Chile - Military Industry

Chile has for many years produced its own small arms, ammunition, and explosives, but it did not have a real defense industry until the 1970s. The almost universal boycott after the armed forces overthrew the Allende administration in 1973, and in particular the 1974 Kennedy Amendment, which deprived Chile of maintenance support for its large inventory of United Statesmanufactured defense equipment, threw the Chileans back on their own resources. At the time, war with Argentina over the Beagle Channel seemed likely, and local industrial potential was expanding dramatically. Thus, Chile became a major producer of defense equipment, the third largest in Latin America after Brazil and Argentina. In addition to small arms and ammunition, Chile manufactured infantry-support weapons, both armored and softskinned vehicles, artillery pieces, ballistic rocket systems, antiaircraft artillery weapons, naval vessels, military aircraft, aerial bombs and rockets, and radar and electronic warfare equipment. Nevertheless, according to defense analyst Daniel Prieto Vial, by 1991 Chile supplied no more than 3 percent of its own defense needs and purchased the remaining 97 percent elsewhere.

As Chile became a successful exporter, the biennial International Air and Space Fair (Feria Internacional del Aire y del Espacio--FIDAE) became its principal marketing event. First held in March 1980 as a modest flying display and exhibition of air defense products to celebrate the fiftieth anniversary of the FACh's formation, what was then called the International Air Fair (Feria Internacional del Aire--FIDA) was an unexpected success. It was decided to repeat what was originally conceived of as a onetime event every second year. In 1990 the name was changed to FIDAE to reflect the aerospace dimension. FIDAE continued to grow steadily both in size and in international importance and by 1992 was the major forum for the display of military equipment in the Southern Hemisphere, attracting more than 300 exhibitors from twenty-seven countries to Los Cerrillos Air Base. These included not only other arms-producing nations in the developing world but also the major manufacturers of defense equipment in the leading industrialized nations.

The Defense Industry and the military industry in particular, contributes to the country’s development by providing innovative technology and possibilities for the transfer of technology. Within this sphere, the Army’s contributions are centralized in the Military Industry and Engineering Command. Factories and Workshops of the Army (FAMAE), the Chemical and Industrial Complex and the Research and Control Institute carry out the most important activities. Military manufacturing capability, mainly represented by FAMAE, Although its technological development permits the manufacture of weapons of different types and calibers, armored vehicles, rockets and ammunition, it is also utilized for the manufacture of tools and articles for national production. Similarly, military chemical production manufactures explosives and supplies used in industry and in mining enterprises.

The Navy has its shipyards and repair shops, Shipyards and Workshops of the Navy (ASMAR) and its related enterprises SISDEF y SOCIBER. ASMAR is an autonomous State-owned enterprise that has grown into a highly-professional industrial complex, with the capability of meeting increasing demand for careening maintenance, repair and construction of ships belong ing to the Chilean Navy and to the National Merchant Marine, as well as for maintenance and repair of navy ships from other countries. It has three dockyards located in Valparaíso, Talcahuano and Magallanes. By 2002, ASMAR had built 95 ships and other sea craft in its dockyards.

The Air Force basically channels its efforts through the National Aeronautics Enterprise (ENAER). This enterprise has achieved strategic business alliances in the national and international spheres for different projects. In the manufacturing field, the “Pillán” basic training aircraft constitutes a distinctive item and is in full operation in several air forces around the world. It also manufactures pieces and parts in conjunction with various foreign companies of recognized prestige in the world of aeronautics. Lastly, ENAER has incorporated state-of-the-art retrofitting technology for combat aircraft and its installed capacity allows it to overhaul the Air Force’s inventory of aircraft, as well as that of military and civil aircraft from other countries.

Chile's defense industry is quite limited and focused primarily on the needs of the national Armed Services. Given its size, it is best described by identifying major defense firms and reviewing the scope of their productive activities.

Astilleros y Maestranzas de la Armada (ASMAR) A state owned ship builder, ASMAR was founded in 1895 and originally named Arsenal Naval de Talcahuano. In 1960, the firm was restructured into its present institutional form. ASMAR'S main facilities are located in Talcahuano, near Concepcion. ASMAR'S Talcahuano facilities include ship building capabilities and dry docks to repair and maintain the Chilean Navy fleet and much of the nation's merchant marine. ASMAR, in association with local firms BAZAN and SOCIBER, also operates maintenance and repair facilities for the Chilean Navy and Merchant Marine in Valparaiso and Punta Arenas. ASMAR and its associates have produced mainly light vessels like patrol boats, destroyers, and armed frigates. However, ASMAR has also built Chile's submarine fleet. ASMAR is marketing its TAITAO class patrol boat worldwide.

Astilleros y Servicios Navales S.A. (ASENAV) A private enterprise founded in 1974, its facilities are located on the Valdivia River in Southern Chile. ASENAV has built about 80 vessels, mainly light patrol boats for a crew of five. ASENAV has developed several prototypes for the Chilean Navy, one of them in a joint venture with VOSPER of Israel. Baselli Hermanos, Ltda. (BHL) Founded in 1981 as a manufacturer of sports helmets, BHL moved in 1984 into the defense sector by producing fiber-based helmets for the Army. Since the first contract with the Army, BHL has diversified into producing flight helmets for the Chilean Air Force, has repaired a shipment of U.S. M-1 helmets, and produced its own M-2 helmet similar to the U.S. FRITZ helmet. BHL also manufactures helmets for the Chilean Commandos, paratroopers, and police forces.

CK Equipamento Aeronautico (CKEA) Manufacturers parachutes for personnel and for the deceleration of aircraft. CKEA manufactures the MC1-lB CK-4292 parachute used by the Chilean paratroopers. CKEA also manufactures the CK-HH parachute used for deceleration of the Hawker Hunter and Northrop F-5 aircraft. In 1990, CKEA formalized a licensing agreement with AEROZUR of France to produce a "Cross Form" parachute for the Mirage 50 aircraft.

