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In a special interview to Israel Defense, Yossi Weiss, CEO of IAI, talks about the past year of Israel's largest defense company as well as its latest technological developments and gives an inside look at the intricate relationships within the Israeli defense industry
Amir Rapaport | 21/07/2017
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Test-launch of the Arrow missile (Photo: IAI)
The summer of 2017 is passing very actively and emotionally at IAI: on the one hand, a police investigation is under way with regard to the activities of the employees' union. On the other hand – technological achievements are recorded and mega-deals are being finalized, particularly opposite India.
This also happened in June 2017: the award of the Israel Defense Prize to IAI for the development of the Arrow-III missile defense system. IAI's CEO, Yossi Weiss, received the prize from President Reuven Rivlin on behalf of the employees (the prize was also awarded to specific departments of Rafael Advanced Defense Systems and IMI Systems, for their respective parts in the project led by IAI in cooperation with the Boeing Corporation of the USA).
Yossi Weiss chose to open the exclusive interview he granted Israel Defense by addressing the Arrow-III project: "The project started when I was VP of IAI and GM of the Systems Missile & Space Group, at the end of the last decade," he recounted.
"We knew that the project involved numerous risks. The technological challenge was immense – to enable interception outside of the earth's atmosphere, at extremely long distances, opposite the primary and highly interesting threats that exist in this theater, as US President Ronald Reagan said back in 1985: 'You have to hit the bullet where the bullet is'. This time, the bullet in question is located very far away."
What is actually the primary technological challenge, coping with the interception range or with the velocity of the missile being intercepted, at these altitudes?
"The challenge involves both the velocity and the altitude, plus other parameters. Being able to hit 'steel with steel' somewhere out there in outer space is a process that borders on science-fiction. Imagine you are standing opposite a person positioned ten meters away from you, and he fires a bullet and you have to hit the bullet he has fired – what we have here presents the very same level of difficulty.
"To my delight, we succeeded. We did it. At the personal level, I felt a sense of closure, and was very excited to stand on the stage opposite the President and Minister of Defense. Circles close, at the personal level as well as at the national level. When I received the prize on behalf of the division, I saw the guys back there, and I knew these are the very best people – Zionism at its very best. We are a government-owned company with all of the limitations associated with this status, and our people work day and night, without blinking, for the benefit of national security, in order to implement the very simple maxim of 'being able to sleep peacefully'. This is the second Israel Defense Prize awarded to IAI within the span of a year. Last year, the Prize was awarded to us for a confidential project we are unable to publicize."
So the Arrow-III is an exceptional achievement even at the global level?
"Definitely, yes. Boeing are our partners, and the head of the US program said that what we are doing here is above and beyond anything that is being done in America.
"Even now, our engineers are not resting on their laurels. In my opinion, there are at the very least some new ideas regarding the development of the Arrow-IV system vis-à-vis the future challenges. At this stage there is nothing specific, but you always want to be one step ahead of the next threat."
At this point, Yossi Weiss expressed a sense of frustration: "You know, you read the newspaper reports about police investigations," he says, "and the gap between the technological strength and the uncompromising contribution to Israeli national security and the background noises generated by various parties – is incomprehensible. We have no choice, so we are dealing with it, but I cannot comprehend this gap."
Weiss refers, naturally, to the police investigation that currently examines suspicions of irregularities in the activities of the powerful employees' union of IAI.
"Overseas, IAI is regarded as a technological giant. Domestically, we must deal with things that are less pleasant," adds Weiss. "During my term as GM, members of the employees' union were suspended and on two occasions I took radical measures against the union, but I had no choice. I had initiated serious confrontations with the employees' union in order to force them to accept the recovery program, but when the police investigation started, we suddenly had dozens of police investigators in our back yard. They are interrogating employees, mid-level managers and even senior executives. It is not a pleasant experience, and none of us knows how to handle it.
"Sometimes it really makes you frustrated – you work day and night, and the engineers devote their best time and efforts, and then an incident comes along that draws all of the media attention to the less pleasant aspects. Eventually, IAI will know how to overcome even incidents of this type."
IAI has been operating for a long time without an active chairman of the board of directors. The intended re-appointment of former chairman Yair Shamir was not authorized, and now the nominee for this position is Harel Locker, who served as Director General of the Prime Minister's Office.
Does the absence of a chairman affect the Company?
