DEFENSE BUSINESS
special interviews
“We Still Have a Long Way to Grow” In just one decade Aeronautics has gone from a modest technological hothouse to one of the top defense companies in Israel and number four in the world in UAVs. In an exclusive IsraelDefense interview, Avi Leumi, Aeronautics' CEO and owner, presents the next areas of company growth: ground robots and UAVs for civilian use By Amir Rapaport
A
eronautics' big break came in 2001. The Second Intifada was at its peak and the IDF faced a relentless wave of terror emanating from the West Bank and Gaza Strip. The troops in the field were suffering from a chronic lack of tactical intelligence, especially since the intelligence unit that operated tactical UAVs had been scuttled the previous year, and all UAV operations were transferred to the air force. When Avi Leumi heard of the ground forces' difficulties (in a chance social meeting with an IDF general), an idea was born: his own company, Aeronautics, would lease and operate UAVs for the IDF and get paid by flying hours. Given the urgency of the circumstances, the offer was grabbed up even though it was an unprecedented move: operational activity being outsourced! No matter how you look at it, Avi Leumi's offer was ambitious. He was only in his thirties and the company he was marketing to the IDF as an operations contractor was not more than a "technological hothouse": three people, crowded in a 40m2 apartment, who dreamed of developing a new generation of avionics for UAVs. "We never imagined actually operating UAVs, let alone producing them", recalls Avi Leumi in a special interview with IsraelDefense. "But things turned out differently. Today we're the second largest UAV producers in Israel (after Israel Aerospace Industries – IAI) and the fourth largest in the world. We employ one thousand workers and have full or partial holdings in fifteen subsidiaries around the globe. Right now we're expanding into the field of ground robotics. In the field of aircraft we're the only company that develops all the systems "in house" – control (avionics), communications, navigation, and command & control (C2) - that is, in Aeronautics' own plant or
46
JUNE 2011
Avi Leumi, Aeronautics’ CEO and owner
through our subsidiaries. In each of these four areas we've reached the highest level of quality according to world standards, and in the field of navigation we're listed as number one. A few days before Avi Leumi gave this interview, he received a message that Aeronautics had won the Ministry of Industry, Trade & Labor's prize for the most successful company in Israel that grew out of the "technological hothouses" ("Technological hothouses" are startups that receive a government grant from the "Chief Scientist". Only a small number of them survive the first couple of years). Aeronautics is the technological hothouse that Leumi set up with his partners: Moshe Caspi, who developed the "Pazomat" – a device for automatic refueling at gas stations; and Zvika Naveh - today the owner of the UAV company "Inocon". The three planned to develop UAV C2 systems and sell them to the large established UAV manufacturers.
Photo: Meir Azulay
On the road to becoming one of Israel's six largest defense companies within a decade (with a turnover estimated in the hundreds of millions of dollars) Leumi waged a stormy struggle with the leading Israeli defense companies – IAI, Elbit Systems, and Rafael Advanced Defense Systems. An intelligence captain in the reserves, Leumi agrees that in many ways he is an "outsider". He did not grow up in the field together with senior IDF officers, many of whom hold key positions in the other companies. And he is obsessively competitive in winning tenders, which led him into clashes with the veteran giants, especially after Aeronautics began biting into their share of the market. Suddenly the startup had become an upstart. "In Israel the process of recognizing a new company is a long one", Leumi admits. "Only in the last one or two years can I say that we've 'made it' into the inner circle of the defense companies, most of which started out as government firms and