Complejo Quimico Industrial del Ejercito (CQIE) Part of the Chilean Army's Corps of Engineers, this firm is located in Talagante, close to the capital city of Santiago. CQIE was created to serve the needs of the Chilean Armed Services in the areas of powders, propellants, explosives and chemicals. The quality of its products has achieved international recognition.

Empresa Nacional de Aeronautica (ENAER) Chile's only aircraft manufacturer, this state owned enterprise was founded in 1984. ENAER is currently working on the upgrading and modernization of the Chilean Air Force's Northrop F-5 and Mirage 50 aircraft. ENAER also builds the PILLAN trainer using piston and turbo-prop engines. PILLAN models T-35 A, B, and C have been sold to the Chilean Air Force and internationally to Panama, Spain and Paraguay. Under license from Spanish manufacturer, CASA, ENAER is building the light cargo aircraft, C-101.

DTS Ltda. A 50-50 joint venture between ENAER and ELTA/IAI, DTS manufactures defense electronics and is a regional leader in this field. DTS sells 30 percent of its production to the Chilean Armed Forces and exports the remaining 70 percent. DTS' electronic components are purchased by buyers in the U.S., Europe, and Israel.

Fabricaciones Militares (FABMIL) An independent division of ASMAR founded in 1982, this firm focused on defense electronics. FABMIL inherited the responsibility of modernizing' aging radars in Chile's Armed Services. Among the initial tasks, FABMIL worked with a Western Electric MK34 radar installed in Brooklyn class cruisers and Bendix SPS-6 radars on board Fletcher class destroyers. In collaboration with the Chilean Air Force, FABMIL designed and marketed its own radar known as the "Aguila". FABMIL also developed the DI-600 Doppler/Intruder detector and the TELLBACK feedback system for the Exocet missile.

Fabrica y Maestranzas del Ejercito (FAMAE) Founded in 1811, FAMAE is one of the oldest defense industries in South America. In 1954, FAMAE became an autonomous state-owned enterprise. While FAMAE is not a part of the Chilean Army, top corporate management comes from the Army as retired and former officers. FAMAE is the Chilean Armed Services supplier of light weapons, munitions, armored vehicles, and some electronics. FAMAE has produced Swiss design rifles like the SIG SG 540, the SG-542-l (standard issue for the Chilean Army) and the SG-543-1. FAMAE'S Missile Division worked on a l60mm missile system known as the "Rayo". The Rayo has a 36 km. range, a 12-tube launcher, and a l55mm warhead.

FAMIL, S.A. A subsidiary of FAMAE, this firm focused on engineering projects for the defense systems of the Chilean Armed Services. FAMIL's activities range from simple modernization projects all the way to the development of computerized simulators. FAMIL modernized the anti-armor missile system known as MAMBA and developed the computerized tactical training simulator known as SETAC.

LINKTRONIC A private enterprise founded in 1985, LINKTRONIC got started by manufacturing high tech remote control systems for the Chilean private sector. In 1987, LINKTRONIC started working for the Chilean Armed Forces. Since then, they have developed and produced low noise receivers, automatic guiding systems, and a variety of digital radar systems. LINKTRONIC was involved with the modernization of Chile's two Obregon class submarines. LINKTRONIC also participated in the development of the TVG-1 "Blow-pipe" short range missile system.

METALNOR With five plants in Iquique and one in Santiago, METALN0R is one of the largest defense companies in Chile. Until very recently, METALN0R was known as CARDOEN. The latter was associated with transactions with Iraq, which led to losses in the vicinity of U.S. $40.0 million and some difficulties with the U.S. and Chilean governments. Owner, Carlos Cardoen, sold all his interests in this and in other defense industries following these difficulties. METALNOR is a supplier of hand grenades, land mines, torpedoes and demolition charges for the Chilean Armed Forces. It also produces military vehicles such as the 6X6 M0WAG Pirana, the light armor 4x4 VTP-2 Escarabajo, and the Cardoen/Hagglunds BV-206. CARDOEN's most successful product was a series of cloister bombs designed and manufactured in Chile, including the CB-500K, CB- 250-K, MK-82 and MK-83 GP. Approximately 40,000 of these bombs were sold to Iraq between 1984 and 1988.

RMS Ltda. A privately owned enterprise founded in 1968, RMS is dedicated to the production of electrical and electronic components for the region's industrial sector. During the U.S. embargo on defense sales to Chile, RMS was responsible for maintenance of the Northrop KD2-R5 drones. With this experience, RMS moved on to develop and build its own drones. The RMS drones are known as TRAUCO and TRAUCO II and were supplied to the Chilean Navy starting in 1978. RMS is currently working as a subcontractor for R & D Aero Engineering to produce under license the Northrop KD-2-R5 drone in the US.

Sistemas de Defensa (SISDEF) This Chilean firm was founded in 1983 and is owned by ASMAR (50%) and FERRANTI (50%). SISDEF participated in the modernization of the Chilean Navy's obsolete electronic equipment. SISDEF also designs and manufactures electronic equipment for the Navy. One of their better known products is a simulator for the Sea Cat missile system still is use by the Chilean Navy. SISDEF has developed command and control systems, local area networks and tactical sensors for weapons systems.

Sociedad General de Comercio, S. A. (SOGECO) A privately owned enterprise founded in 1941, SOGECO joined the defense sector in 1974 by developing an antiaircraft 20mm cannon known as the SOG-3 A/A. To date, SOGECO remains a key supplier of antiaircraft artillery for the Chilean Army and Air Force.