General Dynamics signs $150m reciprocal procurements deal

General Dynamics Land Systems will buy components from Israeli companies for Abrams tanks and Stryker APCs for the US Army.

General Dynamics Corporation (NYSE: GD) unit General Dynamics Land Systems will buy components from Israeli companies for M1A2 Abrams tanks and Stryker armored personnel carriers (APCs) for the US Army, as well as other products, as part of reciprocal procurements agreements with Israel.

General Dynamics recently signed an agreement with the Ministry of Industry, Trade and Labor's Industrial Cooperation Authority to make $150 million of reciprocal procurements in Israel in exchange for manufacturing the Israeli-designed Leopard APC, considered one of the most advanced APCs in the world, for the IDF. General Dynamics will begin production of the Leopard in 2013.

Defense establishment sources say that the deal will enable Israel to boost production of the Merkava Mk. 4 tank by freeing up the shekel budget, because the Leopards will be bought with US military aid money. Final assembly of the Leopards will be carried out at the Tank Development Administration in Israel.

Scores of mostly small Israeli companies that manufacture Merkava and Leopard components have been increasing worried in recent months over the transfer of Leopard production to General Dynamics, saying that it jeopardized their business. In response to these concerns, General Dynamics' Israeli representative Elul Tamarynd Ltd. convened representatives of defense contractors several weeks ago to update them on ways to participate in General Dynamics's planned reciprocal procurements.

Participating Israeli companies included Israel Military Industries Ltd. (IMI), Tefen Metal Castings Ltd., Simat Industries Ltd., Imco Industries Ltd., Agam Metals Ltd., and Yail Noa Ltd.

General Dynamics said that it has appointed a special team to handle relations with Israeli companies. Elul Tamarynd CEO Avner Raz said, "Collaboration with Israeli companies will continue throughout the Leopard production contract period, and General Dynamics' executives have made this promise to Israeli industries."

Published by Globes [online], Israel business news - - on May 8, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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