Tuesday, February 24, 2009

Saudi defence industry strategy takes shape

Posted by newsonline at 3:40 PM 0 Comments

Plans to develop military aircraft production in Saudi Arabia are moving ahead following the Kingdom's agreement to purchase Typhoon fighter jets from BAE Systems. The new deal calls for most of the aircraft to be assembled in Saudi Arabia.

In March, Defence and Aviation Minister Crown Prince Sultan laid the foundation stone at King Abdulaziz Air Base in Eastern Province for a new centre to update and assemble systems for Saudi military aircraft.

The complex will be developed on a 300,000sqkm site will include a range of hangars, stores for hazardous materials, workshops, fuel storage, a water desalination plant and power station as well as other utilities and infrastructure.

Saudi Arabia signed an agreement to purchase 72 Typhoon Eurofighter in September 2007. The purchase, for which BAE Systems is prime contractor, is likely to be valued at up to $40bn or more in the long term as a result of additional support contracts.

The aircraft purchase, designated Project Salam, follows on from the Al Yamamah agreement forged between the UK and the Kingdom in 1985 that has involved the supply of Tornado fighters, Hawk and Pilatus trainer aircraft, warships, munitions, training and support services.

The agreement, which has generated an estimated $75bn of business for BAE Systems and associated sub-contractors, is now largely completed apart from ongoing support.

Its successor, Project Salam is to be supported by substantial logistical and training packages' including the opportunity for British and Saudi air crews and ground technicians to train alongside each other in the UK.

This will deepen the UK's involvement in the operational capability of the Saudi air force bringing the latter's training standards on a par with those of one of Nato's leading members.

BAE Systems is also committed to developing a 'home market' operation in the Kingdom by creating an indigenous industrial capability for both local consumption and export markets.

Following delivery of the first 24 Typhoon aircraft to the Kingdom over the next 18 months, plans are moving ahead to complete the final assembly of the remaining 48 Typhoon aircraft in Saudi Arabia.

Negotiations are believed to be under way that would see an additional 24-48 Typhoons assembled locally.

BAE Systems is already one the largest private sector employers in the Kingdom with over 4,600 personnel, half of whom are Saudis.

The company says that the kingdom's economic reform programme and new laws attracting foreign direct investment have made it easier to plan for a more advanced stage involving both equipment assembly and original equipment manufacturing in addition to repair and maintenance.

Key partnership organisations in Saudi Arabia are said to be Alsalam Aircraft, Advanced Electronics, Aircraft Accessories and Components and Saudi Development and Training. A logistics management operation is being set up and Granada Enterprises, 'a property management vehicle,' has also been established it says.

BAE believes that as it develops its own engineering capability in the Kingdom, the support of international associates and suppliers is also drawn in. 'This ability to act as a magnet for further growth is a key outcome of sun-rise industries. In turn, attracting component suppliers in the defence sector spawns further knowledge and technology transfer.'
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