Israel halves Namer order with General Dynamics

The move ends the dream of extensive collaboration with General Dynamics in mass production of the armored personnel carrier.

In October 2010, General Dynamics Land Systems (GDLS) won the Ministry of Defense tender for the manufacture of the chassis and other key components for 386 Namer (Leopard) armored personnel carriers (APCs). Now, just over three years later, the Ministry of Defense is renegotiating the contract. The IDF's current five-year plan has forced the ministry to more than halve the order to 170 Namers. Israel will have to pay a fine, which could be as high as $17 million, for changing the contract, reports "Defense News".

Under the original contract, GLDS was to deliver to the IDF 110 Namer hulls in the first stage, and the Ministry of Defense had the right to exercise an option for an additional 276 APCs at a fixed cost of $730,000 per vehicle, on the assumption that GDLS's plant in Lima, Ohio, would work at full capacity. With the reduced production, the cost of each Namer could rise to $900,000, subject to the terms of the new contract between the Ministry of Defense and GDLS.

When the program was initiated in early February 2011, "Globes" reported that it was a multiyear program for the mass production of the Namer APC, which was developed and produced in Israel by Ministry of Defense unit Tank Program Administration, the Namer's chief contractor. The Namer is based on the Merkava Mark 4 chassis and technologies, and its designers describe it the best APC that the IDF has ever had.

"The Namer is emigrating to the US," was the "Globes" headline at the time. "The joint venture will make it possible to produce Namers using US military aid and allow the Ministry of Defense to utilize the shekel component of the aid package to continue production of the Merkava Mark 4 in Israel. (Israel receives $3.1 billion in annual US military aid, and has the right to use only 24% of the aid in shekels, for domestic production.)"

The decision to shrink the program is a painful awakening from the Ministry of Defense's grandiose dream of using the Namer as a means for expanding its collaboration with General Dynamics. In an interview with "Defense News" on January 31, 2011, Yaron Livnat, the then-director of the Tank Program Administration, said that the contract with GDLS was the first joint mass production major platform program in our history."

Livnat added, Right now, were focusing on the main body and major components... but even now, in the initial phases, were looking at a huge program ... with many options to expand our strategic partnership with GDLS, Livnat said at the time."

According to "Defense News", "Israeli officials characterized the planned multiyear, US-based Namer production as a program that could surpass $800 million and trigger potential global sales for the Israeli Ministry of Defense and GDLS."

This will apparently not happen, partly because of the large cuts in the US defense budget. The busting of the dream will give bitter satisfaction for Israeli manufacturers and workers committees, which warned at the time against transferring Namer production to the US.

In a report from February 2011, "Globes" quoted Israeli sources as saying that the transfer of Namer production to GDLS's Ohio facility jeopardized thousands of jobs at small and mid-sized Israeli enterprises that were subcontractors for and suppliers to the Tank Program Administration. Many companies had invested capital in the purchase of special production infrastructures for the program on the basis of promises by the Ministry of Defense.

"Defense News" quotes a Ministry of Defense spokeswoman as saying that final approval of the IDFs five-year plan is still pending, and therefore the ministry could not comment on the prospective impact on the Namer program or its contract with GDLS.

Published by Globes [online], Israel business news - www.globes-online.com - on January 14, 2014

Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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