BEIRUT — Ten months ago, the United Arab Emirates defense conglomerate Edge was launched. The young organization is now made up of 25 businesses and brings in more than $5 billion in revenue. Since then, the region has experienced a number of changes and events – from the coronavirus pandemic that has altered business models and forced the cancellation of a number of trade shows, to normalizing relations between the UAE and Israel, to preparation for next year’s International Defence Exhibition and Conference.
Defense News spoke with the CEO and managing director of Edge, Faisal Al Bannai, on Sept. 21 about how his organization has handled itself through thick and thin, and what it has planned for the future.
How has the spread of COVID-19 affected Edge’s business model, and how do you expect the defense market will look in the aftermath of the pandemic?
COVID-19 was an interesting shock to the global system, especially regarding jobs that require physical handling. We’ve managed to quickly adapt our work model remotely, especially in office-based work, whether it is administration or design. We further upgraded our systems to be able to deal with a remote model, and we’ve created new working arrangements and procedures. In the early days there was disruption like everything else, but we managed to create a proper way of scanning and checking for possible outbreaks.
The big lesson is how we rethink supply chain globally because it was damaged - specifically what things to manufacture locally and how to start working with suppliers to create certain buffers in the supply chain.
We also learned how much work can really happen remotely; and even when the pandemic ends, we will have changed our working model permanently, and Edge’s operating model won’t go back to the classical way. We made a clear determination of a much more flexible and nimble environment, and it helps our mindset in being more agile, flexible and practical.
Now, we are considering having a hybrid approach in terms of showcasing some of our products through a virtual expo and others to be showcased in a more physical way, depending on how the first and second quarters next year look.
It’s been less than a year since Edge was launched. What has the organization achieved? What do you expect in the next five years for the conglomerate?
Our original aim was to streamline the 25 subsidiaries, remove duplication, align our vision and resources, have an aligned road map, and accelerate our product development. The next three to five years [will involve a road map for] weapon development strategy, autonomous capability strategy, and airborne platform and land strategy.
Regarding the latest on a few ongoing projects, Garmousha, the rotary-wing drone that was announced at IDEX 2019, will be ready by the end of 2020, and we have a number of products that we will be announcing during IDEX 2021.
We’ve been working on further upgrading our weapons from our subsidiary Caracal in the missile/ammunition business. The P2 missiles to the Emirati armed forces, which were announced at the 2019 Dubai Airshow, will be delivered before the end of 2020. Adding to that, Edge now got approval to develop a whole family of P2 and P3 products. So the deal was modified from delivering one product to delivering a whole family, and this will be [further] announced at IDEX 2021.
Deliveries of RW-24 drones equipped with a warhead to the Emirati armed forces will start in the fourth quarter of 2020.
[We’re working on a] four-wheel drive vehicle NIMR Ajban export deal with Algeria, and we have a number of other discussions that hopefully we are about to close with a number of partners.
How are you preparing for IDEX in February?
IDEX 2021 will witness new announcements about the development of various autonomous families by Edge. There will be a number of updates and initiatives in the weapons business, platform and drone business, and the electronic warfare department. There will be product announcements in these areas, and a few capabilities will be announced as completed and a few capabilities will be announced as part of to be delivered capabilities. There will be a few interesting capabilities at this next IDEX.
After the UAE and Israel signed a normalization agreement Sept. 15, did Edge start negotiations with Israeli companies for possible cooperation, and in what areas?
We are exploring opportunities with partners around the world, including now with Israel, so for sure we are exploring opportunities and seeing where it makes sense on both sides. I think the fields of cooperation are quite wide, and we are in the early phase of exploring the areas of cooperation. We can engage with our counterpart in advanced technology and autonomous systems as well as new sensor technologies. There are many fields in which we can cooperate. In the coming months we will have a better picture following the mapping of needs of both parties. And yes, discussions have started.
Talk about cooperation between Saudi Arabian Military Industries and the General Authority for Military Industries, both based in Saudi Arabia.
We’ve had a number of discussions with SAMI and GAMI. It had been slow in the early COVID-19 days; however, we are now picking it up again. Edge made a number of proposals to Saudi Arabia regarding the summer trials of vehicles, where we participated with our NIMR vehicles, and we are waiting for announcements of winners or selected partners for the land vehicles market. If that goes through, then there will be production happening in Saudi Arabia, and that is part of the cooperation with SAMI and GAMI.
With Edge announcing it will take full ownership of maintenance, repair and overhaul service firm AMMROC, will the conglomerate now buy all the foreign shares of joint ventures?
The AMMROC deal, buying our partner’s shares, was purely a transaction based on a commercial evaluation that made sense for Edge and for Lockheed Martin. It is not really a strategic direction where we want to buy out the shares of our partners. We enjoy with Lockheed Martin a long partnership here within the UAE. The transaction was a win-win for both sides, and we are discussing with them multiple other initiatives at the moment here.
Speaking about your market share, describe Edge’s in the defense sector locally and globally. Have you seen increased or decreased business? What about stagnation?
In terms of our current business size, we are not seeing any dramatic stagnation. There is always a review of prioritization, specifically [regarding the markets to which our products are related], which is natural. However, we definitely see that our plan over the next two years, other than being a key dominant player locally, is to start taking an interesting slice of the international market, either purely by our products or through a product that we produce with our partners.
We haven’t seen a dramatic impact on our capabilities or our growth; we only see a refocus and reprioritization based on what is the current landscape and what are our priorities. But the strategy in what we develop in our capabilities is more of a long-term range, so it doesn’t get affected by the short-term market.
Agnes Helou writes about Middle East defense. In addition to contributing to Defense News, she is a reporter at SDArabia, an Arabic security and defense magazine and website www.sdarabia.com.