Cause for Concern: Israel's Share of the UAV Market is on the Decline
The world market for medium and large UAV systems is growing, but the share of the Israeli industry in that market is declining. The share of US industries is increasing, the Russians and the Chinese have begun exporting, and it seems that unless the Israeli Government takes firm action, winter is coming
Alon Ben-Gal
| 27/05/2019
Photography: Alexandra Aksyutich / IAF website
In late April, Greece announced its intention to purchase the US-made MQ-9 Reaper UAV system at an estimated cost of about 50 million Euro. Seemingly, just another isolated arms deal, but in effect – a part of a definite trend of erosion in the exportation of Israeli-made medium, tactical UAVs, also known as MALE (Medium Altitude, Long Endurance) platforms, such as IAI's Heron, Elbit Systems' Hermes-900, and similar systems.
The decline of Israeli exports in this system category is not surprising and was reviewed by the media periodically. The threat is lateral and aspires to become national, so in addition to the efforts of the industries, the relevant state organs should address the issue and provide support in several ways. In today's terms, referring to Israeli exports in the MALE category, unless coordinated active measures are taken, winter is coming.
Naturally, it is difficult to explain the entire scope of this threat through this restricted format, but it is still possible to outline the simple, factual reality as it is on the ground.
"Make America Great Again." The US industries are currently involved in an aggressive process of marketing their systems to the world. They have been very successful and appear to be heading in the direction of many additional markets. Firstly, we should mention the regulatory aspects of the US government's efforts to revise the policy of MTCR (Missile Technology Control Regime) vis-à-vis the other members of that treaty, in addition to the recent easements in the regulations governing the exportation of offensive weapons.
At the same time, the United States can sell US-made systems through the US-Aid channel. Without burdening the reader with complex explanations, it may be stated, quite simply, that the regulatory revisions along with the US-Aid channel make it easier for the Americans to sell their systems while also making it easier for other countries to buy US-made systems.
Looking factually back a number of years, the American breakthrough is evident. The Netherlands, France, Spain, the UK, and Italy have all purchased the MQ-9 system. Naturally, Greece has been the last country – for the time being – to express an interest in that system. Britain was also the first client of the Guardian version of the MQ-9, a civil aviation licensed version. Belgium and Australia are in the process of acquiring this system, while South Korea has expressed an interest. The US Congress authorized the sale of 22 Guardian UAVs to India. In Canada, a tender is currently underway at the conclusion of which the Canadians will acquire either the Guardian system or IAI's Heron-TP system. South Korea and Japan have acquired the RQ-4 Global Hawk system. Finally, Australia has acquired the MQ-4C Triton system.
On the other side of the barricade stands China, which seems to be catching up and bridging the technological gap at an astonishing pace, rapidly filling the space where Israel and the US are absent in this category of UAV systems. That space includes such countries as Saudi Arabia, UAE, Pakistan, Serbia, Nigeria, Myanmar, Turkmenistan, Iraq, Jordan, Algeria, Egypt, Uzbekistan, Indonesia, Kazakhstan, and others. Today, for the first time, China is competing directly against a US-made system in the context of a Malaysian tender.
Turkey, which in the past relied on Israeli-made systems, is currently developing several MALE systems of its own and has even started exporting them to such countries as Ukraine and Qatar. In Europe, France, Germany, Spain, and Italy are developing the EuroMALE system with a number of other European partners, such as the Czech Republic. Additionally, France has acquired the French-made Patroller system. Russia, whose UAV system development strategy is very impressive, has matured to the point of exporting Russian-made MALE systems with a first contract recently finalized for the supply of their Orion-E system to a Middle-Eastern country. The Russians currently aim their marketing efforts at countries possessing historical Eastern-bloc arsenals.
Conversely, during the period outlined above, Israel exported new systems to very few countries, such as Thailand, the Philippines, Mexico, Zambia, and, according to open sources, to Azerbaijan as well. This is a far cry from the Israeli sales turnover in the first half of the decade, which included sales of MALE category systems to Switzerland, Brazil, Colombia, Chile, and other countries.
Naturally, Israel should be justly proud of the phenomenal achievement of IAI vis-à-vis Germany – the billion dollar Heron-TP leasing deal – as well as of other achievements in the field of system leasing/services (operation by the manufacturer) vis-à-vis the UN and various EU organs. However, one cannot ignore the fact that the global pie of the UAV market has increased, in terms of both sales turnover and market value, while on the other hand – Israel's share is decreasing.
Although the relevant Israeli parties are thoroughly familiar with the issue, the methods for dealing with it and reversing the current trend, or at least mitigating it, are by no means obvious. The actual situation defies logic and in reality, Israeli industries are competing against one another in an attempt to win some of the scarce opportunities that are still relevant. This applies to Israeli-oriented markets such as India, as well as to declining opportunities involving very few systems or even a single system in some countries. The external threat is strategic, real and intense as the number of competitors is increasing.
Israel still has a lot to offer and innovate, at the technological level as well as at the operational level – so as to regain its well-deserved position with regard to the scope of exportation of UAV systems in the various categories. In conclusion, no one disputes the quality of the Israeli resources at the operational, scientific and management levels which, in combination with local enterprise and audacity, will provide an adequate solution. To make it happen, however, we must first familiarize ourselves, understand and internalize the competitive environment in which we currently operate.
