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Abu Dhabi, UAEWednesday 21 November 2018

UAE guns its military engines

Bucking the year’s doom and gloom start amid plummeting oil prices and regional conflict, NIMR, the UAE military vehicle manufacturer, plans to build on its success story with fresh plans this year to conquer fast-growing markets in South East Asia and eastern Europe.

“First we were looking to target the Middle East and North Africa, we have contracts in Algeria, Bahrain and Qatar,” says Fahad Harhara, the chief executive of NIMR Automotive, which has manufacturing facilities in Abu Dhabi.

“In 2016 our prime target is South East Asia. We are targeting Thailand, Malaysia, Philippines, and Indonesia; we are also targeting eastern Europe.”

NIMR is already working in North Africa following a 2012 deal to jointly produce vehicles in Algeria.

Overall, defence spending is forecast to remain fairly resilient amid slowing economic growth in emerging markets and is forecast globally to increase to US$1.68 trillion in 2016 from $1.65tn in 2015, according to IHS Jane.

“Rising tensions in Asia Pacific have seen a long overdue process of military modernisation move up the political agenda in a number of countries,” says Craig Caffrey, a principal analyst at IHS.

“The Philippines, Indonesia, Japan and Vietnam are all following China’s lead and we see no sign of this trend coming to an end.”

Middle East defence spending is expected to be flat at $170 billion over the next two years as eastern Europe overtakes it as the region with the fastest growing defence budgets, with double-digit increases in response to the Ukraine crisis.

After a turbulent five years, defence spending is set to soar in eastern Europe as countries move towards spending 2 per cent of GDP on defence. “Driven by the crisis in the Ukraine and Poland’s modernisation programme, Eastern Europe is now the fastest growing region globally,” says Fenella McGerty, a principal analyst at IHS.

“This position has been held by the Middle East for the last three years.”

Defence spending growth in the region averaged 13 per cent in 2015, up from 4 per cent in 2014, according to the IHS report. Notably, Ukraine’s defence budget increased by 70 per cent in the past year as Kiev responded to unrest in the east of the country. Meanwhile, Lithuania, Poland, Slovakia and Latvia also enacted double-digit real terms increases.

“The regional surge in defence spending is particularly notable in the North-East,” Ms McGerty said. “We saw remarkable growth of 20 per cent in the Baltics in 2015 and this is expected to continue in 2016.”

Founded in 2004, NIMR, or “tiger” in Arabic, was established by Bin Jaber Group, before it was 60 per cent acquired by Tawazun Holding in 2010.

At the end of 2014, the army vehicle manufacturer became part of the Emirates Defence Industries Company, or Edic, which incorporates 16 of the UAE’s defence industry entities under one umbrella.

The formation of Edic is in the line with Abu Dhabi’s 2030 vision to diversify its economy away from its dependence on oil to industries such as defence.

Other economies in the region are trying to hastily catch-up, especially after seeing the oil price crash by more than 70 per cent over the past 18 months, falling from $110 per barrel to about $30 per barrel this month.

Saudi Arabia, for example, is set to reveal details of its new diversification plans amid measures to cut costs and for economic reform. Last month, according to Bloomberg, Saudi Arabia said it plans to gradually cut subsidies and sell stakes in government entities as it seeks to counter a slump in oil revenue.

The government expects the 2016 budget deficit to narrow to 326bn Saudi riyals (Dh319.56bn) from 367bn riyals in 2015. Spending, which reached 975bn riyals last year, is projected to drop to 840bn. Revenue is forecast to decline to 513.8bn riyals from 608bn riyals.

The 2015 deficit is about 16 per cent of GDP, according to Alp Eke, senior economist at National Bank of Abu Dhabi. Oil made up 73 per cent of this year’s revenue, according to the finance ministry.

Designed for harsh desert conditions, NIMR’s vehicles were first tested in real combat in Yemen last year. The Abu Dhabi company manufactures 4x4 armoured vehicles, known as Ajban, and 6x6 vehicles known as Hafeet. They can come as either a “tactical” armoured vehicle that is blast and ballistic protected for front-line battlefield operations or a “soft skin” unarmoured vehicle for utility and logistics purposes.

“People are buying tactical vehicles particularly because of the warfare that are taking place right now [in parts of the region and] people are protecting their borders,” says Mr Harhara.

With healthy order books until 2018, according to Mr Harhara, NIMR is increasing its production capacity to eight vehicles per day this year from one vehicle a day in 2014. The company is also underway with its “winning chip” the N35, a 4x4 or 6x6 armoured vehicle that operates in the desert as well as in wet conditions. The N35 will be perfectly suited to the eastern European markets, according to Mr Harhara. The first of the 4x4 version is expected to roll off the production line in the third quarter.

Despite coming late to the game and competing with the likes of America’s Oshkosh and Global Dynamics, NIMR’s strength lies in its agility.

For example, a new special operations vehicle can be produced over a span of nine-months – between the initial idea, manufacturing, and testing. This can take several years elsewhere.

The firm also plans to increase its vehicle line-up to 15 models this year from the current eight.

“We are pushing hard to expand our footprint outside the GCC and getting the NIMR brand known,” says Mr Harhara.

Real-life fast and furious

After a 30-minute tour at NIMR’s Automotive facilities and seeing workers as they assiduously assemble parts and wires around chassis of armoured vehicles, the adventure began with a desert ride on the Ajban Special Operations Vehicle (SOV).

Used by Special Forces, the open-top 4x4 SOV looked like the marriage of a safari Jeep and a Hummer. I was strapped to my seat by a tight cross belt and asked to keep my laptop bag tight under my feet, so it did not fly into the air over the bumps. The four-crew vehicle has a gun on each side, with an optional fifth seat at the centre giving an all-round situational awareness position. We took the SOV to the sand dunes, which were right outside the facility, the ultimate field operations environment for NIMR staff, who often take vehicles for desert testing there.

During the ride, I was accompanied by a seasoned driver, NIMR’s sales manager, and a photographer for The National. The SOV is light enough for dune-bashing, yet powerful and stable. To get a good photo of the SOV, our photographer asked the driver to take us on a ride on one side of a steep sand dune – there we were driven at high speed at what seemed to be a more than 45° angle on the dune. After a couple of repetitions, I was left impressed, excited and exhilarated … yet a little nauseous after the powerful, almost gravity defying trip.

selgazzar@thenational.ae

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