February 24, 2011 / 2:22 PM / in 7 years

Local UAE partners win expo defence deals

* UAE is building local defence industry

* Local firms awarded most contracts at defence expo

By Stanley Carvalho & Mahmoud Habboush

ABU DHABI, Feb 24 (Reuters) - The UAE’s defence industry is in its infancy but local firms scooped major deals at the region’s largest military expo, as the oil exporter builds a manufacturing base to diversify its economy.

Local firms won 75 percent of the nearly $4 billion contracts awarded during the five-day expo, and international companies wanting to clinch deals will have to promote the local defence sector, said officials at the International Defence Exhibition & Conference (IDEX), which ended on Thursday.

UAE, an OPEC member and the world’s third-largest exporter of oil, is investing billions of dollars in infrastructure, real estate, tourism and industry as part of the sheikhdom’s economic diversification plans.

“We think we have the right infrastructure for the military industry, and we are planning to maximize the utility that we have,” Mohammed al-Bowardi, secretary general of Abu Dhabi’s Executive Council, the emirate’s top administrative body, told Reuters.

Abu Dhabi aspires to become a regional aerospace hub, while neighbouring Dubai, the Middle East trade and tourism capital, aims to become an aviation and logistics centre.

State-owned Mubadala has signed cooperation agreements with several Western majors, including Boeing (BA.N), EADS EAD.PA, Lockheed Martin (LMT.N), Northrop Grumman (NOC.N), and Sikorsky, a unit of United Technologies Corp (UTX.N). It has also invested in Switzerland’s SR Technics [SRTHD.UL], which maintains and overhauls aircraft.

The Advanced Military Maintenance, Repair & Overhaul Centre (AMMROC), a unit of Mubadala, was set up last year to service planes and helicopters of the UAE Armed Forces and is part of Mubadala Aerospace’s goal to develop a domestic aerospace industry.

“The UAE is building an aerospace industry from scratch,” said Homaid al Shemmari, executive director for business development at Mubadala Aerospace, adding it planned to invest $500 million through 2015 for manufacturing components and eventually develop primary aircraft structures.

Abu Dhabi Ship Building has already built capabilities in construction, repair and refit of military and commercial vessels at its local shipyard in cooperation with CMN of France. Other smaller firms are involved in manufacturing small guns and parts.

“If you are a partner company with local firms, it helps to gain an edge in winning or losing contracts,” said Simon Keith, managing director of BAE Systems (BAES.L) for Middle East, Africa & Asia.

The UK firm has partnered UAE firms in sharing technical expertise and training and plans to launch new programmes soon, he said.

International firms will be sought for advanced military equipment, but they need to be involved locally in technology transfer and joint ventures, said Eric Trappier, executive vice president for international business at Dassault Systemes (DAST.PA).

    The French firm won a 112 million dirhams deal this week to upgrade armaments and software on the UAE’s Mirage fleet. It is eyeing a $10 billion deal to supply Rafale fighter jets to the UAE.

    Investment firm Tawazun Holding, part of the UAE Offsets is another firm focused on developing defence manufacturing and technological capability in the UAE.

    As the UAE continues to pump billions of dollars in buying arms and developing indigenous defence capabilities, the message to foreign firms is clear. “Strong alliances with big names helps local companies in winning contracts,” said Major General Obeid al Ketbi, IDEX spokesman.

    “We are placing big efforts on manufacturing locally through joint ventures with international firms who invest with our companies.”

    The following were among the local firms that won deals:

    - UAE’s Emiraje Systems won a $550 million deal, the biggest at the show, to implement C41 command and control systems.

    - UAE’s International Golden Group won five contracts valued at $427 million to purchase guns, armoured vehicles and weaponry systems for the Armed Forces.

    - Abu Dhabi Aircraft Technologies was awarded a $270 million contract to upgrade and arm 23 Sikorsky’s Black Hawk helicopters.

    - Abu Dhabi Ship BuildingADSB.AD was awarded a $218 million contract for purchasing RAM missiles for the UAE Armed Forces. (Reporting by Stanley Carvalho & Mahmoud Habboush)

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