Tel Aviv — Barely a year after buying out Israel Aerospace Industries’ (IAI) minority shares in Elisra, a local electronic warfare specialty company, Elbit Systems is challenging its longtime Israeli rival with its first foray into the radar realm.
While IAI’s Elta Systems remains Israel’s dominant provider of a full spectrum of air-, sea- and space-based radars, Elbit’s debut of vehicle-protecting S-band radars marks the first fruits of a corporate strategy to claim a portion of the land-based radar market as its own.
Elbit presented its new vehicle warning radar systems (VWS) at last week’s Eurosatory exhibition near Paris as part of the company’s comprehensive product offerings for force protection.
Now in field tests, the family of vehicle-mounted radars uses technology developed by Elisra, which Elbit acquired in full in February 2011.
Similar to the operational IAI-Elta WindGuard ELM-2133 radar deployed on Israeli Merkava main battle tanks as part of the locally developed Trophy Active Protection System (APS), the Elbit protypes are designed to provide 360-degree protection around light and heavily armored vehicles.
Like WindGuard, Elbit’s VWS is designed to detect and automatically track incoming threats and can be integrated with soft-kill jammers or hard-kill countermeasures. Both systems operate in S band, are compact and lightweight, and are designed to defend against anti-tank rockets and anti-tank guided missiles.
According to Elbit marketing data, the company developed two versions of VWS — one to detect, track and target incoming threats for hard-kill destruction, and a soft-kill version that identifies, tracks and relays specific target data to electronic jammers for threat diversion.
Like the WindGuard, Elbit’s prototype VWS promises to classify and verify targets, provide detailed time-to-impact data, and initialize warning and reaction only to threats to its own platform.
“Elbit’s corporate strategy is to provide full solutions to our customers. We decided to develop this radar in response to specific demands from customers in the field of land systems,” spokes-woman Dalia Rosen said.
Elbit’s debut of VWS heralds a new direction for a company committed to consolidating its electro-optical, tactical communications, electronic warfare, cyber and precision-fire capabilities under one roof.
“Elbit’s move into this very specific radar niche is the right thing to do, since this was missing in its product portfolio,” said Ella Fried, a senior equity analyst at Israel’s Bank Leumi. “It advances their one-stop shop strategy.”
She suggested, however, that Elbit should be mindful of the costs and risks of diversification, and focus solely on rounding out its portfolio.
Elbit paid less than $70 million in 2005 to assume Koor Industries’ 70 percent stake in Elisra. It was a handsome deal, considering that just three years earlier, IAI paid Koor, based here, $110 million for a minority 30 percent in the company.
For nearly six years, Elbit and IAI managed their Elisra partnership with mutual suspicion, each wary of fortifying the other’s bottom line with new or spinoff technologies. After years of stagnating, even declining revenues, IAI management finally succumbed to Elbit’s offers to buy out IAI’s minority holdings.
Elbit concluded its 100 percent acquisition of Elisra in February of last year after IAI agreed to sell its 30 percent for $67.5 million. For IAI, the sale price was $42.5 million lower than its initial investment. For Elbit, the deal meant freedom to realize corporate designs on the niche radar market.
“I don’t want to comment on the impact to IAI, but no doubt, Elbit has done very well by both acquisitions,” Fried said.
Defense executives here say it could take years for Elbit to translate its nascent radar portfolio into material bottom-line results.
As for IAI, its radar business is booming across multiple sectors, including airborne radars, strategic early warning systems, wide-area surveillance and multimission radars in support of Israel’s Iron Dome and David’s Sling active-defense intercepting systems.
According to IAI financial data, the Elta subsidiary remains a key revenue driver for state-owned IAI, posting $866 million of the company’s total $3.4 billion in 2011 sales.
A geographic breakdown of Elta sales in 2011 lists Asia as its largest market, with $615 million or 71 percent of sales, followed by Israel, which accounted for $105 million last year, or 12 percent of total sales. Other markets include North America, with 3 percent of sales; Europe, 2 percent; and a remaining 3 percent of sales going to combined markets in Africa and Australia.
Earlier this month, Elta unveiled a new product at a conference and exhibition sponsored by Israel Defense and the Israel Artillery Memorial Association. Elta’s dual-band Green Rock ELM-2138T vehicle-mounted tactical radar autonomously acquires and tracks rockets, artillery and mortars in support of maneuvering ground forces.
Israel Lupa, Elta’s deputy manager for land systems, noted that the entire system weighs less than 100 kilograms, with two L-band plates performing threat detection and an upper X-band plate deployed for target tracking. The system has concluded field tests and is ready for production, Lupa said.
He declined to comment on Elbit’s foray into radar.
2011 revenues: $2.8 billion, including:
Airborne systems: $969.4 million
Land systems: $405.3 million
C4ISR: $996.4 million
Electro-optical systems: $300.2 million
Other: $146.2 million