The Defense Appropriations Bill in the US for the 2010 fiscal year includes a big plum for Israel - more than $1 billion for a shining star in the Israeli export sky: Plasan Sasa Ltd., a manufacturer of add-on modular armor kits for military vehicles. The company is a subcontractor for Wisconsin-based Oshkosh Corporation (NYSE: OSK), a manufacturer of heavy-duty all-wheel drive military and other vehicles, including mine resistant ambush protection (MRAP) jeeps for the US Army.
The overseas contingency operations (i.e. the wars in Iraq and Afghanistan) section of the Defense Appropriations Bill includes an outlay of $6.3 billion, $825 million more than the Obama administration requested, for the MRAP Vehicle Fund for the procurement of 6,600 new MRAP vehicles to protect the troops.
Oshkosh has a $6.3 billion contract with the Pentagon to supply 6,600 MRAP vehicles, with an option to supply an additional 3,400 MRAP vehicles.
Kibbutz Sasa-owned Plasan Sasa manufactures add-on armor kits for the MRAP, and supplies a substantial, although not the most substantial, part of the vehicle. The MRAP vehicles are intended for use in Afghanistan, the current hottest combat zone of the US military.
In an interview with "Globes", Plasan Sasa North America general manager Eyal Banai declined to disclose details of the company's share of the deal. He declined to state any figures, but said that the company's share of the project was larger than the company's value. Without commenting directly on the contract with Oshkosh, he said that vehicle armor components and installation were 20-30% of a project's value. "In general, you can say that we're talking about 25%," he said.
It can therefore be calculated, with some degree of assurance, that Plasan Sasa's share of the Oshkosh contract is worth around $1.5 billion, making it one of the largest defense export deal in Israeli history. Oshkosh's Pentagon contract has made the Kibbutz Sasa armor manufacturer one of Israel's largest defense exporters to the US market.
"As far as the defense market is concerned, we're apparently in first or second place (in exports to the US)," said Banai from his office in the Washington DC suburb of Bethesda, Maryland.
The wars in Iraq and Afghanistan, where improved explosive devices (IEDs) are frequently used against US troops, showed Plasan Sasa the potential of its add-on armored kits for the US Army. Banai said that the company was not interested in a direct contract with the US Army. "We could have gotten contracts directly with the Pentagon long ago, but we want Oshkosh, our partner, to feel that we're not a competitor. Our relations with Oshkosh are very close, open, and based on mutual trust."
Banai said that Plasan is working at an insane pace to meet the schedule of 1,000 armor kits a month. "We've been working at this pace for weeks now, which is possible because we developed an independent manufacturing capability. We have a factory in Bennington, Vermont, and a network of subcontractors in the US and Israel.
"Plasan is launching a revolution in the US armor market. We don’t assemble armor plates on existing vehicles. Our armor kits are an integral part of the manufacturing process on the production line. The US Army is pleased by the product, which improves its soldiers' survival ability, Oshkosh is pleased by the productive partnership, and the residents of the Galilee are pleased by the many new jobs we've created for the region, and we are definitely pleased."
Published by Globes [online], Israel business news - www.globes-online.com - on January 7, 2010
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