BANG ON TARGET

Abu Dhabi 2017 | AEROSPACE | REVIEW

Identified as a key component of economic diversification, the UAE's aerospace industry is literally reaching new heights, with benefits felt in both military and civil arenas.

The UAE's defense and aerospace industries have evolved in step with the National Vision of economic diversification and international competitiveness, and as such, while they bring much prestige to the nation, they are far from a vanity project. The UAE is a palpably swift innovator and adopter across the technological spectrum, and aerospace looms large in the mix. As commodity prices flounder, cost-efficiency is the byword, whether for the civilian helicopter fleets of the Abu Dhabi National Oil Company (ADNOC), or the maintenance of the naval fleet, with commercial advances made more productive through international partnership and collaboration. And meanwhile, key international events such as the Abu Dhabi Global Aerospace Summit provide a perfect platform for long-term thinking.

Uniform Effectiveness

While the UAE is considered a safe haven for investment in a troubled region, its physical security is the preserve of the Union Defense Force, based in Abu Dhabi. National service, introduced in the UAE in 2014, is mandatory for Emirati men aged 18 to 30, while optional for women. The purchase of sophisticated hardware for land, air, and sea has led the nation to become the world's third-largest defense importer in 2015, all but doubling expenditure over the past decade, thus registering the same quantum leap observed in other economic sectors.

According to Global Security, the UAE's defense expenditure printed at USD23.5 billion in 2016, and seems set to rise at a CAGR of 6.59% to USD31.8 billion by 2021. This accumulates to defense capex of around USD140.8 billion, not least given its likely contribution to mitigating any escalation of regional tension. Vision 2021 also entails shoring up the domestic component of the defense sector. Defense spending peaked at roughly USD5.6 billion in 2005. The nation has tended toward diversifying its military procurement sources in the interests of economic cooperation with allied nations as is evident in its opting for F-16 combat aircraft from US as well as Mirage 2000 combat aircraft from France, while in 2016 penning a deal with UK-based aerospace and defense company BAE Systems to develop rapid response mobile artillery.

Big Grey Corvette

The UAE boasts a capable navy centered on the Baynunah Corvette Program numbering six ships, and one that is a faithful client to local enterprises. Dr. Khaled Al Mazrouei is the CEO of Abu Dhabi Ship Building (ADSB), the MENA region's foremost shipbuilder. He told TBY of the firm's new Abu Dhabi facility featuring a floating dock capable of dry-docking vessels of up to 10,000 tons and maximum length of 180m, dimensions that exceed anything else available in Abu Dhabi. It has also signed contracts worth USD272 million to build naval vessels. “We are currently working on our flagship (and above-mentioned) Baynunah program," which had delivered five of six 72-meter corvette class Baynunah vessels to the UAE Navy at time of interview. Foreign projects include landing craft and high-speed vessels for the Kuwait Ministry of Defense. ADSB has broadened its geographical footprint through its two wholly owned subsidiaries Frontiers and Safwa Marine, as well as generating revenue in diverse parts of the maritime ecosystem. While the former subsidiary caters to the combat systems and communication systems needs of the military, the latter operates in the civil arena, specifically, “the niche market of superyachts for commercial and technical management, repairs, and maintenance."

Human Capital: Solving a Perennial Dilemma

Twinned with strategic investments across the aerospace and defense value-chain is the training of a skilled local workforce. The star graduates of today are even likely to work on projects that look beyond the earth as space technology, too, is not beyond the remit or capability of the nation as we will see later. The race to increase the local workforce in strategic industries is a serious one in the pursuit of self-sufficiency. Private sector enterprises such as maintenance, repair, and operations (MRO) and OEM activities have traditionally attracted less interest than the more favored state-enterprises. But this is being addressed. Deputy CEO of Strata Manufacturing Ismail Ali Mohammed Abdulla explained how the firm has sent over 100 employees for training in Japan and is keen to partner projects with “technology-oriented universities that can be applied to our production lines." Indeed, in 2016 the firm “celebrated the graduation of 105 Emiratis, bringing the Emiratization rate to 51%."

Continental Aviation Services (CAS) is a veteran defense company in the Emirate. On the topic of trained employees, CEO Juergen Fiebig observed that, “The defense industry is typically not one where workers jump from one job to another; (rather they) seek to develop themselves within a company, build a network, and strengthen their capabilities." The military is no exception either when it comes to leveraging education. In early 2016, HH General Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces, welcomed recruits to the new Seih Hafair Camp National Service School.
Meanwhile, touching on the chicken and egg scenario of importing know-how to enhance one's own independent capabilities, Fiebig commented that Abu Dhabi must now continue to import new technology while developing its own database of intellectual property.

