On the outskirts of Riyadh, officials show visitors one of the latest investments by the state wealth fund at the forefront of a plan to modernize the Gulf nation’s economy – a defense electronics factory of Crown Prince Mohammed bin Salman.
Advanced Electronics, whose factory in Riyadh makes parts for bombs and drones, is the “jewel” of Saudi Arabia’s nascent military industry, officials say. kingdom said. Last year, AEC was acquired by Saudi Arabian Military Industries (Sami), a company established four years ago by the Public Investment Fund to localize defense production.
Saudi Arabia has one of the largest defense budgets in the world. According to the Stockholm International Peace Research Institute, the Kingdom spent $57 billion defending the country last year. The AEC is at the heart of a plan to increase local production by 50% of defense spending within a decade. In 2017 – the year Sami was founded – it accounted for only 3%.
Project, suitable for Crown Prince Mohammed’s Vision 2030 Plan Diversifying an oil-dependent economy is an ambition, but analysts say it would be a mistake to dismiss it.
“Just look at how much the Saudis spend on weapons. . . Francis Tusa, a defense consultant and editor of Defense Analysis. “They will get a possibility. Sure.”
The plan also reflects Saudi Arabia’s desire for self-reliance – Riyadh is at war in neighboring Yemen, whose oil facilities and other infrastructure are subject to cyber attacks. Drones and missiles from Iran-backed rebels, and arms sales from the US, their biggest supplier, have often met with opposition in Washington. Two dynamics are currently running rounds in Congress to block the sale of $650 million in air-to-air missiles to Saudi Arabia.
Walid Abukhaled, chief executive officer of Sami, said: “There is a strong need to strengthen our military capabilities and self-sufficiency and strengthen the defense ecosystem in our region, including including Saudi Arabia, so I see the big defense budget being increased,” Walid Abukhaled, Sami’s chief executive, said in an interview with the Financial Times.
“One of the main reasons that Sami was established is sovereignty, you want that self-sufficiency. Another problem is that repair and maintenance of a product sometimes takes two years, Abukhaled said.
To that end, Sami wanted weapons manufacturers to shift production and maintenance to the kingdom. “All my partners know, the good old days. . .[the original equipment manufacturers (OEMs)]The people who came to contract and deliver all from abroad have disappeared. That won’t happen again,” Abukhaled said.
“That forced the big boys to say that we need to think differently, we need to work with Sami, or other local partners of Saudi Arabia, to win the contract. OEMs can build their own facilities in this kingdom,” he said.
Sami is looking to assemble Lockheed Martin’s Blackhawk helicopters in Saudi Arabia with local labor and armored vehicles in partnership with a United Arab Emirates company. Sami, whose divisions include aviation, defense systems and missiles, is also in talks with other companies. “It’s taken other companies and countries 30 to 50 years to do that, so it can’t all be done spontaneously, so you have to look outside and look,” said Abukhaled. acquisitions,” Abukhaled said.
One of its priorities will be drone defense, he added. A 2019 drone and missile attack that Iran allegedly masterminded temporarily knocked down two Saudi Arabia’s oil facilities and cost about 5% of global oil production.
However, Sami, which has begun production of its first surveillance drone, is a latecomer to domestic military production in the region. The UAE’s neighbor, the UAE, has produced surveillance drones and armored combat vehicles that have temporarily entered the wars in Yemen and Libya. Israel, whose military budget is less than half that of Saudi Arabia, makes some of the most advanced weapons in the world. Iran, the main regional rival, has an increasingly complex domestic arms industry.
Charles Forrester, a leading Middle East industry and budget analyst at Janes, a defense specialist, said the Saudi market is too big for a foreign defense industry to get through.
“For them, Saudi Arabia is too big to ignore and there are a number of countries and companies out there that realize they need to catch up as they have lost ground in the last few years,” he said. ,” he said.
Now, the Riyadh facility has become a showcase for reforms sweeping the kingdom, including the “Saudization” of a workforce traditionally dependent on foreigners and the entry of women. women in the workplace.
The AEC foyer showcases some of its products – a circuit board for the US-made F-15 jet fighter, a military radio, and in the center of the display a straight laser-guided missile stand for which the company manufactures the parts.
A young Saudi woman who led the FT on a factory tour pointed out that her countrymen make up more than 80% of the workforce. In one hallway, she stopped in front of an old group photo of the company’s employees, all male, and noted that she needed to update it before continuing on the tour.
