In line with the Saudi Arabian Government’s Vision 2030 diversification programme, the Kingdom’s defence industry will once again benefit from the skills and knowledge that come from a localisation agreement.

The US defence prime Lockheed Martin has awarded two key subcontracts to industry in Saudi Arabia for a second source of components in the Terminal High Altitude Area Defence (THAAD) weapon system, for which it is the original equipment manufacturer (OEM).

The prime partners receiving subcontracts include Middle East Propulsion Company (MEPC), based in Riyadh, and Arabian International Company (AIC) for Steel, based in Jeddah. Several other Saudi industry partners have also received subcontracts in support of these efforts.

These awards support the project approvals announced by the General Authority for Military Industries (GAMI) during the 2022 World Defense Show to localise the manufacture of THAAD interceptor canister and THAAD Missile Round Pallet in the Gulf nation.

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By GlobalData

What is the THAAD system?

THAAD is an easily transportable defensive weapon system that is used to protect against incoming threats, such as tactical and theatre ballistic missiles, at ranges of 200 kilometres (km) and altitudes of up to 150km.

It provides an upper tier of a ‘layered defensive shield’ to protect high-value strategic or tactical sites such as airfields or populations centres. The THAAD missile intercepts exo-atmospheric (outside the atmosphere) and endo-atmospheric (inside the atmosphere) threats.

These targets would also be protected with lower and medium-tier defensive shield systems, such as the Patriot PAC-3, which intercepts hostile incoming missiles at 20 to 100 times lower altitudes.

Ultimately, the THAAD programme is supported by more than 280 suppliers across 40 states of the US, creating approximately 18,000 jobs in the country.

The THAAD battery typically operates nine launch vehicles each carrying eight missiles, with two mobile tactical operations centres and a ground-based radar.

The missile is 6.17 metres in length and is equipped with a single stage solid fuel rocket motor with thrust vectoring. The rocket motor is supplied by Pratt & Whitney Rocketdyne. The launch weight is 900 kilogrammes.

A gimbal-mounted infrared seeker module in the nose section provides terminal homing to close in on the target missile in the final phase of approach.

An indigenising Saudi defence industry

The latest subcontracts will enhance manufacturing capabilities in Saudi Arabia, enabling the Kingdom to produce parts for the THAAD systems it currently operates. The agreement will also transfer expertise to strengthen the country’s defence industry.

The Kingdom is set to realise the benefit of these strategies through qualitative international defence partnerships with Lockheed Martin and other major original equipment manufacturers that achieve shared benefits for all stakeholders.

Although the kingdom is one of the world’s biggest military spenders, the leading intelligence consultancy GlobalData says that only 2% of this spending is within the country. The national defence industrial sector is limited to only seven companies and two research centres.

To reduce its dependence on foreign OEMs, Saudi Arabia has been concentrating on initiating joint ventures, strategic partnerships, and collaborations to acquire foreign technology and encourage domestic and joint production.

The country has made headway on the transfer of skills to its workforce too. In a speech during the 2024 World Defense Show on 4 February 2024, the UK Defence Secretary Grant Shapps noted that nearly 75% of BAE Systems’ workforce in Saudi Arabia are Saudi by nationality.

“Our localisation efforts in the Kingdom are progressing, and we’re very proud to see that MEPC, AIC Steel and other Saudi partners are now ready to engage in manufacturing and supporting key components of the THAAD Weapon System. It’s a significant milestone,” said Joseph Rank, chief executive for Lockheed Martin in Saudi Arabia and Africa.

“Our mission is to help improve regional security while supporting job creation and economic prosperity, and we’re very proud to be working with our partners in the Kingdom to localise defence systems and contribute to the country’s development goals under Saudi Vision 2030.”