Small firms hit hardest by Israel's Eurosatory ban

Eurosatory 2022 credit: Reuters Lafargue Raphael
Eurosatory 2022 credit: Reuters Lafargue Raphael

Israel's biggest defense companies with record order backlogs and overseas subsidiaries can weather the exclusion from the French exhibition more easily.

The decision by the French government to bar Israeli representatives from participating in the prestigious security and defense event Eurosatory, due to be held in Paris open on June 17 is another disturbing step against Israel's defense industry. The large companies are less bothered due to their record revenue, but for many small companies, the losses, and the missed opportunity to present their wares, are painful.

Like the arms embargo that has continued to spread since the start of the war last October, the developments in the field of exhibitions is worrying. In March, the anti-Israeli government in Chile led by President Gabriel Boric excluded Israel from the prominent FIDAE air show in Latin America, which was held in April.

The political echelon did not identify the start of a process, and thus Israel has found itself pushed out of a much more important exhibition in Paris, in which 74 Israeli companies had been to take part.

Now the world media will feature images of deserted pavilions in Paris, since in this type of exhibition places are reserved a year in advance. Those probably rubbing their hands with glee at Israel's exclusion, ordered by President Emmanuel Macron, are the senior executives of the French defense giants like Thales, Dassault Aviation, Naval Group and Safran, the rivals of Elbit Systems, Israel Aerospace Industries (IAI) and Rafael Advanced Defense Systems, who will appear on a significant stage that the Israeli companies are being denied.

Other doors

Although Israel's big companies are not happy with the situation, they are not panicking. First and foremost, thanks to record order backlogs. At the end of the first quarter, Elbit's order backlog reached $20.4 billion, up $2.6 billion in just one quarter. IAI saw its order backlog increase by $1.1 billion in the first quarter to $19.1 billion, while Rafael's backlog amounted to $15.1 billion, up $850 million in the first three months of 2024.

Another reason why the big companies are less bothered about the French ban, is because of their international collaborations and subsidiaries. Elbit Sweden, Elbit's subsidiary in Scandinavia, as well as Rafael's German unit Dynamite Noble Defense (DND) are still expected to appear at the exhibition. Another company appearing at Paris will be German company Eurospike ion which Rafael has a 20% stake in partnership with Rheinmetall (40%) and Diehl (40%). About four months ago, Eurospike closed a deal worth $92.7 million for the sale of LR2 Spike missiles manufactured by Rafael to Romania.

An additional major collaboration is Proteus Advanced Systems - a joint venture of IAI and Singapore Technologies Engineering, which will be present at Eurosatory. Proteus has developed Blue Spear, a 5G anti-ship missile, which was delivered to Estonia in February as part of a NIS 150 million deal.

Visitors' badges

So it is the smaller companies hit hardest by the exclusion from Eurosatory. Of the 74 Israeli companies due to participate in the Paris defense exhibition 90% were through the Ministry of Defense International Defense Cooperation Directorate (SIBAT). The defense exports arm invests heavily in providing a stage for Israel's smaller defense companies and charges a modest NIS 20,000 for a pavilion at Eurosatory - a price considered very fair.

Some of the small companies chose not to exhibit at Eurosatory through the SIBAT pavilion. 30 month old startup Attis Aviation wanted to appear at the exhibition in order to find investors, and planned to present itself in the startup pavilion. The company invested about NIS 60,000 in the show for preparations including VR display, flights, accommodation and other expenses. The company estimates that in an "optimistic" scenario, they will be able to recover about NIS 15,000.

"Globes" has learned that on Monday a message was delivered to the companies from the Israeli representation at Eurosatory that Israeli citizens will be able to visit the exhibition. It will be possible for companies to receive badges as visitors rather than exhibitors. In other words, they have paid money for a place at the exhibition, and will receive visitors' badges. "This is not the time to get insulted," says a senior executive in the industry. "Those who planned to come will come, and those who planned meetings will meet."

Macron's action, which may also be due to the influence of the Olympic Games in Paris in July and the desire to keep things as calm as possible in the French capital until then, raises a major concern in the industry. The French government adopting the defense boycott could encourage more severe measures. A look at SIBAT's exhibition program for 2025 presents a rather bleak picture. In April, the LAAD exhibition is planned in Rio de Janeiro - last week Brazil's President Lula recalled his ambassador from Tel Aviv. Two months later, the Paris Air Show will take place, and in December 2025, a planned Israeli appearance at ExpoDefensa in Bogota is in doubt, after Colombian President Gustavo Petro severed relations with Israel and last week ordered the opening of an embassy in Ramallah.

Israel's defense industry produces the most advanced technology and is in demand even without exhibitions. But in the long term nobody is immune. Without exhibitions, all Israeli companies in the field will be harmed - including the big ones.

Published by Globes, Israel business news - - on June 6, 2024.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.

Eurosatory 2022 credit: Reuters Lafargue Raphael
Eurosatory 2022 credit: Reuters Lafargue Raphael
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