"I believe it does. At the principle level, a company like IAI must have a chairman of the board operating at a respectable capacity. I am not sure whether he/she should be working full time – but his/her position must be one with a respectable capacity. The fact that we have not had a chairman of the board for more than 9 months (since Rafi Maor left), is significant. The chairman of the board of directors is the boss who decides what we should focus on. It is highly important for the company with regard to strategic aspects in the business field. We deal with processes that take years in the civil market, we are currently in the stages of reviewing the implementation of our strategy and just short of actually implementing it, and we need guidance and counselling. In my view, the chairman of the board of directors is a senior, experienced individual who can provide advice. At the bottom line, I hope that a new chairman of the board of directors is appointed soon.
What were you referring to when you spoke about 'processes in the civil market'?
"We at IAI have a civil activity that accounts for 26% to 27% of our over-all scope of activity, namely – about one billion US Dollars, and for a number of years now, it has been suffering from an on-going crisis. Our Bedek Division, which deals with airframe structural work and the manufacture of executive jets, has been suffering from the effects of a very tough market. The crisis, which broke out in 2008, is not over yet. For example, in that year we manufactured 74 executive jets. Now we are at a level of only 25-30 jets per year. Competition has intensified, and the scope of activity has decreased. The challenge is to get this activity back to profitable status. I truly believe that with the management team we have today, and hopefully with the backing of the board of directors as well, we will make sure that his activity becomes profitable again, and will embark on new civil development projects of various types."
"Massive Backlog"
Yossi Weiss is 65, a mechanical engineer by his academic credentials, the son of Holocaust survivors from Haifa. He has seven children and 19 grandchildren, from two wives (he remarried after his first wife had died). He spent most of his military career in the IDF Navy, where he rose to the rank of Colonel. He was involved in numerous weapon system acquisition projects and served as head of the Dolphin submarine project. Among his various positions in the IDF Navy, he was 'loaned' for a period of four years to IMOD's Directorate of Defense Research & Development (DDR&D – MAFAT), where he dealt with future naval and air-defense technologies.
"I am about to conclude a five-year term as CEO of IAI," says Weiss, "It feels like an eternity. I had come from the technical field and learned new management issues, of which I had not been aware initially. Today, I am well-versed in all of the various activities, having studied them."
What is the macro picture of IAI in the summer of 2017?
"The macro picture is that we are heading along a favorable vector, I may even say a highly favorable vector. After quite a few years of speaking about it, we managed – through a complex and highly challenging dialog with the employees' union – to reach a situation of cooperation and understanding that the company should take some bold steps and discharge more than 800 employees. Additionally, we had to cut everyone's wages – junior and senior managers included, and suspend the fulfillment of agreements with the public sector for a period of 3 years. That means less corporate costs, less wages and we are discharging people the company can manage without. These are not bad people. They had contributed to IAI for 30-40 years, and now they are going home, but we made sure their retirement will have no effect on sales. The retirement costs were enormous and were reflected in the first half of 2016, but the first quarter of 2017 has already ended with a net profit of US$ 46 million. That does not mean all of the coming quarters will generate the same kind of profit, but the situation is definitely better.
"Our backlog of orders has increased to a record of not less than US$ 11.4 billion, which is the equivalent of three years of operations. Our cash reserves are stable, and we always pay for our debentures in time. During my term as CEO we went from 16,000 employees to less than 14,000, and as some of our older employees retire, we hire quite a few young and very talented new employees."
Yossi Weiss noted that the massive backlog does not include the deal involving the sale of Heron UAVs to Germany, valued more than US$ 600 million, which is being delayed by the German parliament, and many other deals that are close to realization. The backlog increased owing to other mega-deals, notably the deal involving the sale of Barak-8 missile systems to India, valued billions of Dollars. The missiles were originally intended for the Indian Air Force and Army, but the deal was expanded to include the Indian Navy as well. Last April, IAI concluded a deal for the supply of missiles to four Indian Navy vessels, valued US$ 630 million, in cooperation with the BEL Company of India. Now discussions are under way regarding the supply of missiles for seven additional vessels at the same time as the expansion of the deal with the Indian Air Force.
IAI has had some successful conclusions recently involving sales of the Radar of the Iron Dome system to such countries as the Czech Republic, Canada and Korea, plus hundreds of other deals. IAI acquired 50% of the TSG Company, which develops advanced command and control systems. Last June, IAI and TSG won a massive tender for a period of 17 years for the management of the project of relocating the technological units of the IDF from central Israel to the Negev. Yossi Weiss regards this win as "A strategic move that will empower IAI in the fields of C3. The acquisition of TSG has definitely proven itself." Weiss further boasts the fact that IAI sold 20% of the cybersecurity company it had established in Singapore at a price that reflected a handsome yield on the investment made in the establishment of that company. On the other hand, IAI has recently purchased two cybersecurity companies in Europe, and announced the establishment of a cyber division headed by Esti Peshin within the organizational structure of IAI, instead of the smaller cybersecurity organ that had existed within the ELTA Division.
