The Israeli ministry of defence has stepped up efforts to merge the country's state-owned defence industries and consolidate their main activities, writes Arie Egozi. A major element of the plan is to rationalise the development and manufacture of missiles.
Three state-owned defence companies - Israel Aircraft Industries (IAI), Israel Military Industries (IMI) and Rafael - are developing missiles of different types. The plan is to merge the missile activities including the manufacture of large boosters, used in the IAI Shavit launcher and long-range ballistic missiles.
Another goal is to merge unmanned air vehicle work performed principally by IAI and IMI.
The urgency in the new round of discussions stems from the growing shortage of defence funding making it almost impossible for the Israeli defence forces to purchase locally made systems while US-made ones can be purchased with US foreign military funds (FMF).
Other aims of the defence ministry are to slash development and manufacturing expenses so that final unit prices are lower, and reduce the competition between Israeli defence companies in the export market.
"If the mergers are foiled by the workers unions, the future of some state owned companies is bleak," says one senior industry source.
Israeli flag carrier El Al is no longer a majority state-owned company after Knafaim-Arkia exercised options for the airline's shares. The Israeli government now has less than a 50% stake in El Al. By the end of the year Knafaim-Arkia, the holding company of Arkia, Israel's largest private airline, will have a majority stake in El Al and all remaining shares will be in the hands of private investors and employees.
Source: Flight International
