When Israeli small arms manufacturer IWI decided to enter the US arms market with their Tavor assault rifle, they were hoping to sell 6,000 rifles during their first year of operations.
The actual results have exceeded even the most optimistic projections: in nine months, not less than 15,000 Tavor rifles have been sold throughout the USA. At the same time as the commercial success, the Tavor rifle – in its first year in the USA – has been selected by the National Rifle Association (NRA) and American Rifleman Magazine for their Golden Bullseye Award as 2014 Rifle of the Year.
Does this award indicate that the Tavor AR is on the way to becoming a blockbuster like the Uzi SMG, which was a worldwide hit for decades?
"This tremendous success has taken even us by surprise," say Uri Amit, CEO of IWI, and Shlomi Sabag, deputy CEO and President of the US subsidiary, in an exclusive interview to IsraelDefense. "It is still too early to predict that the Tavor will be as successful as the Uzi, but the American public has really embraced it rather enthusiastically."
But in order to understand the connection between the Uzi and the Tavor, we need to step back in time: IWI, Israel Weapon Industries, is the modern incarnation of the Israeli arms works originally established by the military industry even before the establishment of the State of Israel. Until about a decade ago, the small arms division, known as Magen, an inseparable part of IMI, was sustaining substantial losses. The division, which had been manufacturing such small arms as the Uzi SMG, the Galil assault rifle, the Negev machinegun and Jericho pistols for many years, was using outdated manufacturing machinery and the number of employees decreased until it reached less than one hundred. The most significant asset of the company was a contract for the supply of Tavor assault rifles to the IDF and subsequently for the armed forces of Thailand as well.
At that time, more or less, the division was privatized: the State of Israel sold it to business entrepreneur Samy Katsav, who also owns part of the control stock of Israel Shipyards and other defense industries (like the electro-optics manufacturer Meprolight). The price paid for the division in the context of the privatization process was only US$ 14 million. Today, the division is a part of the SK Group – so named after Katsav's initials. The group coordinates Katsav's operations in the defense sector and through Israel Shipyards. The IWI plant is currently prospering and has a workforce of not less than 500 employees, but even that has turned out to be insufficient: "We are preparing to substantially expand our scope of production in order to meet the tremendous demand for Tavor rifles in the USA," say Amit and Sabag.
How did the rapid entry of the Tavor rifle into the American arms market actually take place?
Shlomi Sabag recounts: "The first time we introduced the Tavor rifle in the USA was at an arms exhibition in Orlando, in November 2012. From the very first moment, there was tremendous interest on the part of dealers, who waited until we initiated actual sales in March 2013."
According to Sabag, "The small arms market, all over the world, is one of the most complicated markets. In many countries it is easier to sell missiles and aircraft than it is to sell rifles, the sales of which are subject to stringent regulation. However, even subject to that regulation, the American arms market is immense. It is based on a culture where people buy guns as a sport pursuit. Some people buy new guns every few years, just like buying cars. Accordingly, stores that sell rifles and related gear often look like regular supermarkets.
"In view of all this, we knew that entering the American market can be highly important to us. We decided to establish a new infrastructure that would serve us for the benefit of sales in the USA as well as for other international activities. In order to implement that decision, we acquired the business of an arms dealer from Pennsylvania, which included a state-of-the-art firing range as well as assembling facilities. The American distributor stayed on with the business, and together with him we built assembling facilities for a semi-automatic-only version of the Tavor assault rifle that would conform to the rules of US regulation. The fact that we were already manufacturing parts for the Israeli version of the Tavor rifle on US soil, using US defense aid funds, helped us vis-à-vis the US regulation: we started assembling semi-automatic Tavor rifles (the standard version of the rifle is fully automatic) in Pennsylvania from parts manufactured partly in Israel and partly in the USA."
According to Uri Amit, "We really intended to sell only 6,000 Tavor rifles in the USA in 2013. In reality, the number of rifles we sold was more than twice as high. The rifle was embraced with tremendous enthusiasm by the gun buffs and soon thereafter major articles began to appear in the American arms magazines. People uploaded clips showing live fire sessions to YouTube and reported that the rifle remained very accurate even after having fired a thousand rounds. Sales started immediately following the terrorist attack during the Boston Marathon in April 2013. People simply emptied the shelves. You can say, to some degree, that the US arms market was actually waiting for the Tavor rifle."
The fact that it is not a "conventional format" rifle, one that is easy to get used to, did it make the market entry more difficult to accomplish?
"That is correct. Our greatest accomplishment is the fact that the Tavor rifle dominated a segment of the primary market for AR-15 rifles, despite the fact that its center of gravity is way to the rear and it does not belong in the category of such rifles as the M19. It is a firearm you can attach to your shoulder and fire like a machinegun even with one hand, while opening a car door or window. It is a stick of sorts that weighs only 7 kilograms instead of 12 kilograms, which is fairly standard for machineguns. The American public loved it very much."
Uri Amit and Shlomi Sabag reveal that the standard distribution price of the Tavor rifle in the USA is about US$ 1,400 per rifle. As far as they are concerned, this means that having sold 15,000 rifles in nine months generated millions of US dollars as revenue for IWI in the first nine months of selling the rifle in the USA.
According to Uri Amit, "the fact that the Tavor rifle is the primary firearm of the infantry brigades of the IDF has been very helpful to us with regard to sales in the USA. People in the USA remember the Uzi SMG and assume that what's good enough for the IDF is necessarily a high quality product. The people of the National Rifle Association had visited our plant in Ramat-HaSharon before they decided to bestow their 2014 Rifle of the Year Award on us. This award, too, was very fast and very surprising for us."
Not Just in the USA
According to Uri Amit, the distribution of the Tavor rifle is expanding not just in the USA.
"Generally, 90% of our sales are intended for export, and that applies to the entire range of firearms we manufacture. The IDF are introducing the Tavor rifle into more and more units, but most of our sales take place overseas."
According to foreign reports, IWI signed a contract with the government of Vietnam, in the context of which a facility for manufacturing the Tavor rifle was erected on the soil of this Asian country. "The market we aim the sales of this rifle at is not only the military market – we also target tactical intervention units. The shortened version of the rifle, designated 'Micro Tavor' has also been a major success story for us."
If the privatizing of the small arms division has proven to be so successful, will that mean that Samy Katsav intends to compete over the tender for the privatization of the entire IMI, which is to be issued soon?
Uri Amit: "Numerous parties out there want to purchase IMI. Samy Katsav has established an exceptional record with Israel Shipyards as well as with Meprolight, which grew considerably after he had purchased it, and naturally with IWI as well. This says it all."
Shlomi Sabag says further that one of the indicators of the success of the Tavor rifle in the USA is the fact that "An aftermarket of products associated with the Tavor rifle, like triggers, has evolved very quickly."
Uri Amit reveals: "We intend to start marketing 2-3 additional products in the US market in the coming year, and hope they turn out to be just as successful." For the time being, he has not provided any more details about those products.