What was the idea behind the establishment of the cyber division?
"As far as we are concerned, one aspect of cyber is providing protection to all of IAI's products. I cannot come to a client and talk about any one of my products without being able to answer the question of whether that product is cyber-secure. Beyond that, cyber is a new envelope for various types of elements in which we had been involved in the past – like electronic warfare. We dealt with them in the past, so it was natural for us to take our capabilities in these fields and divert them to the field of cyber.
"The main thing today is being able to come to countries and offer them a comprehensive cybersecurity setup for the entire country. So we hired the appropriate manpower for that. Our cyber division was established on January 1, 2017. It is a challenging process and we face many competitors. Keeping the pace is a challenge in itself."
It was recently reported that a South American country acquired a "national level cybersecurity project". Are any other countries currently purchasing such projects?
"Yes, and I am unable to elaborate. At the moment, we have a few other proposals in these fields of activity, and we have even signed a contract with another country. It largely depends on the needs of each and every country."
Has the move you made over the last few years, of enhancing the capabilities of IAI with regard to the land warfare category – borne any fruit?
"I believe it has. We decided to enter this field. For this purpose, we brought in individuals who are very experienced in land warfare. We have Maj. Gen. (res.) Gadi Shamani working for us full time and providing a very substantial push to this activity both inside and outside of the company. We have also hired the outgoing head of the IDF C4I Directorate, Maj. Gen. (res.) Uzi Moscowitz.
"Eventually, IAI must be involved in the land category with full power and across the entire range of IAI's capabilities in the categories of autonomous and robotic systems; computer, command and control systems; missile systems and surveillance systems. We already have systems operating in Israel and overseas. We are the national leaders in the field of robotics and invest substantially in this field – efforts as well as funds."
***
In the Photo: CEO Yossi Weiss (Credit: Meir Azulay)
The complete interview can be found in the new Summer issue of Israel Defense magazine (no. 38). To subscribe, click here.
Amir Rapaport | 21/07/2017
Send to a friend
A+A-Size
Share on
Share on
Test-launch of the Arrow missile (Photo: IAI)
The summer of 2017 is passing very actively and emotionally at IAI: on the one hand, a police investigation is under way with regard to the activities of the employees' union. On the other hand – technological achievements are recorded and mega-deals are being finalized, particularly opposite India.
This also happened in June 2017: the award of the Israel Defense Prize to IAI for the development of the Arrow-III missile defense system. IAI's CEO, Yossi Weiss, received the prize from President Reuven Rivlin on behalf of the employees (the prize was also awarded to specific departments of Rafael Advanced Defense Systems and IMI Systems, for their respective parts in the project led by IAI in cooperation with the Boeing Corporation of the USA).
Yossi Weiss chose to open the exclusive interview he granted Israel Defense by addressing the Arrow-III project: "The project started when I was VP of IAI and GM of the Systems Missile & Space Group, at the end of the last decade," he recounted.
"We knew that the project involved numerous risks. The technological challenge was immense – to enable interception outside of the earth's atmosphere, at extremely long distances, opposite the primary and highly interesting threats that exist in this theater, as US President Ronald Reagan said back in 1985: 'You have to hit the bullet where the bullet is'. This time, the bullet in question is located very far away."
What is actually the primary technological challenge, coping with the interception range or with the velocity of the missile being intercepted, at these altitudes?
"The challenge involves both the velocity and the altitude, plus other parameters. Being able to hit 'steel with steel' somewhere out there in outer space is a process that borders on science-fiction. Imagine you are standing opposite a person positioned ten meters away from you, and he fires a bullet and you have to hit the bullet he has fired – what we have here presents the very same level of difficulty.
"To my delight, we succeeded. We did it. At the personal level, I felt a sense of closure, and was very excited to stand on the stage opposite the President and Minister of Defense. Circles close, at the personal level as well as at the national level. When I received the prize on behalf of the division, I saw the guys back there, and I knew these are the very best people – Zionism at its very best. We are a government-owned company with all of the limitations associated with this status, and our people work day and night, without blinking, for the benefit of national security, in order to implement the very simple maxim of 'being able to sleep peacefully'. This is the second Israel Defense Prize awarded to IAI within the span of a year. Last year, the Prize was awarded to us for a confidential project we are unable to publicize."
