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WEEKLY NEWSLETTER
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Israel
Index
Israel's more than 150 defense and defense-related firms
(thousands of other firms were engaged in subcontracting) fell into
one of three ownership categories: state-owned enterprises,
privately owned firms, and firms with mixed state and private
ownership. One firm, Armament Development Authority, commonly known
as Rafael, was the main military research and development agency
responsible for translating the ordnance requirements of IDF field
units into development projects. Rafael had a unique status under
the direct supervision of the Ministry of Defense.
Total employment in the defense sector reached a peak of 65,000
persons in the mid-1980s, more than 20 percent of the industrial
work force. By 1988, however, retrenchment of the defense budget
and shrinkage of the world arms market had exposed the defense
industry to severe financial losses and layoffs that reduced the
work force to about 50,000 employees.
The largest of the defense firms was the government-owned
conglomerate, Israel Aircraft Industries (IAI) that manufactured
the Kfir and Arava aircraft, the Ramta light armored car, Gabriel
antiship missiles, and high-speed patrol boats. IAI began in 1933
as a small machine shop, later catering to the maintenance and
upgrading of the motley collection of aircraft acquired during the
War of Independence. It continued to specialize in the overhaul and
retrofitting of the whole range of aircraft in the air force
inventory. Until the cancellation of the Lavi project in 1987, IAI
had been entrusted with the development of the advanced fighter
aircraft.
The factories of Israel Military Industries (IMI), another
government-owned conglomerate, produced the Uzi submachinegun, the
Galil rifle, explosives, propellants, artillery shells, and light
ammunition. IMI also specialized in the upgrading and conversion of
tanks and other armored vehicles. Tadiran Electronic Industries was
the largest private firm engaged in defense production, notably
communications, electronic warfare, and command and control
systems, as well as the pilotless reconnaissance aircraft of which
Israel had become a leading manufacturer. Soltam, another private
firm, specialized in mortars and artillery munitions.
Growth of the defense industry was achieved by a mixture of
imported technology and Israeli innovation. Israeli firms purchased
production rights and entered into joint ventures with foreign
companies to manufacture both end products and components. Nearly
every electronics firm had links of some sort with United States
producers. Purchase agreements for foreign military equipment
frequently specified that production data and design information,
together with coproduction rights, be accorded to Israel.
Nevertheless, American firms often were reluctant to supply
advanced technology because of fears that Israel would adapt the
technology for use in items to be exported to third countries on an
unrestricted basis. Some American firms also feared that
collaboration would encourage Israeli competition in already
saturated world markets.
Data as of December 1988
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