Wednesday, August 10, 2005

Military to Dominate EO Systems Markets

Forecast International Inc. (Newtown, CT), a provider of market intelligence and analysis in the areas of aerospace, defense, power systems, and military electronics, predicts that production for combat forces will dominate the land- and sea-based electro-optical (EO) systems market:

An estimated $6.4 billion will be spent on the research, development and production of key electro-optical systems over the next 10 years, according to a new study by Forecast International. "The Market for Land & Sea-Based EO Systems" estimates that some 363,779 systems will be produced through 2014.

"Raytheon, Northrop Grumman, ITT, Thales, and Kollmorgen are pumping out large numbers of thermal weapon sights, night vision goggles, combat vehicle surveillance systems, and naval fire control systems for a large variety of applications," said the report's author, Andrew Dardine. "In some cases these devices are being fielded to troops as fast as they can be produced."

In terms of production, two of the biggest systems in the coming years will be ITT's PVS-7/14 series of night vision goggles and Raytheon's PAS-13 thermal weapon sight. Combined, an impressive total of some 253,950 of these systems are expected to be produced over the next 10 years, having a value of some $1.5 billion. In the case of the PAS-13, the more than $165 million in contracts awarded in 2004 has doubled monthly production rates for the system, to 1,000 units.

Naval EO sensor manufacturers are also expected to find ample opportunity in the years ahead as the navies of many nations seek to upgrade their fleets. In the case of the US company Kollmorgen, a recent order for its Non-Penetrating Periscope (NPP) illustrates that the systems will probably be in demand as long as submarines are being built or modified. These systems offer submariners a wide range of increased surveillance capabilities. An estimated 15 NPPs are expected to be produced through 2014 for the US Navy, at a value of $55.5 million.

Meanwhile, work is also under way on a number of EO research and development programs that will likely be the leaping off point for a whole new generation of systems. This is most apparent in the development of a wide array of directed energy (DE) systems and capabilities. "Although vastly expensive DE programs like the Mobile Tactical High Energy Laser (MTHEL) system have been hampered by deep funding cuts, more practical, relatively less expensive DE systems are making steady advances toward possible production," Dardine said.

One interesting trend is how the US military is migrating from nightvision technology toward thermal imaging systems. Uncooled thermal imagers are achieving levels of performance on par with the previous generation of heavier, cooled systems. At the same time, cooled systems are also becoming smaller and lighter as miniturization is making digital arrays more efficient (for more on this, see Getting Cooler). This means that effective lighter systems are available for man-portable scopes and weapons sights. These sensors can also be packaged as EO payloads and sighting systems for vehicles, aircraft, and UAVs. The main US players for these applications are Raytheon (El Segundo, CA) and DRS Technologies (Parsippany, NJ). The military's demand for thermal imaging sensors is creating opportunities for players that have made their names in the civil protection and law enforcement markets, such as L-3 Wescam (Burlington, ON, Canada) and FLIR Systems (Wilsonville, OR).


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