Revealed: Israel's new defense company

Itzhak Nissan  picture: Ben Yuster
Itzhak Nissan picture: Ben Yuster

Former IAI CEO Itzhak Nissan and Hezi Bezalel have founded unmanned systems company Meteor Aerospace.

Two and a half years after leaving the post of CEO of Israel Aerospace Industries Ltd. (IAI) (TASE: ARSP.B1), Itzhak Nissan, in an exclusive interview with "Globes", unveils Meteor Aerospace, the new defense company he founded together with Hezi Bezalel. The company deals in unmanned systems, and mainly aims at markets in Asia, Latin America, and Africa. Its top management, revealed here for the first time, consists of former senior managers in Israel's defense establishment and IAI.

"All my life, I have been involved in creativity, initiative, innovation, and management. After running Israel's largest defense company, I looked for a worthwhile and interesting challenge. I decided to continue in the defense field, which I know extremely well, this time as a private entrepreneur. I feel that I am once more at the forefront of the defense business, only this time I don't have to worry about sixteen thousand employees as I did at IAI. What I'm doing gives me great satisfaction," says Nissan, chairman and CEO of Meteor Aerospace.

Nissan refuses to provide details of Bezalel's investment in the company, but confirms that they have equal stakes in it. Defense industry sources estimate the initial investment in the company at over $10 million. Nissan says of Bezalel, who has been reported in the past to have been involved arms deals, mainly in Africa, "He's a strategic investor with vision, who, unlike financial investors, is not interested in a quick exit, but thinks long term about a technology and manufacturing company that will develop, grow, and become a significant player in its area of business."

The private company's management includes former Ministry of Defense Security Authority director Yehiel Horev; former Bank Hapoalim (TASE: POLI) VP Avi Harel; former government minister Raanan Cohen; and former Israeli defense attaché in Russia Col. (Res.) Efraim Michael. Nissan says that they will shortly be joined by former senior Israel Security Agency officer Ofer Dekel.

Meteor Aerospace operates out of an office building in Yehud, and recently completed construction of a production and assembly facility in Modi'in. Nevertheless, most of its activity will be through outsourcing, using subcontractors. "We mainly have integration and software people. The rest we outsource," says Nissan. At least for now, he refuses to reveal the company's product portfolio, but confirms that it will deal in unmanned systems: UAVs, and unmanned boats and vehicles for various military purposes and for protection of borders and sensitive installations. "At this stage, I prefer to operate under the radar and not to reveal our systems in detail. I can only say that we are talking about unmanned sea vessels, aircraft and land vehicles that are at the cutting edge of technology and can compete successfully in the global market. They are original products, together with command and control systems. The company offers its customers integrated products in homeland security, for protecting borders and areas of economic importance, such as oil fields, coasts and maritime installations. All the solutions we offer combine the company's products as the main component in the solution with additional support systems that we buy from other companies, such as electro-optic payloads, radar, and communications systems."

As far as the markets in which Meteor Aerospace intends to base its activity are concerned, Nissan says, "We know our target markets very well, their specific needs and their ability to absorb and operate systems. We have already managed to obtain a first order, and we have several significant deals that we are pursuing at the same time with other customers."

"We shan't compete with IAI"

Nissan was CEO for six years at IAI, where he worked for 30 years. He started as an engineer in the company's missiles division, and was involved in the development of many weapons systems, some of them classified. He went on to become head of the missiles division, and then a vice president at the state-owned defense company. He was appointed CEO in 2006 by then prime minister Ehud Olmert and defense minister Shaul Mofaz. For part of his time as CEO he was one of the highest earners in the public sector, with a salary cost of over NIS 90,000 monthly. Later on, there were problems: In early 2012, Dov Baharav, who was then chairman of IAI, decided not to extend Nissan's contract on the grounds that he was near retirement age. This was despite the fact that Nissan was a respected manager credited with wining huge deals for IAI. "In my time as CEO of IAI, I worked harmoniously in cooperation with the previous chairman, Yair Shamir, and with his full backing. A new chairman was appointed, Dov Baharav, who came from civilian business. Baharav and I had differences of opinion over the company's strategy management methods and the directions in which the company should develop. When our disagreements started to interfere with the day-to-day management of IAI, I decided to leave and set out on a new path," says Nissan, in his first public comment since leaving IAI.

Nissan says that the new company he leads will not compete with IAI. "After I left IAI, I was obliged to observe a year-long cooling off period, which I did. But even after the end of that year, I have tried to avoid direct competition with it. In general, I maintain good relationships with the company's management, and I would be happy to collaborate with it in the future."

Meteor Aerospace sees the growth potential of homeland security markets around the world, and although there are many companies competing with it in Israel, its management believes that there is room for additional players. "To win orders in this environment, you have to persuade customers of the uniqueness of the solutions and their competitive advantage, and there are several factors that make them competitive: I recruited the best managers and engineers, leaders in their fields, and, as a private company, we are flexible and fast-acting enough to put together for customers the best possible solutions at competitive prices. Our systems will have unique characteristics."

Published by Globes [online], Israel business news - www.globes-online.com - on February 5, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Itzhak Nissan  picture: Ben Yuster
Itzhak Nissan picture: Ben Yuster
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