Case studyCase study: From bricks and mortar to homeland security

Brick-and-mortar companies can also benefit from the growth in the homeland security market. Case in point: Belvidire, Illinois-based Corrugated Metals, a company which has been making ridged metal roofs for home and commercial construction for nearly 120 years. Corrugated Metals expects the number of its employees to grow from 35 to 135 over the next three years thanks to a new product for a new market that the company — and the state of Illinois — predicts will see major growth: homeland security.

Corrugated Metals produces the Metalith, a steel barrier the company says can withstand the explosive devices commonly used by terrorists today. The company already has sold the Metalith to the U.S. Department of Defense for use in Iraq and Afghanistan to protect against improvised explosive devices (IEDs). It is now trying to sell it to DHS and the Department of Energy (DoE), as well as to private businesses for use in the United States.

“The industry we’ve been in — building products — is a very mature industry. It’s mostly repeat customers on handshake deals. Not much growth,” said Edward Carlton, vice president of finance at Corrugated. “The homeland security market is a new market, which we believe will really take off. Becoming a federal contractor has been a big learning curve for us, but it was a move we had to make.”

Illinois Rock River Valley area is home to several companies doing business with the military, and the shift to homeland security was only natural. From aerospace companies Woodward Governor and Hamilton Sundstrand to industrial products supplier SupplyCore, the military has pumped tens of millions of dollars into the local economy. Corrugated, however, is the first local company to leap directly into the homeland security market.

As we reported a few days ago, the state of Illinois is actively encouraging companies to make that leap. Through the state’s Department of Commerce and Economic Opportunity, Illinois created a Homeland Security Market Development unit to help manufacturers identify potential products, learn how to work with the federal government and help fund final products (see HSDW 1/17/06].

The shock of 9/11, the growing attention to the threat of terrorism, and the creation of DHS in 2003 created the homeland security market. The market has not taken off as quickly as anticipated, however. “The nation took a real hit in the economy because of 9/11, so that slowed spending,” said Gregg Durham of the Illinois Manufacturers Association. “And as time went on, the urgency faded a bit. There have been some successful spin-offs, but it hasn’t been as lucrative as people thought it would be.”

Several research groups say this is now changing. Washington, D.C.-based Homeland Security Research expects worldwide spending to top $230 billion this year and more than double to $518 billion by 2015 — assuming there are no new major attacks. In the United States, the firm expects nearly $58 billion to be spent on homeland security in 2006, and that should increase to more than $105 billion by 2010.

“You can’t snap your fingers overnight and have plans to protect critical infrastructure from terrorism,” Carlton said. “It takes time and money. Finally, we are at a stage where those funds are going to companies like ours.”

-read more in this report