So the Arrow-III is an exceptional achievement even at the global level?
"Definitely, yes. Boeing are our partners, and the head of the US program said that what we are doing here is above and beyond anything that is being done in America.
"Even now, our engineers are not resting on their laurels. In my opinion, there are at the very least some new ideas regarding the development of the Arrow-IV system vis-à-vis the future challenges. At this stage there is nothing specific, but you always want to be one step ahead of the next threat."
At this point, Yossi Weiss expressed a sense of frustration: "You know, you read the newspaper reports about police investigations," he says, "and the gap between the technological strength and the uncompromising contribution to Israeli national security and the background noises generated by various parties – is incomprehensible. We have no choice, so we are dealing with it, but I cannot comprehend this gap."
Weiss refers, naturally, to the police investigation that currently examines suspicions of irregularities in the activities of the powerful employees' union of IAI.
"Overseas, IAI is regarded as a technological giant. Domestically, we must deal with things that are less pleasant," adds Weiss. "During my term as GM, members of the employees' union were suspended and on two occasions I took radical measures against the union, but I had no choice. I had initiated serious confrontations with the employees' union in order to force them to accept the recovery program, but when the police investigation started, we suddenly had dozens of police investigators in our back yard. They are interrogating employees, mid-level managers and even senior executives. It is not a pleasant experience, and none of us knows how to handle it.
"Sometimes it really makes you frustrated – you work day and night, and the engineers devote their best time and efforts, and then an incident comes along that draws all of the media attention to the less pleasant aspects. Eventually, IAI will know how to overcome even incidents of this type."
IAI has been operating for a long time without an active chairman of the board of directors. The intended re-appointment of former chairman Yair Shamir was not authorized, and now the nominee for this position is Harel Locker, who served as Director General of the Prime Minister's Office.
Does the absence of a chairman affect the Company?
"I believe it does. At the principle level, a company like IAI must have a chairman of the board operating at a respectable capacity. I am not sure whether he/she should be working full time – but his/her position must be one with a respectable capacity. The fact that we have not had a chairman of the board for more than 9 months (since Rafi Maor left), is significant. The chairman of the board of directors is the boss who decides what we should focus on. It is highly important for the company with regard to strategic aspects in the business field. We deal with processes that take years in the civil market, we are currently in the stages of reviewing the implementation of our strategy and just short of actually implementing it, and we need guidance and counselling. In my view, the chairman of the board of directors is a senior, experienced individual who can provide advice. At the bottom line, I hope that a new chairman of the board of directors is appointed soon.
What were you referring to when you spoke about 'processes in the civil market'?
"We at IAI have a civil activity that accounts for 26% to 27% of our over-all scope of activity, namely – about one billion US Dollars, and for a number of years now, it has been suffering from an on-going crisis. Our Bedek Division, which deals with airframe structural work and the manufacture of executive jets, has been suffering from the effects of a very tough market. The crisis, which broke out in 2008, is not over yet. For example, in that year we manufactured 74 executive jets. Now we are at a level of only 25-30 jets per year. Competition has intensified, and the scope of activity has decreased. The challenge is to get this activity back to profitable status. I truly believe that with the management team we have today, and hopefully with the backing of the board of directors as well, we will make sure that his activity becomes profitable again, and will embark on new civil development projects of various types."
"Massive Backlog"
Yossi Weiss is 65, a mechanical engineer by his academic credentials, the son of Holocaust survivors from Haifa. He has seven children and 19 grandchildren, from two wives (he remarried after his first wife had died). He spent most of his military career in the IDF Navy, where he rose to the rank of Colonel. He was involved in numerous weapon system acquisition projects and served as head of the Dolphin submarine project. Among his various positions in the IDF Navy, he was 'loaned' for a period of four years to IMOD's Directorate of Defense Research & Development (DDR&D – MAFAT), where he dealt with future naval and air-defense technologies.
"I am about to conclude a five-year term as CEO of IAI," says Weiss, "It feels like an eternity. I had come from the technical field and learned new management issues, of which I had not been aware initially. Today, I am well-versed in all of the various activities, having studied them."
What is the macro picture of IAI in the summer of 2017?
