There’ll Always Be an ‘Evil Empire’ : Terrorism Threat Keeps Bomb-Detection Manufacturer Busy
The Cold War may be over, the Berlin Wall may have come down, and the Gulf War may be fading fast into history, but for EG&G; Astrophysics of Long Beach, there will always be an “evil empire” somewhere.
EG&G; Astrophysics is a leading producer of equipment to detect bombs and weapons used by terrorists. Its devices are used in airports, courtrooms, embassies, industrial sites, even schools around the world.
Despite doing $50 million a year in sales and employing 275 people, no corporate logo marks the outside of the company’s world headquarters on a quiet street in a Long Beach industrial area. In fact, there is no EG&G; Astrophysics sign outside at all.
The company, like the products it sells, keeps a low profile. It’s partly out of habit, says President Ray Yates, breaking a long silence with the media. But it’s also out of deference to the company’s customers, who would prefer that terrorists have as little information as possible about ways they can be detected.
“It’s an unfortunate fact that there are always going to be certain groups that think they can go to any extreme,” said company spokesman David deMoulpied. “The world will continue to be a dangerous place.”
In the coming months, however, companies in the bomb-detection business will be vying for visibility. The Federal Aviation Administration is considering requiring airlines to change their security systems. If it does, the current $120-million market for detectors could explode to more than $1 billion overnight.
For its part, the FAA is being circumspect about when it might issue regulations on new explosives-detection technologies.
“The basic question is: Are we going to require their use or not, and that hasn’t been decided yet,” said Fred Farrar, spokesman for the FAA in Washington. The agency has been looking at a host of new technologies for the past three years. Farrar said no timetable has been set for making the decision.
Regardless, EG&G; plans to be ready. Its newest device for detecting plastic explosives, developed in part under a $2.4-million contract from the FAA, will be finished by midyear, Yates said.
X-rays alone have a limited ability to find plastic explosives. An EG&G; device called T-Scan identifies bombs or plastic explosives in luggage, using a combination of X-rays and thermal neutron activation, or TNA.
TNA excites nitrogen atoms in the luggage and its contents, causing them to emit gamma rays that can be detected by the device. Information determined by the TNA, combined with information about the density of the material gleaned from X-ray pictures, allows the viewer to flag plastic explosives with more accuracy.
“As we sit here, there is a law on the books in the United States that has not been enforced,” Yates said. The law, in effect since October, 1990, requires airlines to screen all baggage at high-risk airports through an explosives-detection system that can find plastics. It was passed in response to the midair explosion of Pan Am Flight 103 over Scotland, a disaster that was later attributed to plastic explosives on board the aircraft.
“But it was a premature response,” Yates said. At the time, the only reliable way to detect plastic explosives was with TNA machines that cost more than $1 million, took up more space than an airline’s executive suite and weighed 10 tons--too heavy for an airport floor to support.
It would have required rebuilding whole sections of airports just to accommodate the machines, said Yates, who saw a market opportunity in the void. “We began a crash program of our own in anticipation of a $1-billion to $2-billion market.”
EG&G; developers are hoping that the FAA will approve its T-Scan device as a solution for explosives detection in airports. T-Scan operates by first screening luggage with X-rays to identify bags with questionable contents. Only those bags tagged as suspicious are subjected to TNA. Because the TNA equipment does not have to screen every single bag, it can operate at a slower rate and use less radiation. The twin-technology approach not only cuts down the size of the equipment but pares the cost by 20% to 25%, Yates said.
TNA is only one of several new technologies that companies are banking on to meet new criteria the FAA establishes, said Mike Carstens, an analyst who follows the security industry for the New York brokerage firm of Tucker Anthony. One competitor, for example, has developed a device that “sniffs” the air to detect the chemical compounds present in checked bags.
But EG&G; is in the unique position of already being the dominant supplier of X-ray-based detection systems, which gives the company a competitive advantage, Carstens said.
Currently, EG&G; commands 80% to 90% of the domestic airline security market. Overseas, where its largest competitor is Heimanns, a division of German giant Siemans Corp., the company has secured 40% to 50% of the market.
While awaiting the FAA decision, the company is focusing much of its marketing efforts overseas. International demand is growing at 20%, double the rate of domestic demand, Yates said.
And that could increase. Eastern Europe, for example, represents a large potential marketplace, Yates said.
“One of the first ways and easiest ways to generate hard currency is tourism,” Yates said. “But to have tourism, you have to meet international standards (for security).” The company plans to open a manufacturing facility in Germany before the end of the year.
Closer to home, there are other markets to develop as well. About 25% of EG&G; Astrophysics’ sales today are to customers other than airlines, including courtrooms, industrial organizations, nuclear power plants and government offices.
Courtrooms could represent as large a market as airlines, Yates said. And nuclear power plants are about four or five years behind the airlines in installing systems to detect weapons and explosives.
In addition, the company is developing a lightweight, portable metal detector for use in schools, a small but growing market.
Charting just how fast any one of these market segments might grow, however, is tricky. Detection of explosives and weapons is a cyclical business, largely because one of the market factors is public perception of risk, Yates said. “Right now, we’re in a period of low perception of threat.”
During events such as the Persian Gulf War and other political upheavals, the perception escalates, and so do sales, he said. “It’s an event-driven business.”
BACKGROUND
EG&G; Astrophysics is a division of EG&G;, a $2.7-billion diversified-technology company based in Wellesley, Mass. EG&G; acquired the company, which was then called Astrophysics Research Inc., in 1988. Astrophysics Research, which was founded in the early 1970s, got its start marketing X-ray screens. During that time, airplanes began to be hijacked and by 1973 the FAA had passed a law requiring all luggage to be searched. Each piece of luggage was examined by hand before being allowed on an aircraft. The company spied a market niche for its X-ray technology and has built only high-tech security systems ever since.
