Airport screening machines to stimulate the U.S. economy?

Published 30 January 2009

A $500 million piece of the proposed economic stimulus plan

The House version of the economic stimulus package includes more than $1 billion in spending for DHS. The biggest single slice of that is $500 million for the Transportation Security Administration (TSA) to spend on what the bill calls “explosive detection systems and emerging checkpoint technologies.” A Senate source said that chamber’s plan is very similar. Wall Street Journal’s Cam Simpson reports on what that language means.

At a briefing at TSA headquarters in Virginia Monday, the agency’s acting technology chief, Robin Kane, singled out “advanced technology X-ray machines” as covered by the stimulus package. These are the high-end versions of the machines travelers send their carry-on bags, shoes, laptops, and jackets through at U.S. airports before heading to the gates. The advanced machines, compared to the standard models, provide clearer, high-definition views, including by imaging from more than one side of an item which is being screened. Simpson writes that so far, only about 45 percent of all air passengers are screened with the advanced version of these technologies, according to TSA. A TSA spokesman confirmed those systems are covered by the rather vague language in the stimulus bill, but he said the stimulus money could also be spent by TSA on “a number of other technologies,” including specialized explosive detection systems and checked-baggage screening technologies.

Still, the very large sum of money looks to be a potential boon for the only two companies that currently have advanced X-ray screening machines placed at U.S. airports. These are Rapiscan Systems, a subsidiary of Hawthorne, California-based OSI Systems, and Smiths Detection, a division of Smiths Group, which is traded on the London Stock Exchange.

OSI’s machine is called the Rapiscan 620DV. The Smiths machine is called Smiths Detection HI-SCAN 6040aTIX (see TSA descriptions). TSA spokesman, Christopher White, confirmed to Simpson that these are the only machines currently used by TSA at U.S. airports. White also said, “This does not mean that we would necessarily purchase them exclusively in the future.”

Simpson notes that it was not immediately clear where Smiths conducts its manufacturing (a press release on the company’s Web site notes the 9 July 2008 opening of its production facility for these very machines in Wiesbaden, Germany). Rapiscan’s Web site indicates it has additional offices and manufacturing facilities in Finland, India, Malaysia, Singapore, the United Kingdom, and the United States (Peter Kant, vice president of global government affairs for Rapiscan Systems, said the company’s qualifying x-ray machines are manufactured in the Los Angeles area with 80-90 percent U.S. content). This leads Simpson to say that it seems spending for some airport screening gear can stimulate the U.S. economy, while other such spending can stimulate the German and British economies.

Kant also said the company would create one new manufacturing job for every seven machines ordered. TSA needs 1,300 more such machines nationwide, meaning there could be about 185 new manufacturing jobs. The Rapiscan models sell for about $85,000, Kant said.