Idex 2015: Big deals for UAE companies at defence show

Countries in the Mena region are pumping up their defence budgets amid the threat from ISIL with spending expected to touch $150 billion this year.

The UAE armed forces show their skills during the opening day of Idex in Abu Dhabi. Silvia Razgova / The National

Local companies won a big chunk of the contracts up for grabs at the International Defence Exhibition (Idex) in the capital yesterday as the UAE beefs up its support of industry to help diversify the economy away from its dependence on oil and create high tech jobs.

ADX-listed Abu Dhabi Ship Building, in which Mubadala has a 40 per cent stake, won an Dh870 million contract to provide two vessels to the UAE armed forces, according to Major General Obaid Al Ketbi, an Idex spokesman. Its shares closed 11 per cent higher in Abu Dhabi yesterday.

A Dh2.4 billion contract was awarded by the armed forces to Al Taif Technical Services to provide maintenance for ground force vehicles. Al Taif is a unit of state-owned Emirates Defence Industries Company (Edic), which was recently formed following a merger of the defence assets of Tawazun Holding, Mubadala and Emirates Advanced Industries.

A contract also went to the manufacturer Nimr Automotive, which produces 4x4 and 6x6 armoured and non-armoured vehicles. Nimr, also a unit of Edic, won a Dh1.2bn deal from the UAE armed forces for 500 Nimr vehicles “in addition to developing another 500”.

Abu Dhabi Autonomous Systems Investments, part of Edic, won a Dh490m deal for unmanned systems.

“Today we are hoping to reach a significant level of self-sufficiency,” said General Al Ketbi. “The UAE has a clear strategy that started off in the late ‘80s or early ‘90s to focus on local manufacturing. We have also started a while ago doing joint ventures between international defence companies. Therefore what we are seeing today is a positive result of the UAE’s strategy that was set long ago.”

Meanwhile, Airbus said it expects the Middle East to contribute about 20 per cent of its global defence business this year, and says that lower oil prices will not affect demand from this region.

“To be the conservative side, I see demand from the Middle East to be stable at about 20 per cent,” said Marwan Lahoud , chief strategy and marketing officer of Airbus Group.

Habib Fekih, president, Airbus Group, Africa and Middle East, said that the aircraft development cycle of five to six years is long enough to ride through any fluctuation of oil prices.

“The drop in oil price is only a few months. If it continues for three years, we will see what effect it will have,” said Mr Fekih.

Airbus Defence, together with the French-based technology firm Thales Alenia, won a Dh3.7bn deal to build two military observation satellites for the UAE, according to an announcement at Idex yesterday.

In 2013, Airbus Defence delivered three A330 MRTT multi-role tankers to the UAE. The aircraft, which is converted from an Airbus A330 commercial passenger jet, is capable of refuelling air force fighters such as the Mirage 2000 and F-16.

Countries in the Mena region are pumping up their defence budgets amid the threat from ISIL with spending expected to touch US$150bn this year from $148bn in 2014 and $136bn in 2013, according to the defence consultancy IHS Jane’s.

Follow The National's Business section on Twitter