4•; t ir- black in 1997 after years of loss- puter-based diagnostic test equip- oq. receives 100 percent funding ment for commercial carriers and combat evaluation systems for the devoloPment of approved air for the military market. projects. Today, Nissenson proudly Most experts say the answer is privatization, a solution which sports such t,op-notch customers has sparked much debate over as British Airways, United Air- how and when to sell off and con- lines, U.S. Air, Olympic, China solidate the Israeli defense in- United and Royal Netherlands Air Force. dusty. Nissenson, whose background "What you should do with IAI, TAAS and Rafael is cut them into is in pharmaceuticals, not the little pieces and join them togeth- military, attributes Rada's suc- er," says Ze'ev Bonen, a former cess to the company's offensive Rafael executive and now a re- approach to doing business. Un- searcher at Bar-Ilan University's like most military-equipment Begin-Sadat Center for Strategic manufacturers, which respond to Studies. "First privatize them and a customer's request rather than then let them fight it out." develop and bring unsolicited But public or private, prevail- goods to the market, Rada, a non- ing market differences also pm- governmental, publicly-traded vent defense companies from company, had to take a more ag- succeeding in the civilian sector. gressive approach in order to stay Unlike defense-related enter- afloat. IAI is another example of a prises, commercial high-tech companies must pursue their company which has understood markets. To stay afloat, they the need for a division of powers. must stay ahead by providing the When it began to ache in the latest and fastest technology at late '80s, it made several un- cheaper prices than competitors. successful attempts to assemble The defense industries, how- civilian products on military as- ever, are large and unwieldy. sembly lines. In 1993, the corn- They cannot react quickly to pany registered a $400 million changing consumer demands and loss. Company management then also lack a physical presence in realized that the only way to con- many of their markets. quer new markets was to isolate The civilian market has a civilian divisions and put them much wider playing field which under different leadership. To- is open to a constantly growing day, two of lAl's four divisions number of competitors. The de- concentrate on commercial pro- fense industry, however, is an old jests. "We separated the civilian and boys network dominated by a handful of companies which sell the military departments as well as the marketing divisions that to a few customers. "Usually one finds more inno- sell each of these types of prod- vation in small start-ups simply ucts," said David Harari, IAI's because it's the only way they can managing director of products exist and this is really their rai- and business development, son d'etre," says Mr. Galil. "In adding that in five years he hopes larger organizations, the most ef- that half of IAI's activities will be fective innovation is in areas that in the civilian market, compared require very large investments to 35 percent today and 22 per- cent five years ago. or in special R&D labs." Although IAI is still struggling Even when technologies are re- lated, civilian and defense corn- to enter the black— company ex- panies cannot approach their ecutives forecast that profits in marketplaces in the same way. 1997 will total $22 million—the "If a defense company wants to company is undoubtedly on the start developing commercial right road. On May 16, 1996, IAI goods, it has to set up a different organization. They cannot live launched the Amos satellite, within the same 'company," says making Israel one of only nine countries worldwide to use its Mr. Galli. Not all defense companies military space technology to de- have failed to make the transi- velop, produce and launch a corn- tion, however. munication satellite. With good One company that has sue- reason, IAI's President Moshe ceeded, for instance, is Rada Elec- Keret said after the launch that tronic Industries, Ltd., a it was one of the company's great- manufacturer of avionics data est achievements. The question is whether other testing and ground support equipment, which managed to defense companies can also learn penetrate the civilian market cif- from the mistakes of the past. ter a technological turnaround. Troubled times still lie ahead for With few new orders on the the defense sector and no one can horizon, Rada realized it was in afford to make mistakes. The pe- trouble in 1990. It faced a diffi- riod of trial and error is over. To- cult choice — close down or im- day it isn't bombs and aircraft provise. Haim Nissenson, Rada's that will win the financial war, CEO, decided the only solution it's Internet connections and was to go into the civilian arena. satellite TV. ❑ He set a team of engineers to de- (c) Jerusalem Post 1997 velop two new products, com- Erhard BMW SIZZLING SUMMER SAVINGS No Charge Scheduled Maintenance-36 months or 36,000 miles '97 BMW 318ti '97 BMW 318i Month '97 BMW 328ia Month I rune 4065 Maple Just E. of Telegraph Bloomfield Hills ERHARD BMW OPEN SATURDAY SALES 10 A.M,-4 RM. Michigan's Largest and Most Experienced BMW Dealer Family Owned and Operated Since 1964 SERVE/PARTS/SALES (248) 642-6565 month &tied end lam sObject to approved trait wilt BMWS. S2500 neorefOnlable down parrtnt requitalTitle.drams. rird ta: :Atka. A scatty ckposit of S350.CO fot 31 8d. $400.00 for 3181. 5450.00 fa 328ia. 10.000 miles prat limit. S.I5 cats pa mik over linit.Opdon to purchase at lease crd 01021.50 fa 31 8d. $18.027.45 fa 318i. 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