The Israeli navy has decided against purchasing a new fleet of naval ships from US contractors, and may instead build its own vessels at the shipyards in the northern port city of Haifa.

Israel was planning to purchase several corvette-size ships from either Lockheed Martin or Northrop Grumman. But when the cost of the ships from both US providers suddenly jumped up, Israeli officials were forced to conclude that they couldn't afford them.

Instead, Israel is seriously designing and building its own naval corvettes based on the German Meko A-100 model.

If Israel does indeed decide to start producing its own naval ships, it would be a huge boost to the local economy. Naval officials said that boost is now a large determining factor in their final decision.