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TWST: What is Arotech?
Mr. Ehrlich: Arotech is a public, defense and homeland security products
company. We operate with three divisions. We have a division of armor,
in terms of vehicles and various kinds of body armor and aircraft armor.
We have a division that does simulation both for the military and for
law enforcement. And we have another division that makes batteries for
militaries, both in America and in Israel. TWST: Give us an idea what those markets are like, their dynamics. How
are you situated and what are your differentiators within those markets?
Mr. Ehrlich: In the armor market, we are the principal supplier to the
Israeli Defense Forces for armored vehicles up to a level of HMMWV,
various kinds of vehicles, such as ambulances. We've just developed a
new car called the David, which is a six passenger or four passenger
armored vehicle that is very good for urban warfare. We just recently
were awarded an order from the US military via what's called FMF, which
is Foreign Military Funding for cars made in the US delivered in Israel
for 160 vehicles, and we are currently producing in Israel another 27 of
a slightly different variation for the IDF as well. We see that as a
major ongoing business opportunity because the IDF (Israeli Defense
Forces) requires probably some 600 to 700 of these kinds of vehicles to
replace their aging, armored jeep fleet. So that's what we do. And that
market we see is growing; there are other opportunities in other
countries like in the Far East as well as central Europe. In the
simulation business, we are the leading supplier of driving simulators
for the US military. We provide all of their driving simulators for
every vehicle that's driven in the US military. We also have a component
of our business that does simulation of aircraft missile launch, both
used in the aircraft and in training. And we also have a significant
portion of our business doing law enforcement training for use of force,
when to use what kinds of force to subdue someone that's a perpetrator
of some kind of bad event. The battery business is more limited to
making batteries to support field equipment for the various militaries,
principally as I said, the Americans and the Israelis. We use two
different chemistries: zinc-air, which is basically unique to us, which
is very high energy but not such a high power, so it has a long runtime
but not tremendous power; and lithium-ion, which is more conventional
and more competitive. We see big opportunities. We have a very dominant
position in the Israeli market, but we see opportunities through our
plant in Alabama to expand to the US military but it's a longer process
because you have to get spec'ed with the OEM. So the radio
manufacturers, the computer manufacturers, the hand-held device
manufacturers that are making products for the military have to adopt
your battery technology for their products, which usually takes 18 to 24
months to get accepted and then approved and then, when you do get those
orders, they run for several years, because once the product has been
adopted by the military, they buy them for several years. So we see all
of these as growing markets. The biggest opportunity we think is in the
simulation market. There is huge opportunity as militaries need to
simulate all kinds of environments and scenes before they put their
soldiers into harm's way. There are tremendous opportunities to grow in
the military simulation business.
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