Manufacturers are severely criticizing the plan to outsource future production of the Eitan armored personnel carrier (APC) to the US in order to buy it with US defense aid. At the beginning of the week, "Globes" revealed that the IDF ground forces and the Ministry of Defense were considering importing the new APC from the US, while keeping installation of the systems used in it in Israel.
"Israel has to preserve its technological, security, and employment interests, and manufacture the Eitan APC in Israel," Manufacturers Association of Israel President Shraga Brosh told "Globes." Manufacturers Association sources said that the project for developing and producing the future wheeled APC slated for use by the IDF ground forces could put NIS 2 billion in to the economy, provide work for 200 industrial companies, and accommodate 2,000 jobs, mainly in outlying areas.
Defense manufacturers warned that Israeli armored fighting vehicles industries had already suffered a serious blow in 2010, when the Ministry of Defense decided to transfer production of the Namer APC to the US, leading to the loss of 2,000 jobs. "It appears that the government is about to make the same destructive mistake by considering the removal of another flagship labor, technology, and know-how-intensive project from Israel to the US. We must not allow them to do this," a manufacturer involved in the matter said.
Manufacturers Association of Israel Merkava tank industries forum chairman Avraham Bar David said, "Transferring production of the APC to the US will lead to the closing or constriction of production lines in dozens of plants around Israel, have a negative impact on exports of systems used in the Eitan, and damage the civilian sources of know-how and development based on the technologies used in the Eitan. I call on the Ministry of Defense to reconsider its decisions on the matter, and to leave production and development of the Eitan in Israel."
The Eitan is a wheeled APC whose development began following the lessons learned in Operation Protective Edge two years ago. It is slated to replace outmoded unprotected APCs still used by IDF infantry brigades. Development of the Eitan was revealed four months ago. It is still being tested under various battle scenarios, and a decision about its procurement will be made only when these tests are completed.
The model under which the Ministry of Defense is considering outsourcing most of the Eitan's production to the US and its procurement with the use of US aid money has already been used for the Namer APC. 60% of the production work on these APCs is done by US companies, and the finishing is done in Israel. In the case of the Eitan, consideration is being given to having a larger proportion of the work done by US companies, at the expense of the work done by Israeli industries.
"The state has to learn from the US itself, which is having its taxpayers' money used for the development of local industry," Brosh said. "The Indian government has also set a policy of transferring production and know-how to the country. Instead of regarding the development of local industry as a strategic goal, as other countries do, we are transferring know-how and business opportunities to foreign countries because of short-term considerations."
Defense sources told "Globes" that the armored fighting vehicles industry in Israel had always been based on the development and production of the Merkava tank, which will remain in Israel. This program is estimated at NIS 1 billion a year. The sources asserted that as long as production of the Merkava remains in Israel, the hundreds of industries involved in it would not be affected.
Commenting on the possibility of outsourcing production of the Eitan outside Israel, the Ministry of Defense said at the beginning of the week, "The Eitan is still in the development stages, and has not yet been approved by the IDF for procurement and mass production. If and when decisions are taken to produce it, and in what volume, the Ministry of Defense Merkava Tank Administration, which regards the involvement of Israeli industries in the Merkava project as a strategic asset, will take steps to ensure the share of Israeli industries in the project, as it has done up until now. We emphasize that after the project is approved, production of the Eitan will take place simultaneously with production of the Merkava and Namer. In view of the increased procurement of armored fighting vehicles following Operation Protective Edge, the Israeli defense industries' share on all these projects will increase, not decrease."
Published by Globes [online], Israel business news - www.globes-online.com - on December 7, 2016
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