Figures published today by the defense exports department of the Ministry of Defense are a further indication of the difficulty being experienced by Israeli defense companies in global markets. Defense exports by Israeli companies declined from $7.47 billion in 2012 to $6.54 billion in 2013, although they are still higher than the $5.82 billion exports recorded in 2011.
The Defense Ministry figures refer to new contracts signed in 2013. Most of these contracts were for airplane upgrades, aerial chasses and systems, airborne software systems, electronic communications and warfare equipment, various types of munitions, unmanned aerial vehicles, and radar. The defense exports department said that the global defense market trend last year was towards slimmer defense budgets in Israel's main markets, headed by the US and Europe. Another factor affecting global demand for weapons systems is the withdrawal of coalition forces from Iraq and Afghanistan.
The Defense Ministry figures also show that contracts of small and medium-sized Israeli defense companies totaled $500 million in 2013, about the same as in 2012.
Despite the steep drop in defense exports, Israel is still one of the world's leading countries in the field: various lists around the world rank Israel among the top 10 weapons exporters. The Defense Ministry reported that it had provided support for dozens of defense exporters in the framework of weapons exhibitions in various places around the world, and had hosted defense delegations from various countries for the purpose of exposing them to products made by Israeli companies, thereby encouraging deals.
At the same time, CEOs of key Israeli defense companies have warned in recent years of receding demand for systems in various markets, which is also intensifying competition between their companies and major global weapons manufacturers. In addition to the difficulties experienced by many companies in the global markets, the largest Israeli companies - Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT), Rafael Advanced Defense Systems Ltd., and Israel Military Industries - have also been confronted with difficulties at home, consisting of the Defense Ministry's budgetary constraints, which have led to a situation in which the ministry owes the companies NIS 2.4 billion for systems, equipment, and weapons purchased from them. The Defense Ministry said in response, "All the debts will be paid by the end of the year; only a few months' delay is involved."
Published by Globes [online], Israel business news - www.globes-online.com - on October 7, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014