Israel - Aerospace and Defense Israel - Aerospace and Defense
Overview
In 2018, Israel spent over $6 billion on defense procurement. About half of this amount was spent in the United States through the U.S. Foreign Military Funding (FMF) Program. $3.2 billion were spent on non FMF funded purchases, sourced primarily in Israel and in the United States. The current U.S. military aid to Israel, covering FY2019 to FY2028 is $38 billion: $33 billion in FMF plus $5 billion in missile defense appropriations. Additional U.S. funding was allocated in 2016 for anti-tunnel capabilities that detect, map, and neutralize underground tunnels.
Israel’s military and commercial activities with the U.S. defense industry are strong and include commercial contracts with major U.S. companies. The local industry is sourcing quality components and sub-systems, presenting export opportunities to U.S. suppliers of high-quality components that can be integrated into Israeli systems.
The country’s defense industry is dominated by four companies: Israel Aerospace Industries (IAI), Rafael Advanced Defense Systems (both parastatals), publicly-owned Elbit Systems and Israel Military Industries (IMI), which was recently acquired by Elbit. The companies have a diverse portfolio of products and services, including space and airborne reconnaissance systems, radar systems, UAVs, avionics and electro-optical systems, munitions, tanks and armored personnel carriers. They produce structural components and parts and operate maintenance, repair and upgrade facilities. In addition, there are several hundred Small and Medium Sized Enterprises (SMEs) active in the sector.
Approximately 80% of local defense production is destined for overseas customers. In 2018, Israel’s total defense exports amounted to $7.5 billion. Missile systems and defense systems against missiles exports accounted for 25% of total exports. Unmanned aerial vehicles accounted for 15%, radar and electronic warfare systems 14%, upgrade and avionics 14% and weapons stations 12%. Other exports were in optronic systems, satellite and space systems, and cyber products.
Israel has a space research program with scientific and commercial goals and has developed indigenous launch capabilities. A space cooperation agreement with NASA in 2015 expanded cooperation in civil space activities. Israel’s space program is small but significant. It’s first mission to the moon in February 2019 made Israel the 4th nation to attempt to soft land on the moon.
Israel's national carrier El Al, which flies an all-Boeing fleet, purchased and leased 15 Boeing Dreamliner wide-bodied 787-8 and 787-9 planes, with an option for an additional 13 aircraft in the future. The first Dreamliner was delivered in August 2017.
U.S. Export Control requirements are considered a serious challenge by local manufacturers procuring components that will be integrated in systems for export to third countries. The local industry also benefits from Israel’s offset program, which is administered by the Industrial Cooperation Authority at the Ministry of Economy. Israeli industry has also benefitted historically from an option to convert 25% of U.S. Government FMF from dollars to shekels, which has enabled the Israeli Ministry of Defense (MOD) to spend FMF locally. The U.S. military aid program to Israel approved for 2019-2028 gradually eliminates that provision, which means that the MOD will have to spend the entire amount in buying weapons, systems, and defense equipment solely from U.S. companies. Local industry is concerned about the negative impact the change will have on SMEs but this will not affect the four major players listed above, who already have a presence in the U.S., in one form or another.
Leading Sub-Sectors
Aircraft parts, air-control technology, electronic components for land, air and sea platforms, airborne and ground-based engines, electro-mechanical devices, microwave components, and sensors.
Opportunities
U.S. exporters are strongly advised to appoint a local representative to introduce their products and services to the Israeli military and aerospace & defense industries. The local representative can also provide business development services and after sales support. For additional information about FMF tenders, please contact the MOD procurement office in New York City, at: http://www.mission-ny.mod.gov.il/Pages/default.aspx
Vendor Contact Form: http://www.mission-ny.mod.gov.il/VENDORS/Pages/contactUsVedorRegistration.aspx
In addition to FMF-purchases, the MOD publishes local tenders that present limited sales opportunities for U.S. companies. The U.S. Commercial Service has access to the list of local tenders and can make information available to interested U.S. suppliers. Bidding on local tenders requires opening a local bank account and appointing a local rep. For information about local MOD tenders please contact Commercial Specialist Yael Torres at Yael.Torres@trade.gov; +972-3-519-8522.
MOD’s International Defense Cooperation Directorate, SIBAT, also publishes a directory of the Israeli defense industry that is a useful tool for U.S. exporters.
Web Resources
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