Israel Aerospace Industries (IAI) is a state-owned company with a great reputation for quality and innovation. The Economist looks at their moves toward going into private control:
When Mr Shamir, an important figure in Israel’s booming high-technology business, took on the job of sorting out his country’s biggest industrial company in 2005, state-owned IAI was in a wretched condition.
For one thing, it had never quite got over the blow to its self-confidence when the Lavi, an advanced dual-role combat aircraft, was cancelled by the government headed by Mr Shamir senior in 1987. Although the Lavi was on course to meet all its performance targets, the cost of the project and American concern that it was helping to finance a rival to its F-16 and F-18 fighters killed it. For IAI, it meant that it would never again try to make a fast jet on its own.
For another, despite recovering much of its technological élan, IAI was an organisational and financial mess. Executives say it had gone three years without a formal chairman and two years without a signed financial statement. Banks had seized some of its financial assets and its chief executive of 20 years, Moshe Keret, was facing bribery allegations (he denied these and the case was dropped for lack of evidence). The firm was also in the grip of the Histadrut union federation, which fought all attempts to slim a bloated workforce and introduce merit-based remuneration.
