The heads of the leading defense firms in Israel haverequested an urgent meeting with Prime Minister Benjamin Netanyahu to discuss “a significant crisis in the defense industries.”
The letter requesting the meeting was signed by the chairmen and CEOs of four major defense contractors: Michael Federmann and Bezhalel Machlis from Elbit, Rafi Maor and Joseph Weiss from Israel Aerospace Industries, Brigadier General (ret.), Yitzhak Gat and Yedidia Yaari from Rafael, and General Udi Adam and Avi Felder from Israel Military Industries.
“It has been several years since the IDF and the Ministry of Defense had a multiyear plan,” the defense contractors wrote to Netanyahu, “Meanwhile, there have been major changes in the defense sector smaller budgets, more competition, less desire for Israeli-made products, and the growing demands to transferknow-how and work abroad.”
The letter expressedgraveconcern over a dramatic drop indefenseexports at the end of 2015. “The defense industry in Israel is in the midst of a major crisis: military exports have dropped from $7.5 billion in 2012, to $6.5 billion in 2013, and further to $5.5 billion in 2014. This year we are expecting exports to total$4-4.5 billion.”
If their prediction for 2015 holds true, it willmark a ten-year low for defense sector exports.
The chiefs of the four major security contractors three of which are state-owned firms say the defense budget for 2016 offers no sign of hope. In their letter to the prime minister they say the size of the planned budget will lower the government’s procurement deals with them:“The current budget and recent events will not enable the Ministry of Defense and the IDF to be the wind in our sails.”
Similar letters were also sent to National Security Advisor Yossi Cohen, Finance Minister Moshe Kahlon, Foreign Affairs and Defense Committee chair Tzachi Hanegbi, and Finance Committee chair Moshe Gafni.
Some two weeks ago, “Globes” reportedgrowing concern in the defense establishment ata significant decrease in the year’s military exports. Itamar Graff, the deputy director of SIBAT (the Ministry of Defense International Defense Cooperation directorate), said at the time: “There is a slowdown in the global economy and defense markets are cutting back. Countries are buying fewer weapons, and the countries still buying are requesting to relocate production and development facilities to within their borders; we are facing serious dilemmas because ofthis.”
In hisreport, he also said, “The current defense budget does not allow further buildup which also affects initiatives to develop new armaments. We are concerned, and the defense establishment has purchased less from thedefense firms. It is a difficult period for all Israeli industries.”
Published by Globes [online], Israel business news - www.globes-online.com - on October 22, 2015
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