Tuesday, February 24, 2009

Saudi Arabia's changing military industry

Posted by newsonline at 3:49 PM 0 Comments

"Saudization" will reduce the number of jobs for foreigners in the long term, but prospects for trainers and managers look good.

The nature of military aerospace in Saudi Arabia is changing rapidly, and this is naturally having a considerable effect on the aviation job market in the Kingdom.

As the largest and wealthiest nation in the Arabian peninsula, Saudi Arabia has built up large and modern armed forces, and historically employed large numbers of foreignpilots, engineers and managers to support and operate its aircraft and equipment.

US military aircraft in service include Boeing E-3 Sentry AWACS aircraft and F-15 fighters and fighter-bombers, and these have led to a major presence by some US companies, most notably Boeing, which provides in-country service, training and support programmes for the above aircraft, as well as for the large number of Boeing jetliners in commercial service in the Kingdom. Other US companies, including Northrop Grumman, provide training services to the Saudi armed forces.

But the big beast among foreign companies in Saudi Arabia is BAE Systems, which has had a presence in the Kingdom since 1973, initially supporting Lightning and Strikemaster aircraft. BAE Systems was again appointed the prime contractor In 1985, when a new government-to-government agreement (known as Al Yamamah) saw the UK supplying Tornado, Hawk and Pilatus PC-9 aircraft (and later minehunter ships) for the Royal Saudi Air Force and Royal Saudi Naval Force, and supporting these in service.

Saudi Arabia remains the world's leading oil exporter, but revenues are now dropping in real terms. Saudi Arabia is therefore trying to diversify its economy, and, through a process of "Saudization", to reduce its dependence on foreign workers. Saudi Arabia is increasingly unwilling to purchase overseas goods and services, and is increasingly demanding that its suppliers use Saudi resources and people. Further commitment to the transfer of technology and expertise is expected.

In September 2007, when the UK and Saudi governments signed a further agreement (this time code-named Project Salam, based on the supply of the Eurofighter Typhoon), this formed part of a new Saudi-British Defence Co-operation Programme, inaugurated at the start of that year. This was intended to provide the platform for a new partnership between the two governments as they worked together to modernise the Saudi armed forces while developing the Saudi industrial base.

The previous Al Yamamah arrangements have also been gathered up into the new Defence Co-operation Programme, with increasing emphasis on developing local capabilities and participation.

BAE Systems' aspiration is to turn its operations in Saudi Arabia into what it calls a "home market", with local development, production and maintenance - becoming as much a Saudi company in Saudi Arabia as BAE Systems Australia is an Australian entity, and establishing a real engineering and manufacturing base in the kingdom.

In pursuit of this aim, BAE Systems directly employs 4,700 people in the Kingdom (more than half of them Saudis), making the company one of the largest private sector employers of Saudis. The proportion and number of local employees has risen steadily: in 1995, it was 700 (15%), while today it is 2,400. The company has also invested in local companies, contributing another 700 local jobs. The company has instituted a programme to train Saudi aircraft technicians, and is working to bring Saudi nationals into management and technical leadership positions.

The Saudi companies in which BAE has invested include the Jeddah-based Aircraft Accessories and Components, which now overhauls Tornado landing gear, and Advanc­ed Electronics in Riyadh, which manufactures weapons interface units and upgrades Tornado main computers. BAE Systems' IT operations have been outsourced to International Systems Engineering, in Riyadh, and the Saudi Maintenance and Supply Chain Management joint venture provides logistical support.

Final Assembly

A cornerstone of BAE Systems' activities in Saudi Arabia lies in its relationship with Alsalam Aircraft. Alsalam (which also works on the F-15 Eagle, E-3 Sentry and other aircraft) has provided programmed depot maintenance for the Tornado since 1997 and is expected to perform the second phase of the Royal Saudi Air Force's Tornado Capability Sustainment Programme upgrade. Looking ahead, Alsalam is "under consideration" for the key role of the final assembly of the last 48 RSAF Typhoons, which will follow the first 24 aircraft delivered from the Warton assembly line.

All of this means a real change to the type of jobs offered in Saudi Arabia by companies like BAE Systems. Where possible, foreign contractors are being replaced by Saudi nationals, which will mean fewer foreign workers. Flightline jobs, for example, are being filled by Saudis, though there is still, for the moment, a need for experienced managers and supervisors, and 'trainers' who can provide locals with the required skills.

On the flying side, jobs will similarly flow to Saudis. Some instructional positions on the Cessna 172 and PC-9 are already beingfulfilled by Saudis, and locals will take a growing proportion of flying and instructional positions over the coming years.
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