Defense Technology International - September 2007 - (Page 63) more in space, another area that will be increasingly important in the not-so-distant future. On the defense side, that includes observation satellites like Ofeq [reconnaissance satellites]. It will also include other observation systems such as TecSAR [synthetic aperture radar satellite] and OptSat [3000, an advanced high-resolution optical satellite under development], both of which garnered attention at Paris. And soon, you will see a very large deal with anti-air missiles . . . one that folds together many of our top technologies. This is indicative of things to come . . . new protection systems that provide a shield against today’s and tomorrow’s biggest threats. They will integrate our world-leading radar technologies with ISR (intelligence, surveillance and reconnaissance) and electronic-warfare systems, manned and unmanned airborne and ground sensors and command and targeting networks. What are the greatest obstacles to achievement, and how is IAI overcoming them? There are three. The first is government ownership. The second is political—at the end of the day, we are Israelis and therefore out of business in certain markets. Third is size. When you’re competing with Boeing, Lockheed Martin, EADS, Thales or other $10-60-billion companies and you are a $2-3-billion company, it becomes clear that size matters. On the other hand, you compete and cooperate with the same people simultaneously and you have to be aware that the big guys might go into shock if you start to take a significant portion of their sales. The smaller you are, the worse that could be for you on the cooperation side. We have been talking about international partnership as a way to get bigger, and that requires a larger base for financial activities. We have had to diversify our credit sources, because for many years the only money we could get for a down payment or credit line came from local banks or insurance companies . . . [and IAI had] nothing solid to stand on to www.aviationweek.com/dti YAIR SHAMIR Chairman of the Board, Israel Aerospace Industries Age: 62 Birthplace: Ramat Gan, Israel Education: B.S., electronics engineering, Technion, Israel Institute of Technology, 1974. Background: Pilot and commander in Israel Air Force from 1963-88. Headed the test unit for three years and the service’s highest electronics oversight and procurement position before retiring as a colonel. Senior executive at several high-tech firms, funds and investment companies, including Scitex, DSP Group, Catalyst and The Challenge Fund. Chairman of El Al Airlines during the last stages of its privatization in 200405. Married, with three children and five grandchildren. Lives in Savyon, near Tel Aviv. He is the son of former Israeli Prime Minister Yitzhak Shamir. take the risks and big steps needed for acquisition. Worst of all, we did not have control. If the company wanted to do a deal or make an investment, it needed the support of the bank consortium. Once we wanted to invest $5-6 million to acquire one-third of a local start-up company, but since we are stateowned, the [Israeli] cabinet had to approve the deal. That took months, and the amount was peanuts. In this case the company waited, but abroad that would have been unacceptable and a missed opportunity. Getting in a position to decrease government involvement takes many steps. You have to build the company differently. We also made it a reporting company with the [recent $250-million] bond sale [on the Tel Aviv Stock Exchange]. This means there will be transparency on all matters commercial or financial. Will there be more offerings in the future? We might repeat such an offering . . . and we are looking for other sources, internationally, for credit and investment. Meanwhile, we have changed the structure of our debt . . . and are essentially clear of our main debt . . . that in the past was hundreds of millions of dollars. The point of the first offering was to increase capital enough for an acquisition. We are looking for a company in the U.S. or Europe. The governments in the U.S. and Europe are inclined to buy direct, so we are seeking a local company with a talented board and managers . . . setting up a wall between IAI and them, and using our technology to leverage projects in these important markets. We have a vice president for this sort of business development running all over the globe reviewing several [companies]. We are moving quickly, but somewhat conservatively. . . . We will go only with the best because we cannot afford to fail. We are sitting on over a billion dollars in the bank and have the flexibility to take risks and make decisions. We are still fully owned by the government, but on top we have our own resources. . . . Everything has become much easier. I 63 SEPTEMBER 2007 DEFENSE TECHNOLOGY INTERNATIONAL B.C. KESSNER/DEFENSE TECHNOLOGY INTERNATIONAL http://www.aviationweek.com/dti
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