French defence and technology group Thales is to increase procurement from UAE companies, boost engineering activities and nearly double the workforce at its UAE subsidiary, in line with the country's local manufacturing push.
The company is in talks with the government to explore opportunities in defence production, Pascale Sourisse, senior executive vice-president of International Development at Thales, told The National on Monday.
“We are always interested in diversifying the supply chain and, particularly in the UAE, we want to increase the role of UAE companies in the Thales supply chain, so we have launched an initiative called Go To The UAE.
“We want to procure much more from UAE companies,” Ms Sourisse said.
“In the UAE, we are not only supplying our customers, but we are also working on reinforcing our footprint,” she said on the sidelines of the International Defence Exhibition (Idex) in Abu Dhabi.
The company's wholly-owned unit Thales Emarat Technologies aims to increase its workforce to 300 employees by 2025, from 160 people now. At least 30 per cent of those will be Emiratis, she said.
The subsidiary focuses on radar, radio communications and defence aerospace technology, according to its website.
Gulf states such as the UAE and Saudi Arabia are developing their military production capabilities to reduce reliance on foreign suppliers. The move is intended to diversify economies away from the oil sector, create more jobs for citizen and attract highly-skilled employees.
The transfer of advanced technology and technical know-how from international partners to local companies will become part of offset and procurement regulations and are likely to be reflected in deals signed at Idex, industry analysts said.
“We have a plan to set up a radar academy. The location will be in Tawazun Industrial Park (in Abu Dhabi). We are discussing it and the objective is to start it quickly,” Ms Sourisse said.
The idea is to expand Thales' supply chain in the UAE.
“We want to increase the activity that will be performed in the UAE … so, what we will be doing here will be local production, engineering activities in development with Emirati partners,” Ms Sourisse said.
“This is the best approach to build solutions that ideally suit the needs of users in the UAE and create a level of competence that goes much further if you involve not only manufacturing but also engineering, research and development and services to support the equipment you supply to your customers.
“Then, you have the whole supply chain and you can build a pool of competence that is very solid.”
Ms Sourisse said Thales is discussing these opportunities with government and hopes the process will be quick as its UAE unit has grown rapidly in the three years since it was established.
“It's really about agreeing with the other stakeholders on what activities will be included and then we can put it in place within the structure of Thales Emarat Technologies that is already there,” she said.
“We hope to be able to make some announcements very soon.”
Thales also expects its overall business in the Middle East to grow, driven by customers’ demand across its segments, from space exploration to defence.
The Middle East is a “very important region” for the company, representing about 10 per cent of its total global sales, Ms Sourisse said.
Thales expects its business in the region to grow “above average”, driven by interest in its latest technologies, from satellites to space exploration, telecoms and earth exploration, which represents a lot of opportunities, she said.
The level of demand is growing in the short term despite uncertainties from geopolitical tensions and macroeconomic challenges, she added.
Supply chain diversification
Aerospace and defence companies are diversifying their procurement as pandemic-induced supply chain problems caused delays and disruptions.
Thales has worked with its suppliers to find solutions following disruptions in 2021 and has found ones that allow it to produce at a pace required by its customers but it remains “vigilant about this”, Ms Sourisse said.
“It's constant work. It's a strong area of focus, but as compared to the situation in 2021, we can say that particularly at the end of 2022 and the beginning of 2023, it is much better because everybody has been able to take actions,” she said.