Issue 4, 2019. August-September

   

GEORGIAN AEROSPACE MANUFACTURING TAKES OFF

The Georgian Partnership Fund and Israeli defense manufacturer Elbit Systems have come together to make the desert bloom; or at least to give new life to an otherwise forgotten industrial park on the outskirts of Tbilisi airport, where the first composite aerospace parts factory in the South Caucasus is already open for business.

The Georgian Partnership Fund and Elbit Systems' new plant in Tbilisi is already producing airplane parts, a major victory for a country that is struggling to restore its industrial sector.

The construction of the ATC (Aerostructure Technologies Cyclone) factory began in 2017.

ATC has been producing and selling composite parts for airplanes, particularly for the Boeing 787 Dreamliner, for a little more than three months now.

Composite parts involve multiple materials which are attached by polymer in different ways, to make a part that has a very specific set of properties.

Composite parts made by Elbit are generally labor-intensive and cannot be easily or cheaply fabricated by machines alone.

"[They're] a vital aspect of modern aviation," ATC CFO Mikheil Begiashvili told Investor.ge.

"They're not pieces or parts you'll be able to spot as you walk onto a plane, or even something that you can see from the inside-they're more like the bones and spine of an aircraft. For example, when you walk into the cabin, composite materials are often used beneath the floor, holding the cabin up from the storage space below," Begiashvili explained.

Begiashvili stressed that "though composite materials have been around for a while, their use in aviation began only recently. When Boeing released its Dreamliner 787 back in 2011, the craft boasted 50 percent composite materials. And while they aren't visible when you get onto the plane, one can be proud that you might be on a craft that was partially created in Georgia."

Why did Elbit choose to open a new factory in Georgia?

One reason Begiashvili noted was the ease of doing business in the country.

It took just a year and a half to complete the factory.

Within just another six months, the facility received all the necessary accreditations to begin operations from both local and international supervisory bodies.

Begiashvili told Investor.ge that this speaks to both the ease of doing business in Georgia and the efficacy of the enterprise itself.

"The quality of what we produce-the accuracy, the precision-has to be much higher than at almost any other kind of factory. And thus we had to undergo a long and difficult process of quality control and assessment. But the fact that we got approval within just six months is truly impressive; sometimes the certification process can drag on for years. Or you can just never get certified," he added.

"Bureaucracy and technical issues exist everywhere in the world, but it's fair to say that in Georgia, they've been reduced to a minimum."

The Georgian Partnership Fund was another factor.

he advantage of having the Partnership Fund on board as a partner is that it means the government itself is vested in the venture.

Negotiations for the project began back in 2013, and Elbit requested the Partnership Fund become a partner, which it did by buying 66 percent of the shares of the $93 million project.

Moreover, Elbit already had experience in the country, as it had cooperated with the Georgian government in a defence project several years ago. This first experience, Begiashvili says, meant Elbit had a good idea of the lay of the land.

Georgia's minimal bureaucratic procedures, tax and manufacturing incentives, in addition to its geographical location, also made it an attractive destination for the Israeli company.

ATC hopes to be bringing in $60 million in annual sales by the end of 2021, and hopes to expand its production with another $15 million investment to include the production of more complex composite materials.

But ATC's story goes beyond stats and figures. The opening of an aerospace manufacturer in Georgia has an inspiring human component as well.

"Back in 2017 when we started to hire people, it was difficult to find people with the appropriate technical skills. What we needed didn't even exist on the market. So we selected about 80 people who had basic technical skills, and sent them to Israel for training-for in between three months and one year. They surprised both us and our Israeli partners-while there, they helped establish processes to cut down on costs and increase productivity," Begiashvili says.

But the best moment, Begiashvili notes, was when the news of the factory got out and attracted the attention of Georgians living and working abroad:

"One guy reached out to us himself. He said he had heard about the factory opening up, and he was interested in working in Georgia again-he had long been in Germany.

"We kept in touch with him, and when the factory opened, we were able to bring him back here. It's very important for us- it's an honor to be able to bring back Georgians to their homeland, and for others to see that they don't have to remain abroad forever."

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