Israel Snags 50% Offsets on Heavy APC Deal

Israel Snags 50% Offsets on Heavy APC Deal
17 May 2011

Local firms here stand to win $150 million in subcontract awards from General Dynamics Land Systems (GDLS) initial $300 million Namer (Tiger) armored personnel carrier (APC) production deal with Israel’s Ministry of Defense.
Government and industry sources here said GDLS, Sterling Heights, Mich., has pledged industrial cooperation, or offsets, amounting to nearly 50 percent of the MoD’s initial production award of more than $300 million. Orders to local firms will be spread over the eight years of the MoD-GDLS contract, with GDLS commitments slated to increase at similar rates if MoD exercises follow-on production options.
In the initial phases of the U.S.­based production program, GDLS will produce hulls and kit sets for the first couple hundred Namers, a heavy APC based on Israel’s Merkava Mk4 main battle tank. U.S.-based production work will take place in GDLS’ plant in Lima, Ohio, and integration and final as­sembly in Israel.
Ultimately, government and industry sources said, the GDLS-MoD partnership could extend to global sales of Namer structures or entire vehicles, subject to additional approval and negotiated royalties and offsets from Tel Aviv.
“The agreement allows for the integration of Israeli products and technologies in weapon systems manufactured by GDLS, including their two largest programs in production today: the M1A2 Abrams and the Stryker,” said Avner Raz, president of Elul Tamarynd, the firm’s local representative.
“Right now, the industrial participation commitment stands at about 50 percent of the whole deal, and if the quantity of the Namer will increase — as every­body expects it to — their commitments will increase accordingly,” said Raz.
Raz is a longtime Israeli industry executive who recently joined Elul after serving as chairman of Israel Military Industries, a key supplier to the Merkava tank and Namer APC program.
In a May 10 interview, Raz noted that a few Israeli firms already have received small orders, and that working teams are in place to coordinate contracting procedures, harmonize standards and prepare smaller firms to compete with GDLS’ vast cadre of subcontractors and suppliers worldwide. “Obviously, Israeli companies will have to compete with those who have been subtler suppliers to GDLS for many years. So we at Elul have established a special team to bridge gaps that invariably will arise when small local firms have to learn how to adapt them­selves to a large global company like GDLS,” Raz said. (Source: Defense News)


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