Mini submarines and patrol boats are to be made in the UAE as the newly established Etihad Ship Building, based in Abu Dhabi, targets a burgeoning Middle East naval market.
The company was formed in September as a joint venture between Fincantieri of Italy and the local firms Melara Middle East and Al Fattan Ship Industry.
Al Fattan already has a facility at Al Sadr Port in Taweelah, near the Dubai border. In addition to building vessels, Etihad Ship Building will offer maintenance and retrofitting services to navies in the region.
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The joint venture reflects the Government's increased focus on its offsets system, which directs foreign defence suppliers to contribute to the UAE, particularly in transferring technology into the local economy. Fincantieri entered into the partnership after receiving a contract to provide the UAE Navy with an anti-submarine warfare vessel and stealth patrol vessels.
The Italian company has shipyards in Italy, Germany and the US, and has produced naval vessels for Italy, India, Malta, Iraq, the UAE and the US.
Etihad Ship Building, which is an exhibitor at the International Defence Exhibition and Conference (Idex) in Abu Dhabi this week, is the third major shipbuilder in Abu Dhabi set up to cater to demand in the region for naval vessels and luxury yachts. The other companies are Abu Dhabi Ship Building, which has a contract worth more than US$1 billion (Dh3.67bn) to build six corvettes for the UAE Navy, and Abu Dhabi Mar, which builds yachts and is also expected to build naval vessels.
The Etihad Ship Building joint venture "offers us significant business potential … not only in the military but also in the civilian sector," said Giuseppe Bono, the managing director of Fincantieri.
Angelo Fusco, Director Customer Relationship and Production Process told delegates at an Abu Dhabi conference last week that Etihad Ship Building would produce "midget submarines".
The company's mini submarines, which Mr Fusco said would be 28.5 metres long, would not be the first produced in the Emirates. The Bin Jabr Group, a family-owned business with a defence division, has produced submersibles for the UAE Special Forces.
Etihad Ship Building's mission was "to establish a fully capable local shipyard with all related processes like design, engineering, construction, outfitting, project management, test trials, maintenance and repair," Mr Fusco said. Fincantieri would transfer its methodology in these fields to the new company, he said.
The joint venture aims to generate profit that will satisfy Fincantieri's offsets requirements stemming from its contracts for the anti-submarine warfare and stealth vessels. The new company should also position Fincantieri to be the prime contractor in the sale and production of other ships to the UAE Navy, Mr Bono said at the Abu Dhabi International Offset Conference in the capital last week.
The UAE Offset Program Bureau introduced a policy last year representing its most dramatic changes in 18 years. The rules allow defence companies to receive credits for transferring technology and for training and hiring UAE nationals, and requires the firms to set up profitable joint ventures in the country.
Etihad Ship Building will also produce patrol vessels at Al Fattan shipyard in Taweelah after an upgrade there, Mr Fusco said.
Al Fattan's output is to include aluminium boats for coastal patrol and offshore protection.
Fincantieri will train Etihad Ship Building staff, with on-the-job training following at the joint ventures's shipyard at Al Sadr Port.