the right one," he says. Diversifying its activities, by starting a television manufactur ing plant and venturing into operations such as managing the integration of the planned Voice of America radio-broadcast relay station in the Israeli desert, has not affected Elbit's main line of activity. The company developed the Opher autonomous termi nal-guidance kit for bombs and continues to invest heavily in advanced defence systems, which will enable it to keep its competitive advantage. Nevertheless, Gill is ready to admit that "...in the current situ ation of the defence-systems market all companies should be less arrogant and try to co operate. I hope that we will find a way to do so, even in the Romanian deal. The client wants us and there is no reason why we shouldn't be in." BY ARIE EGOZl n FLIGHT INTERNATIONAL 6 - 12 January, 1993 17
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