Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) and Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Israel's two largest defense companies, are taking aim at the German market. IAI announced two days ago that it would open a new branch in Berlin, making it the second Israeli defense company operating there, after Elbit Systems began last year.
At the same time, IAI decided in recent months to close its branch of many years standing in France.
Defense industry sources told "Globes" that IAI's decision to focus its activity in the German market was taken because of the business potential there, at the expense of marketing resources and efforts invested by the company for many years in the French market. "The volume of business between IAI and various concerns in France has dwindled in recent years. Components that the company purchased in the past from in the French market can now be obtained from various companies throughout Europe, so this decision is justified," said a source familiar with the company's activity.
IAI explained in the past few days that the decision to open a new branch in Berlin had been take, among other things, following the German Ministry of Defense's decision to lease IAI-made unmanned aerial vehicles (UAVs) for more than €600 million. The company is preparing for more tenders scheduled for publication in Germany in the coming years, and the new Berlin branch will be an advance outpost, as a senior company executive called it, for promoting the company's business in the German market, and in the European market in general.
Elbit Systems has also realized the potential in the German market, and has had a representative office there for the past year, similar to the offices it maintains in other markets around the world in which it is active, such as Australia, the UK, Brazil, and the US.
Elbit Systems' decision to open an office in Berlin preceded the deal for the supply of defense systems for airplanes used by the German air force against shoulder-carried missiles.
"A company that wants to grow in a specific market has to be there; it can't manage its affairs by remote control. Germany is a target market that justifies the concentration on it by Israeli companies, while preparing for future deals," a defense industry source said today."
Published by Globes [online], Israel Business News - www.globes-online.com - on June 21, 2017
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