Israel and Germany signed an agreement this week for the purchase of four corvettes for the Israeli Navy * German Delegation to Israel – including naval officers, senior Defense Ministry officials and representatives of ship manufacturer TKMS – ThyssenKrupp – arrived in Israel for signing ceremony * As part of deal, TKMS made commitment with Division for Foreign Investment and Industrial Cooperation at The Israeli Ministry of Economy for reciprocal purchasing, including direct investment in Israeli industry of NIS 700 million
JERUSALEM – 12th May 2015 – ThyssenKrupp is a multi-disciplinary concern in the metal production sector. The group produces metal (40%), parts for the auto industry, establishes chemical plants, manages the TKMS shipyard and is involved in other activities. The company employs 160,000 people around the world, 60% of them outside Germany. The company's revenue for 2014 stood at €40 billion. The company invests about €1 billion annually in R&D, half in projects outside Germany.
In 2006, the Israeli government signed a deal with the German manufacturer to purchase dolphin-type submarines. Following the transaction, TKMS committed to a reciprocal purchasing agreement worth 40% of the Israeli financing in the deal, totaling NIS 1.8 billion (reciprocal purchasing worth NIS 740 million). An examination by the Division for Foreign Investment and Industrial Cooperation at The Israeli Ministry Of Economy showed that until now, the company has not fully realized this commitment.
In light of this, the division demanded - even at early stages of the negotiations - to discuss widening the company’s reciprocal purchasing agreements and its future commitments in the framework of the new deal.
Director of the Division for Foreign Investment and Industrial Cooperation at The Israeli Ministry Of Economy, Ms. Ziva Eger, was determined to fully realize the existing commitment, to create a larger commitment from the company for reciprocal purchasing in Israel and to redirect some of the commitment expressly toward direct investment in Israeli industry. This, to maximize the gain for the Israeli economy and the local labor market.
As part of the outline agreement with the company, the following was achieved:
* TKMS committed to a reciprocal purchasing agreement worth 50% of the new deal - c. NIS 700 million; this in comparison to the previous commitment in which reciprocal purchasing agreement stood at 40%.
* The Division for Foreign Investment and Industrial Cooperationand TKMS will jointly examine the viability of jointly investing in research and development, establishing a manufacturing facility and converting some of the reciprocal purchasing commitment to capital investment; this in comparison to the previous deal in which TKMS committed to a reciprocal purchasing agreement only.
Director of the Division for Foreign Investment and Industrial Cooperation at The Israeli Ministry Of Economy, Ms. Ziva Eger said: "The Israeli Ministry of Economy, with the backing and cooperation of the Israeli Ministry of Defense and the Israeli Navy, managed to bring to the negotiating table a draft that turns defense acquisitions into cooperative ventures and economic development. Expanding the economic activity of TKMS in Israel is a breakthrough in trade, economic and research cooperation between the countries. We operate according to the policy set by the ministry to encourage small and medium-sized factories and to strengthen Israel’s peripheral communities. The cooperation with TKMS is an example of the importance of reciprocal purchasing agreements for the Israeli economy."
Director General of the Israeli Ministry of Economy, Mr. Amit Lang said: "The Israeli expenditure on national security injects money into Israeli industry. We have begun a move that turns a standing commitment into direct investment in Israeli industry, based on a detailed plan with a set timetable. This is excellent news for Israeli industry and for the Israeli job market. It also shines a positive light on Israel's economic and security cooperation with Germany, countries marking 50 years of diplomatic relations this year."