Here is a transcript of a ques-
A: Extensive technical in-
tion-and-answer session with Mr. struction and training in system
operation and maintenance. This
Q: The disintegration of the So- is the unique component we pro-
viet Union made Eastern bloc vide. It displays a willingness to
systems readily accessible at off- allow the client to share our tech-
the-rack prices, and impelled nology and cumulative experi-
Western countries to sell more ence.
aggressively. How did this affect
Q: How extensive are IAI's
business relations with the Unit-
A: It's true that there are new ed States, and are there signs the
difficulties. However, we also are volume of business is decreasing?
benefiting from new markets. A: The United States is our
The peace process opened the for- largest client. There is a tradi-
mer Third World, or bloc of coun- tional tension between IAI and
tries that never did business with U.S. firms, but in the final analy-
us. In addition, the process was sis the U.S. is an open capitalist
also conducive to opening Euro- market which is so vast that you
pean markets closed because of really don't need more than a
embargos, such as Britain and small fraction.
France. The general trend today
Q: What military and civilian
is toward more openness. Com- products does IAI sell to the Unit-
petition is obviously greater and ed States?
more aggressive, but I prefer the
A: IAI is the only non-U.S. firm
new situation over the old.
that supplies the U.S. military
Q: Do you still market with three products considered
weapons under the slogan "IDF "major systems," or products
battle proven" or are you more in- jointly developed with U.S. com-
clined today to emphasize com- panies. We supply the U.S. mil-
itary with the Hunter UAV
(unmanned aerial vehicle, or pi-
lotless plane). We have co-devel-
oped the Arrow anti-ballistic
missile with the United States.
Two other products are the
MLM-manufactured Night Tar-
geting System and a mine-plow-
er for tanks. (MLM is an IAI
A: The best calling card we subsidiary).
As for civilian products, our
have is the fact that the system
we want to sell is being used by Astar executive jet has been sold
the IDF. The client knows that to companies in the United
this is a mark of quality. One of States and we are currently
the problems we face, not that I working on the Galaxy, an im-
am complaining, is that we can- proved Astra. We also sell up-
not market any system unless its grading services for Boeing and
sale was approved by the IDF. MacDonnell Douglas jets and jet
Sometimes, a system or sub-sys- engines.
Q: Have orders from the IDF
tem is being used by the IDF for
five, six, even seven years before gone down?
A: The IDF is our second
we can export it. It's a qualitative
edge the IDF has and is reluc- largest customer after the Unit-
tant, for good reason, to compro- ed States. The market is un-
doubtedly shrinking as a result
Q: That means you are mar- of a smaller defense budget in
keting 7-year-old systems as real terms and consequently
state-of-the-art, while in fact they there are constraints of smaller
buying power. We do not develop
are almost a decade old.
A: That's a price we have to systems unless the IDF requests
pay. But today's clients are picky them.
Q: How much do you spend on
and demand alterations and
modifications for their needs. research and development?
A: Our R&D is divided into two
That's good for us because our rel-
ative edge is in providing up- parts. Self-R&D is allocated from
grading and modifications partly IAI's budget. Then there is client-
because the system is several requested R&D, which is what
years old, and we have the bene- we expend in terms of R&D for
fit of experience in dealing with systems we export. This is a trib-
ute of excellence from our clients
Q: What do you offer the client that they trust our R&D for their
in addition to the system as an needs. Overall, 30 percent of IAI's
budget is for R&D. ❑
extra competitive edge?
Orders in 1994
amounted to $1.46
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