Defense Firms Put Down Roots in UAE
Global defense companies are opening offices and forming partnerships with local industry in hopes of winning business in the United Arab Emirates.
ABU DHABI – Inside an office, halfway to the top of a skyscraper that leans 18-degrees to the west, freshly painted white walls are covered with pictures of American military V-22 Ospreys, Shadow reconnaissance drones and Commando armored trucks.
The equipment is built by Textron’s Bell Helicopter and Textron System, which jointly opened this officer here in the capital of the United Arab Emirates this week. The items are not built here, but they could be one day.
About a 20-minute drive away in Masdar City, Lockheed Martin recently opened what it calls the Center for Innovation and Security Solutions, a place where employees can collaborate on projects with UAE government officials and academics. The center allows these officials to receive technical information about Lockheed products, according to company employees.
Boeing already has two offices in UAE, one in Dubai and the other here in Abu Dhabi, that support its defense and commercial airplane businesses. DRS Technologies, the U.S. arm of Italian defense firm Finmeccanica, is “looking at options to opening an office,” office in Abu Dhabi, according to company officials.
U.S. and other global defense firms are putting down roots here in hopes selling arms to UAE, a strong American military ally in the region. For these companies, the sales have become even more important, particularly as Pentagon weapon sales have slowed in recent years.
Ellen Lord, the president and CEO of Textron Systems, checked out her company’s new digs earlier this week on the eve of the International Defence Exposition and Conference, the largest military arms bazaar in the Middle East.
(Read more: US Military Increasing Foreign Expo Presence After 2-Year Downturn)
Just a handful of Textron employees are based here now, but more are expected to come, particularly if the company scores new business in the Emirates.
“The idea is it will grow because as we get more programs here, we would like to have some program mangers here and so forth,” Lord said in an interview.
As she chatted, workers affixed the Textron Systems and Bell Helicopter logos in an elevator lobby just outside the office.
Textron Systems sees billions of dollars in possible arms sales of its products in Middle East. The company already sells the UAE Air Force the Sensor Fuzed Weapon, a 1,000-pound guided-bomb used to destroy armored vehicles. The company is looking to sell the Emirati military armored vehicles and drones. The UAE military is also said to be considering a purchase of V-22 Ospreys, a tilt-rotor aircraft jointly made by Bell and Boeing.
A Textron Systems Shadow drone hangs above exhibits at IDEX 2015 in Abu Dhabi. Photo by Marcus Weisgerber
UAE is expected to spend $40 billion on new weapons over the next five years, according to Avascent Analytics, a Washington-based consulting firm that tracks global defense spending.
On the first two days of IDEX, the UAE announced it had spent more than $3.6 billion on weapons, equipment and services, including a $1 billion deal for new satellites made by Airbus Groups and Thales, both European defense firms.
UAE wants to build up its manufacturing sector here. Two years ago, the country announced a focus toward joint ventures, according to Maj. Gen. Obaid Al Ketbi, chairman of the IDEX organizing committee.
“I think what we have is more focus from the government on local manufacturing and … we have a bigger number this year of local companies that became more professional in this defense field,” Al Ketbi said. “We are always glad to work closely with our friends around the world in joint ventures and I think we see the results now.”
At IDEX, Raytheon and NIMR Automotive, part of the Emirates Defence Industries Company, announced they would collaborate on a project to put Raytheon’s Talon laser-guided rocket on six-wheel NIMR armored vehicles.
DRS will be conducting a joint venture with the UAE defense industry as well, a company spokesman said.
“We hope that in the future [the local industry] will develop more, still we rely and work closely with out friends around the world basically to supply us with our requirements,” Ketbi said.
For all companies looking to business in UAE and elsewhere in the Middle East, IDEX is a must-attend event. More than 115 U.S. companies are here this year.
“[UAE is] a country that has demonstrated the ability put on a very top-notch show at IDEX and it’s a country that is very clearly committed to innovation and to improving [its] technological capabilities,” Frank Kendall, the Pentagon’s acquisition chief who attended the trade show on his first visit to UAE, said in an interview. “I’m hoping we can work together to accomplish that.”
But for foreign companies, setting up shop in UAE takes time. It took Textron Systems and Bell more than a year of paperwork and other procedural musts that come along with a U.S. company doing business in the Emirates before it opened its doors for business.
“It’s a lot of work in a lot of different ways to start an office here, but we thought it was absolutely critical to have our employees living in the same community with our customers,” Lord said. “I think it’s serving us well. It’s obviously giving us a venue to have meetings [and] hold larger meetings.
Lord reorganized Textron Systems business development division 18 months ago, basing more employees overseas where the firm has contracts.
“We said instead of having people get on airplanes and go to our customers, we’re going to take our international business development team and deploy them globally,” Lord said.
Beyond defense business, companies are also looking for commercial sales in the region. Oil and gas companies are interested in unmanned aircraft, particularly for pipeline and infrastructure security. A Middle East company flies one of the firm’s drones, however Textron does not disclose the customer.
Armored Vehicle maker Streit was founded in Canada in the early 1990s and now has factories around the world. In 2005, the company opened a manufacturing factory in UAE that could build hundreds of vehicles per month, according to company officials. Its product line includes military-style trucks and even an armored six-wheel G-63 Mercedes SUV. Many of the firm’s customers are private citizens living in this dangerous region.
Now as Islamic State (also known as ISIS) militants spread across Iraq and Syria, and the security situation in Yemen deteriorates, there has been a renewed focus on the region, particularly as many Middle Eastern states contribute troops, equipment and money to the campaign against ISIS. UAE has flown its F-16 fighter jets on missions to strike ISIS locations in recent months.
“There’s a lot going on here and not all of it good by any means,” Kendall, said of the Middle East region. “It remains a very important region and our partners here are very important to us, particularly UAE.”