Night-vision manufacturers in the United
States and in Europe are working at full capacity to meet demand from
American and European armed forces for advanced night- vision systems.
ITT Industries of White Plains,NY, the worldwide leader, produces
approximately $180 million worth of night-vision equipment annually,
while Northrop Grumman Corp., headquartered in Los Angeles, Calif.,
manufactures approximately $140 million. The European market for
night-vision tubes is dominated by France’s Photonis, located in Brive,
and the Netherlands’ Delft Electronic Products, B.V in Delft.
Picking up momentum at home
In one sign that the homeland-security market
may be picking up, the US Coast Guard recently awarded ITT Night Vision
a $1 million contract for 650 night-vision kits for its cutters,
replacing 20-year-old night-vision technology. That order may be
expanded to thousands more kits to cover all Coast Guard vessels.
Yet demand for night-vision equipment is
overwhelmingly for armed forces, particularly the US Armed Forces,
which represents more than half the worldwide market for night-vision
Much of the work for ITT Industries Night
Vision Division and Northrop Grumman Electro-Optic Systems comes from
the Army’s Omnibus procurements of night-vision goggles. The latest
five-year Omnibus VI procurement for night-vision equipment, awarded in
2002, represented the largest US Army contract ever awarded for
Generation 3 image-intensification devices. ITT and Northrop Grumman
split the work on the ground contract 60-40, while ITT received 100
percent of the requirement for aviators’ night-vision equipment. The
value to ITT, including potential options, was $450 million over five
years. Northrop Grumman did not disclose the potential value of its
Obviously, the homeland security market
represents only a tiny fraction of the value of the military market,
although manufacturers are still convinced that will inevitably grow.
The lack of money for night-vision equipment stems from the Department
of Homeland Security’s focus on airport security. But that focus
inevitably will broaden to include other areas.
Much of the available money is transferred to
local governments, which then allow it to be spent by the fire and
police departments. Such decentralized sales of one or two systems to a
customer aren’t profitable for large companies.
Alternative methods of providing security may
also help depress demand. Fixed facilities such as nuclear power
plants, airports or ports in many cases can be illuminated by bright
lights, which may be cheaper than using night-vision equipment to
Still, homeland security continues to have
strong potential. ITT Night Vision has built up the strongest position
in the market, continuing to pursue a niche with local law enforcement
that it had begun developing even before the terrorist attacks of Sept.
11, 2001. In an effort to address the small market, ITT provides the
services of a grant-writing specialist to local agencies seeking
funding for their purchase.
Electro-Optical Systems was formerly part of
Litton Industries, which was acquired by Northrop Grumman in 2001. It
also promises to become an increasingly strong competitor as it takes
advantage of the strengths of a larger company.
Netherlands-based Delft is building up its
presence inthe United States, in part out of a belief that the
homeland-security market offers considerable promise. Last September,
the company took over the business activities of its former US
distributor, Ziemer & Associates, as part of a plan to make a
strong US push.
As budgets increase for homeland security, it
is not only the US market that should thrive. European manufacturers
anticipate that the European night-vision market will also pick up as
European Union members—especially the newer ones—better secure their
borders. In a sign that this may already be beginning, Atlas
Electronik, a German naval systems manufacturer, received an order for
a 5 million euro coast-surveillance system for the Polish Border Guard
in May—a sign that new members of the European Union are taking
improved border security seriously. HST
Philip Finnegan is
director of corporate analysis at the Teal Group, a firm based in
Fairfax, Va., that provides strategic and market analysis to major