"The macro picture is that we are heading along a favorable vector, I may even say a highly favorable vector. After quite a few years of speaking about it, we managed – through a complex and highly challenging dialog with the employees' union – to reach a situation of cooperation and understanding that the company should take some bold steps and discharge more than 800 employees. Additionally, we had to cut everyone's wages – junior and senior managers included, and suspend the fulfillment of agreements with the public sector for a period of 3 years. That means less corporate costs, less wages and we are discharging people the company can manage without. These are not bad people. They had contributed to IAI for 30-40 years, and now they are going home, but we made sure their retirement will have no effect on sales. The retirement costs were enormous and were reflected in the first half of 2016, but the first quarter of 2017 has already ended with a net profit of US$ 46 million. That does not mean all of the coming quarters will generate the same kind of profit, but the situation is definitely better.
"Our backlog of orders has increased to a record of not less than US$ 11.4 billion, which is the equivalent of three years of operations. Our cash reserves are stable, and we always pay for our debentures in time. During my term as CEO we went from 16,000 employees to less than 14,000, and as some of our older employees retire, we hire quite a few young and very talented new employees."
Yossi Weiss noted that the massive backlog does not include the deal involving the sale of Heron UAVs to Germany, valued more than US$ 600 million, which is being delayed by the German parliament, and many other deals that are close to realization. The backlog increased owing to other mega-deals, notably the deal involving the sale of Barak-8 missile systems to India, valued billions of Dollars. The missiles were originally intended for the Indian Air Force and Army, but the deal was expanded to include the Indian Navy as well. Last April, IAI concluded a deal for the supply of missiles to four Indian Navy vessels, valued US$ 630 million, in cooperation with the BEL Company of India. Now discussions are under way regarding the supply of missiles for seven additional vessels at the same time as the expansion of the deal with the Indian Air Force.
IAI has had some successful conclusions recently involving sales of the Radar of the Iron Dome system to such countries as the Czech Republic, Canada and Korea, plus hundreds of other deals. IAI acquired 50% of the TSG Company, which develops advanced command and control systems. Last June, IAI and TSG won a massive tender for a period of 17 years for the management of the project of relocating the technological units of the IDF from central Israel to the Negev. Yossi Weiss regards this win as "A strategic move that will empower IAI in the fields of C3. The acquisition of TSG has definitely proven itself." Weiss further boasts the fact that IAI sold 20% of the cybersecurity company it had established in Singapore at a price that reflected a handsome yield on the investment made in the establishment of that company. On the other hand, IAI has recently purchased two cybersecurity companies in Europe, and announced the establishment of a cyber division headed by Esti Peshin within the organizational structure of IAI, instead of the smaller cybersecurity organ that had existed within the ELTA Division.
What was the idea behind the establishment of the cyber division?
"As far as we are concerned, one aspect of cyber is providing protection to all of IAI's products. I cannot come to a client and talk about any one of my products without being able to answer the question of whether that product is cyber-secure. Beyond that, cyber is a new envelope for various types of elements in which we had been involved in the past – like electronic warfare. We dealt with them in the past, so it was natural for us to take our capabilities in these fields and divert them to the field of cyber.
"The main thing today is being able to come to countries and offer them a comprehensive cybersecurity setup for the entire country. So we hired the appropriate manpower for that. Our cyber division was established on January 1, 2017. It is a challenging process and we face many competitors. Keeping the pace is a challenge in itself."
It was recently reported that a South American country acquired a "national level cybersecurity project". Are any other countries currently purchasing such projects?
"Yes, and I am unable to elaborate. At the moment, we have a few other proposals in these fields of activity, and we have even signed a contract with another country. It largely depends on the needs of each and every country."
Has the move you made over the last few years, of enhancing the capabilities of IAI with regard to the land warfare category – borne any fruit?
"I believe it has. We decided to enter this field. For this purpose, we brought in individuals who are very experienced in land warfare. We have Maj. Gen. (res.) Gadi Shamani working for us full time and providing a very substantial push to this activity both inside and outside of the company. We have also hired the outgoing head of the IDF C4I Directorate, Maj. Gen. (res.) Uzi Moscowitz.
"Eventually, IAI must be involved in the land category with full power and across the entire range of IAI's capabilities in the categories of autonomous and robotic systems; computer, command and control systems; missile systems and surveillance systems. We already have systems operating in Israel and overseas. We are the national leaders in the field of robotics and invest substantially in this field – efforts as well as funds."
***
In the Photo: CEO Yossi Weiss (Credit: Meir Azulay)
The complete interview can be found in the new Summer issue of Israel Defense magazine (no. 38). To subscribe, click here.
