The Defense Ministry on Tuesday signed a 2.8 billion shekel ($756 million) deal with defense contractor Elbit Systems to supply ammunition for IDF ground forces over the next two years.
The Defense Ministry has in recent months opted to to enhance domestic production capabilities as the military faces ammunition shortages amid its protracted war in Gaza and hostilities on the Lebanese front. This includes the unprecedented move for Israel to produce air-to-ground bombs, which until now have been exclusively supplied by the United States.
Elbit reported a substantial increase in demand for its products from the Defense Ministry since the onset of the war. "Since the beginning of the conflict, Elbit Systems has seen a significant surge in demand from the Israeli Defense Ministry, compared to pre-war levels," the company said. Since October 7, the Defense Ministry has procured equipment from Elbit worth tens of billions of shekels.
Defense industries booming during war
Israel's leading defense firms, including Israel Aerospace Industries (IAI), Rafael and Elbit, are experiencing a boom during the ongoing war. This growth is seen as a key driver of the Israeli economy.
Following Iran's failed attack on Israel last month, demand for products from these industries has surged. Prior to this, Israeli missile defense systems had already gained prominence during the Russia-Ukraine war, leading to record order volumes: IAI at $18 billion, Rafael at $14.5 billion and Elbit at $17.8 billion.
Last year, Israel's security exports reached an all-time high of $12.5 billion. Defense Ministry data indicates that security imports have doubled over the past decade and increased by 50% in the last three years.
The defense systems that protected Israel during the Iranian attack were a collaborative effort. The Iron Dome, which intercepts short-range rockets, is produced by Rafael. The radar component is developed by Elta, an IAI subsidiary.
The Arrow system, designed to intercept long-range ballistic missiles, is produced by IAI. The Arrow's rocket engine systems and warheads are made by Rafael, while Elbit provides the control systems.