They say of him that he's industrious, brilliant, knows exactly what he wants (and how to get it), and doesn't take no for an answer. They also say however that he throws his weight around, and that he's a centralist and an empire builder. He's a voracious reader of professional literature, an avid fan of nature films and science fiction, and likes taking a vehicle to explore nature overseas (with an emphasis on snow, rivers, and forests). He is also described as someone who takes a bird's eye view of information but who is capable of diving into the details. CEO Itzhak Nissan has completed two years in the cockpit of Israel Aerospace Industries (IAI), and has enjoyed every minute.

Nissan sees IAI as an international company. Its profit on sales turnover has risen from zero to over 5%, and he aspires to raise it further. He is also pushing IAI in the direction of new civilian fields of activity, the first of which is alternative energy. As far as he is concerned, the sky is the lower limit.

Nissan became CEO in 2006, after veteran CEO Moshe Keret, who was twenty years in the post, retired. At the time, Nissan was a VP at IAI, and managed the Systems Missiles and Space Group, a job he took up after managing the MBT Division, which deals with products for space, missiles and precision guided munitions. In other words, he grew up within the company.

On taking up his current position, Nissan looked for ways of improving the company's performance. Among other things, he tightened project management procedures, where there had been "leakage" of man-hours; he pushed in the direction of mega-projects and super-systems, in which IAI tailors a package out of the activity of several divisions; he set up an Israel desk ("ironically, we were strong overseas but weak in Israel"); he reorganized procurement procedures, where he had spotted inefficiencies; and wrought radical change in the accessibility of information. "Today," he says, "anyone with the right permissions can sit in front of a computer and obtain all the information he wants at the push of a button."

Another change, a move led by IAI chairman Yair Shamir and supported by Nissan and workers committee chair MK Haim Katz, was a bond issue by IAI on the Tel Aviv Stock Exchange. Part of the thinking behind this was that the transparency required of a listed company would force it to meet its targets.

A particularly important and sensitive process, which has not yet ended, is the reduction in IAI's workforce. The IAI workers committee is among the strongest in the country. In the past, it was thought that motivating employees to leave voluntarily meant such high expenditure on enhanced severance pay that the government had to be a partner in the process. Nissan decided to bring in retirement agreements at the company's own expense. "Obtaining government support is like waiting for the Messiah," Nissan says. "800 employees have taken early retirement, and another 150 will leave this way in 2008."

Alongside streamlining, growth engines for the company have been defined, one them being expansion overseas. Eighteen months ago, IAI set up a company in the US, Stark Aerospace, which produces unmanned aerial vehicles (UAVs) and stabilization and vision systems. In February this year, IAI and Indian conglomerate Tata announced the founding of a joint venture in India for development and manufacture of defense products.

To strengthen this trend, a VP has recently been appointed for business development and subsidiaries, with the task of finding companies around the world that IAI can acquire. "Both in Europe and the US, there is a policy of giving preference to local products," Nissan explains. "Our ultimate goal is that 50% of IAI's activity should be in overseas subsidiaries, preferably wholly owned by us. We will be a multi-national company. We see these companies as a highway for IAI products, and as a good way of fulfilling reciprocal trade obligations."

Globes: Where are your future markets?

"We are trying to find and buy European companies to be our anchors in the local market, and we are trying to buy a company in Latin America. CIS countries also interest us. And of course, we will buy more companies in the US, in order to strengthen Stark."

What about the Far East?

"At present we plan collaboration there on civilian aircraft, similar to our collaboration with Gulfstream in the US."

Alternative energy

"Among all the developments, one of the most interesting is IAI's decision to enter the field of alternative energy: wind and solar power," says Nissan. "We can upgrade existing wind turbines, we have the know-how and the professional manpower, and our studies indicate significant growth in demand for alternative energy, so we have decided to become active in this area."

Do you feel that the changes have yielded results/?

"In the period 2006 to 2007 we grew by $500 million each year, about a billion dollars in two years, as though we swallowed Israel Military Industries and a bit more," Nissan says, aiming a barb at his competitor as a precursor to later remarks, "and all of it from internal growth."

Nevertheless, in comparison with your main competitor, Elbit Systems, the results are poor.

"Elbit is a private company. It has no limitations on acquisitions or development. We have countless restrictions. It's hell. There are restrictions imposed by the Government Companies Authority, the Ministry of Finance, you name them; all this while we are competing in a free market, against the world's giants, all of them in private ownership."

Will you try to get privatization going?

"Privatization still isn't on the agenda, because it requires a government decision, and then a decision by the board, and agreement by the workers' organization. It's a long way off."

What is on the agenda is Nissan's desire to merge Israel Military Industries (IMI) and Rafael, the two other defense companies in state ownership, into IAI. In his mind's eye he sees two blocks, one made up of IAI, Rafael, and IMI, and the other led by Elbit. The subject has come up in the past, but the idea was never realized.

"We are ready to absorb IMI," Nissan says, "We'll take the existing production lines and workforce, and leave the state with the land and the pension payments for those who leave. We can relieve the state of the burden. I think that a merger with Rafael would be for Rafael's good, IAI's good, and the good of the country. Even after all the defense industries in Israel merged, we would still be considered small in relation to the multi-nationals. In the nature of things, a move like that will not be easy, apart from anything else because of the personal programs of many senior people."

Defense industry sources responded derisively to this idea, and said that the question of ownership of government companies was one for ministers, not hired CEOs. "He would be better off enhancing the value of the stake in Elisra that he bought two years ago," the sources say.

What about Elisra, of which you hold 30% through Elta?

"I think that, in the end, IAI will have to part from its shares in Elisra, because being there with 30% doesn't allow us to have the influence we would like to have. With the right management, Elisra could become something positive. But there are a great many stages and board approvals to get through before a deal like that happens."

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