Aerospace: a Sector Taking off

In 2002, the government of Abu Dhabi established Mubadala as the key investment engine of economic diversification with a wide remit of strategic sector participation, among which aerospace is vital. Its portfolio exceeds USD55 billion, and extends beyond national borders to commercial opportunities that promise a solid return on investment. The company today also showcases the Emirate by hosting the Global Aerospace Summit. The CEO of Mubadala subsidiary Strata points out that the UAE is leveraging its fortuitous geographic location between the East and the West, and four-hour flight radius to one-third of the world's population and two-thirds within eight. “We have two of the fastest-growing airports in the world in Abu Dhabi and Dubai, as well as two of the world's most competitive airlines, Etihad and Emirates. Therefore, the manufacturing sector of our aerospace industry is at the heart of a heavily globalized economy." On this matter Continental Aviation Services (CAS) CEO Juergen Fiebig added, that GCC companies were targeting “alternate markets such as Russia, India, and the ASEAN economies."

Strata has secured a contract to manufacture Airbus 1350-1000 flap-support fairings until 2023. Strata manufacturing produces commercial aircraft including the A330, A350, A380, 7A7, and 777, and, “For Phase II, we will begin building the Airbus A320, a horizontal tail aircraft." According to its CEO, “The growth of our industry depends on four major factors. The first is being able to bring and win technologically advanced work packages; second is building on the human capital that we have and investing more in our people; third is building a local supply chain; and the fourth is an engaging and foreseeing growth strategy." The firm, with its own dedicated R&D department, has announced a cutting-edge 3D manufacturing project with Etihad and Siemens.

Nibras Al Ain Aerospace Park

In a game-changer moment, Mudabala Aerospace and Abu Dhabi Airport Company in December 2015 announced building Nibras Al Ain Aerospace Park to meet the diverse needs of the sector across the value chain. Strata's CEO noted that the regional aerospace hub was located Al Ain since its own 2030 Vision targets its becoming a key industrial hub. In support of the objective of a superlatively trained workforce, “Al Ain is an academic center hosting 21 institutions, which means that the region is home to the pool of highly educated talent needed for such an advanced industry. "In January 2017, Phase I of Nibras was fully completed and leased at a 60% of its capacity (and is home to the Advanced Military Maintenance Repair & Overhaul Center (AMMROC) and the Abu-Dhabi Autonomous System Investments (ADASI), among others." Meanwhile, in a JV between Turbine Services and Solutions (TS&S) and GE, TS&S is creating a regional, state-of-the-art GEnx engine MRO facility within the park. CEO Abdul Khaliq Saeed summed up the sheer scope of the aerospace value chain thus, “The development of the Mubadala Aerospace sector, including increased capability development within the engine MRO business through offset deals worth over USD1 billion from General Electric and Rolls-Royce (plus) high technology composite manufacturing with Strata, and innovative financing solutions provided by Sanad have secured Abu Dhabi as a global aerospace hub."

Ground Control to Major Tom

In a further leap for the UAE, space itself has become the next frontier. And having launched its own satellites, inked commercial deals, and designed its own space research center, progress made is already more tangible than dark matter. Yahsat, another subsidiary of Mubadala Development, operates two communications satellites. A third, the Al Yah 3 satellite, with an estimated launch date of June 30, 2017, will expand Yahsat's broadband footprint to 19 countries.

The scheduled space research center in Al Ain is a partnership between the UAE Space Agency, UAE University, and the Telecommunications Regulatory Authority was earmarked to cost around USD27.2 million. Its task is to foster related R&D at the federal level as a stepping-stone for local innovation. The first such center in the Middle East, it has an ambitious goal of overseeing the development and operation of the UAE's unmanned Mars mission in 2021. And meanwhile, with space tourism seemingly around the corner for those with gravity-proof wallets (USD250,000 per ticket), Abu Dhabi-owned Aabar is an investment vehicle active in key sectors ranging from commodities, automotive, and energy to finance and real estate. In line with the national importance given to aerospace, it has purchased a total 37.8% stake in Virgin Galactic. It is even speculated that Abu Dhabi might ultimately boast the second Virgin Spaceport. And in 2019 Abu Dhabi is set to host the Global Space Congress, bringing together senior public and private figures, as well as academics, to explore the technology and training required to commercially exploit space.

It is clear then, that defense and aerospace industries are not only elevating the local content of strategic industries, but also proudly carrying the nation's flag into the far future.