Rafael Reorganizes to Boost Return on Broad Capabilities
Rafael’s exhibit here at the Singapore Airshow (Booth N51) reflects the outcome of the Israeli defense group’s recently completed reorganization that, according to chairman Brig. General (Retd.) Itzchak Gat, will better enable it to meet its goals for further developing its product portfolio.
One top priority is development of the David’s Sling air defense system with Raytheon. In December, Rafael and its U.S. partner conducted a joint full system test of the system’s interception capability to provide active defense against medium-range aerial threats, including air-breathing targets and other threats inside the atmosphere. System development is due to be completed next year, forming the third tier of Israel’s multi-layered air defense concept, which also consists of the proven Iron Dome missile defense package and the Arrow-2 and -3 systems.
The reorganization implemented during 2013 saw the creation of the following three new divisions: land & naval, which also is responsible for systems integrated security solutions for critical asset and infrastructure on land and at sea; air and C4ISR, which covers air-to-ground systems (such as Spice); electro-optical systems (including the Litening airborne navigation and attack pod and Reccelite); and communication, intelligence and cyber technologies. Last year, Rafael also established a new combined division to encompass all its efforts in research and development, as well as engineering.
“We pride ourselves on our superb scientists and engineers, who since Rafael’s establishment have developed some of the world’s most ground-breaking systems, such as Iron Dome, Trophy, Protector and many others,” Gat told AIN in a pre-show interview. “These changes will serve us in achieving our plans and goals and in meeting our future challenges. Looking ahead, we plan to capitalize on this experience and knowledge and to expand our existing families of advanced systems, such as Spike missiles, electro-optics, RWS [remote weapons systems] and others, all of which have been combat-proven and in service with the Israel Defense Force, as well as dozens of militaries around the world, providing the users with an added value in the battlefield.”
Iron Dome entered combat service almost three years ago in 2010, cementing Rafael’s reputation as a leader in the provision of missile defense capability. Since then it has intercepted more than 600 rockets fired at Israel with a reported operational success rate of more than 85 percent.
In 2012, Rafael generated sales of more than $1.78 billion, setting up an orders backlog spanning over two years. This represented a 10 percent drop on the $1.98 billion sales total for 2011, but net profits after taxes increased by around one third to $148 million.
The Haifa-based group’s export client base spans the U.S., NATO powers and other militaries across Europe, Asia and Australia. To date, in excess of 21,000 Spike missiles have been delivered to more than 20 countries, with 3,000 of them fired in tests and in combat. The Litening system, developed with Northrop Grumman, has seen service in missions over territory such as Afghanistan and Libya. The Python-5 and Derby air-to-air missiles are now also employed through the Spyder air defense application, with full commonality between both roles. Other research and development priorities at Rafael include laser applications and counter-improvised explosive device capabilities for future combat scenarios.
According to Gat, the global defense market is continuing to shift from a situation in which customers buy complete systems from foreign suppliers to one in which they expect to be able to produce the systems for themselves locally. For instance, Spike missiles are now produced in several countries, including the Netherlands, Spain and Poland.
“[This is] a trend requiring efficient capability to transfer manufacturing technologies, know-how and [to] monitor quality assurance, all that under complex offset rules that require significant flexibility and resilience to maintain a profitable operation,” he explained. Here in Singapore, Rafael is continuing its pursuit of further opportunities for cooperation with international partners that already number more than 100.
“We continue to develop our foreign operations and expand our presence in strategic markets, such as India,” said Gat. “This can be done either through acquisitions or through joint ventures, or other forms of partnerships.”
Rafael’s installed base of products in the Asia Pacific region already includes Spike missiles, airborne pods and air defense systems. The company is currently responding to several declared requirements for systems such as air defense, communications, air-to-ground weapons and precise tactical missiles. Gat indicated that he expects to see further joint ventures and partnerships established in this part of the world.
Last year Rafael also established a new division to combine all its efforts in research and development, as well as engineering. Annually, Rafael invests approximately 8 percent of its revenues in these areas and Gat said that the new organization will more effectively bring together capabilities and innovations from across the group.