The world market for medium and large UAV systems is growing, but the share of the Israeli industry in that market is declining. The share of US industries is increasing, the Russians and the Chinese have begun exporting, and it seems that unless the Israeli Government takes firm action, winter is coming
Photography: Alexandra Aksyutich / IAF website
In late April, Greece announced its intention to purchase the US-made MQ-9 Reaper UAV system at an estimated cost of about 50 million Euro. Seemingly, just another isolated arms deal, but in effect – a part of a definite trend of erosion in the exportation of Israeli-made medium, tactical UAVs, also known as MALE (Medium Altitude, Long Endurance) platforms, such as IAI's Heron, Elbit Systems' Hermes-900, and similar systems.
The decline of Israeli exports in this system category is not surprising and was reviewed by the media periodically. The threat is lateral and aspires to become national, so in addition to the efforts of the industries, the relevant state organs should address the issue and provide support in several ways. In today's terms, referring to Israeli exports in the MALE category, unless coordinated active measures are taken, winter is coming.
Naturally, it is difficult to explain the entire scope of this threat through this restricted format, but it is still possible to outline the simple, factual reality as it is on the ground.
"Make America Great Again." The US industries are currently involved in an aggressive process of marketing their systems to the world. They have been very successful and appear to be heading in the direction of many additional markets. Firstly, we should mention the regulatory aspects of the US government's efforts to revise the policy of MTCR (Missile Technology Control Regime) vis-à-vis the other members of that treaty, in addition to the recent easements in the regulations governing the exportation of offensive weapons.
At the same time, the United States can sell US-made systems through the US-Aid channel. Without burdening the reader with complex explanations, it may be stated, quite simply, that the regulatory revisions along with the US-Aid channel make it easier for the Americans to sell their systems while also making it easier for other countries to buy US-made systems.
Looking factually back a number of years, the American breakthrough is evident. The Netherlands, France, Spain, the UK, and Italy have all purchased the MQ-9 system. Naturally, Greece has been the last country – for the time being – to express an interest in that system. Britain was also the first client of the Guardian version of the MQ-9, a civil aviation licensed version. Belgium and Australia are in the process of acquiring this system, while South Korea has expressed an interest. The US Congress authorized the sale of 22 Guardian UAVs to India. In Canada, a tender is currently underway at the conclusion of which the Canadians will acquire either the Guardian system or IAI's Heron-TP system. South Korea and Japan have acquired the RQ-4 Global Hawk system. Finally, Australia has acquired the MQ-4C Triton system.
On the other side of the barricade stands China, which seems to be catching up and bridging the technological gap at an astonishing pace, rapidly filling the space where Israel and the US are absent in this category of UAV systems. That space includes such countries as Saudi Arabia, UAE, Pakistan, Serbia, Nigeria, Myanmar, Turkmenistan, Iraq, Jordan, Algeria, Egypt, Uzbekistan, Indonesia, Kazakhstan, and others. Today, for the first time, China is competing directly against a US-made system in the context of a Malaysian tender.
Turkey, which in the past relied on Israeli-made systems, is currently developing several MALE systems of its own and has even started exporting them to such countries as Ukraine and Qatar. In Europe, France, Germany, Spain, and Italy are developing the EuroMALE system with a number of other European partners, such as the Czech Republic. Additionally, France has acquired the French-made Patroller system. Russia, whose UAV system development strategy is very impressive, has matured to the point of exporting Russian-made MALE systems with a first contract recently finalized for the supply of their Orion-E system to a Middle-Eastern country. The Russians currently aim their marketing efforts at countries possessing historical Eastern-bloc arsenals.
Conversely, during the period outlined above, Israel exported new systems to very few countries, such as Thailand, the Philippines, Mexico, Zambia, and, according to open sources, to Azerbaijan as well. This is a far cry from the Israeli sales turnover in the first half of the decade, which included sales of MALE category systems to Switzerland, Brazil, Colombia, Chile, and other countries.
Naturally, Israel should be justly proud of the phenomenal achievement of IAI vis-à-vis Germany – the billion dollar Heron-TP leasing deal – as well as of other achievements in the field of system leasing/services (operation by the manufacturer) vis-à-vis the UN and various EU organs. However, one cannot ignore the fact that the global pie of the UAV market has increased, in terms of both sales turnover and market value, while on the other hand – Israel's share is decreasing.
Although the relevant Israeli parties are thoroughly familiar with the issue, the methods for dealing with it and reversing the current trend, or at least mitigating it, are by no means obvious. The actual situation defies logic and in reality, Israeli industries are competing against one another in an attempt to win some of the scarce opportunities that are still relevant. This applies to Israeli-oriented markets such as India, as well as to declining opportunities involving very few systems or even a single system in some countries. The external threat is strategic, real and intense as the number of competitors is increasing.
Israel still has a lot to offer and innovate, at the technological level as well as at the operational level – so as to regain its well-deserved position with regard to the scope of exportation of UAV systems in the various categories. In conclusion, no one disputes the quality of the Israeli resources at the operational, scientific and management levels which, in combination with local enterprise and audacity, will provide an adequate solution. To make it happen, however, we must first familiarize ourselves, understand and internalize the competitive environment in which we currently operate.
