Defence industry in UAE on the march
30 May, 2010
Ali al Dhaheri could not have known he was trailblazing an indigenous defence industry for the UAE when he set up Adcom Systems in the late 1980s.
The company, now with a turnover in the hundreds of millions of dollars, produces advanced aeronautical products such as jet-powered, remote-controlled unmanned aircraft, called drones, used as targets by trainee air force personnel.
Over time we
evolved from being hobbyists to professionals, says Mr al Dhaheri. We found that we had a mind to develop things by ourselves.
Adcom has produced thousands of target drones for about 12 customer nations. It is also focusing on more advanced drones, called unmanned aerial vehicles, which includes a partnership with a Malaysian company, Composite Technology Research Malaysia.
As well as aircraft superstructure, Adcom produces sensitive navigational technology such as the drones flight control units which take 500,000 positional readings per second at its workshops in Musaffah, he says. The company plans to increase the size of the workshops by 4,600 square metres.
Adcom may have been one of the first but there are now a number of companies that have found ways to cater for the UAEs huge defence requirements it is the worlds fourth-largest arms importer as well as other Gulf nations.
Among the original entrants into the UAE market were trading businesses such as International Golden Group (IGG) and Vallo, which represent and market foreign defence companies and their products, and companies such as Bin Jabr Group, which has assembled mini-submarines and armoured vehicles for the UAE military.
These companies were started by big personalities who were well connected with the military, says Riad Kahwaji, the chief executive of the Institute for Near East Military Analysis in Dubai. They figured out an easier way to meet the exact needs of the military than western countries, he says. They knew the culture and interaction here.
IGG has acted as a local agent for foreign defence companies such as Thales of France and General Dynamics of the US since 2002. When the company announced its partnership with South Africas Denel in 2006, it made a point of stating it had demonstrated its ability to bring business to Denel in the UAE, officials at the time said.
In February last year it signed a three-year, Dh67 million (US$ 18.2m) deal with the Abu Dhabi Governments Critical National Infrastructure Authority to construct water security barrier systems produced by Wave Dispersion Technologies, based in the US.
Vallo, formerly Hydra Trading, also has partnerships with foreign companies to help them enter the Middle East marketplace. It represents the Czech vehicle maker Tatra and Russ Technology, which produces the BMP armoured personnel carrier, in the region. Vallo sees huge potential in selling Tatras military vehicles to the UAE and Saudi armed forces and plans to build a 40,000 sq metre assembly plant in Musaffah, says Mohammed Zahran, the manager for Vallo.
I think Vallo is going to be the talk of the town, we have really grown so fast, he says, adding it has beefed up its management team with eight retired officers from the UAE Armed Forces.
Bin Jabr Group began as an agent for companies such as Thales and Sagem supplying communications equipment to the military. In the late 1990s it began developing its own products, such as special forces submarines and armoured vehicles for the UAE, and also does brisk business manufacturing military uniforms for many of the UAEs estimated 50,000 servicemen.
Its NIMR high-mobility tactical vehicles were custom-tailored for the desert environment, says Yousef al Sheybah, a retired UAE staff colonel and the general manager of marketing and development, defence and security at the Bin Jabr Group.
According to the Army Guide website, Bin Jabr Group signed a deal with the UAE to provide 500 of its NIMR vehicles in 2005 in a contract valued at $ 41m. The vehicles are manufactured in Jordan, while the gearbox and engines are purchased from other companies. There are plans to develop local manufacturing of the NIMR in Abu Dhabi.
Mr al Sheybah says the NIMR programme has huge export potential. The UAE forces are happy with the submersibles it manufactured at its facilities in Musaffah, he adds. [The submarines] are very advanced for certain operations and depths they can do depths of 50m.
These original companies are now having to contend with a changing order, however, as Abu Dhabi master-plans a home-grown defence industry.
A new generation of defence-related companies are rising up that are well-funded, state-supported and tasked with helping the emirate to realise its 2030 plan by creating highly skilled jobs and a knowledge-based economy.
Tawazun, an Abu Dhabi Government-backed holding company, has created a gun manufacturer, Caracal, which has contracts in the UAE and other Middle Eastern countries. It is targeting an output of 40,000 handguns this year, officials have said. Another Tawazun company, Al Burkan, produces munitions, while its Abu Dhabi Autonomous Systems Investments is expected to introduce unmanned aerial, land and marine systems in the coming years.
In addition, state-supported maintenance companies have been established such as Al Taif Technical Services, a unit of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government. Al Taif has a 20-year contract to service the armys fleet of tanks and heavy utility lorries, worth more than Dh1 billion.
One of the largest recent entrants to the UAE defence market is Emirates Advanced Investments (EAI), which was established in 2006 and is jointly developing laser-guided rockets with one of the worlds largest defence companies, the US-based Raytheon.
The partnership is just one of several EAI has cultivated including those with the European company EADS for command and control systems, and Thales to provide in-service support for armed forces communications systems.
But new competition does not worry Mr al Sheybah, who says his company has gained enough experience to be competitive in cost and quality in everything it manufactures.
We compete with companies that have been in the marketplace for years and are more experienced than Bin Jabr but we are at the same level of quality and are often cheaper, he says.
All of the local defence companies can be sustainable as long as they continue to invest in new products, Mr Kahwaji says.
If they invest well and smartly in research and development and continue to make tailor-made products and maintain close partnerships to the local militaries, they will be sure to get contracts.
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