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Tuesday, 28 May, 2002, 09:58 GMT 10:58 UK
US defence firms revel in spending spree
Defence picture
Maggie Shiels

It's gold rush fever in America's so called 'military silicon valley'.

And San Diego companies are beginning to reap the benefits of the extra $48bn the Bush administration is spending on defence in the wake of the worst terrorist atrocity committed on US soil.

We literally expect to see billions of dollars coming to this region in defence contracts

San Diego Chamber of Commerce
The fear of a repeat of 11 September has led to mammoth budget increases in defence, homeland security and bioterrorism as the nation launches a major rearmament and wages what looks to be a lengthy war on terrorism.

The county's Chamber of Commerce says while most of the money is expected to flow to international defence giants with operations in the county, other local technology firms and even small obscure start-ups are also sharing in the largest defence build up in 20 years.

"Companies are aware of how to capitalise on those defence opportunities and we literally expect to see billions of dollars coming to this region in defence contracts," says the Chamber's chief economist Kelly Cunningham.

Infared vision

Doug Eisold of Trex Enterprises says: "The doors that we were knocking on prior to 11 Sept, now those people are coming looking for us."

Trex makes a near-infrared camera that can see through fog to find downed pilots. It can also see guns or explosives under clothing.

Gene Ray, Titan chairman
Gene Ray: new contracts are flooding in
And for a player like the Titan Corporation, big money deals have already started flowing.

Titan provides high tech information and communication systems for the military.

Its chairman Dr Gene Ray says business has been booming since 11 September.

"The first quarter of this year we actually had bookings in excess of $600m but in a two week period we actually won seven contracts that totalled $550m."

"So we got almost a half a year's revenue in a two week period of time."

Speedy decontamination

The beneficiaries of the Defence Department's largesse also include some of San Diego's smallest companies and newcomers to the game who were not even working in the defence sector.

This whole thing has exploded and we are working our tails off

Ralph Sias
Intercon chief
Intecon Systems has six employees. It originally invented a system that was intended to be used in operating rooms but which can also decontaminate a victim of a biological or chemical attack within 10 seconds.

Intecon's chief executive Ralph Sias says: "We weren't even involved in the government side at all. This whole thing has exploded and we are working our tails off."

Anthrax alert

The shift in focus to bioterrorism and homeland security has also been opportune for Titan Corp.

Their 'Surebeam' product was tried and tested and originally used for zapping bacteria in food and medical equipment.

Following the anthrax attacks on the US postal service, it is now being used to make the mail safe.

Girl checking her mail
Titan's Surebeam product is used for checking mail
For this Southern California city, more widely known for its beaches and its surfing, the increased business marks a return to form.

The once mighty defence sector was devastated by federal cutbacks in the early 1990s.

Companies forced to diversify now excel in communications, surveillance, and satellite and computer technology vital to military planners.

Ideal location

Today San Diego is home to the fifth biggest concentration of military contractors.

That enticed the Space and Naval Warfare Systems Command (SPAWAR) to set up shop in San Diego in the late 1990s.

SPAWAR's Captain Craig Madsen
Craig Madsen: San Diego is a perfect location
SPAWAR provides information technology and space systems for the navy and the defence department.

It has a budget of $4.7bn and 80% of that goes to outside companies

SPAWAR's Captain Craig Madsen says: "There's a real estate axiom that says the three most important things are location, location, location... San Diego is perfect."

"We have the fleet, our command SPAWAR, the universities, General Atomics the maker of the predator, Qualcomm, Titan, SAIC. It's a hotbed of activity here."

Cpt Madsen also admits that outside contractors play a vital role in their plans post 11 September because they are able to bring new products to market faster.

Wars of the future

"It's a popular notion that we have prepared for the last war. In the military that is no longer so."

"We have been preparing for the next war. Our job now is to prepare for the wars of the future and since 11 September our fielding has accelerated and we have brought things to market faster."

While industry watchers predict a return to the boom times in San Diego, they also urge caution citing the county's once over dependence on the aerospace industry.

When its packed its bags and left town, it plunged San Diego into one of its longest ever recessions.

See also:

17 Apr 02 | Americas
04 Feb 02 | Americas
24 Jan 02 | Americas
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