BusinessSecurity companies' fortunes continue to rise post 9/11
Thanks to the flurry of security spending in the past decade, companies like Rapiscan have seen profits skyrocket as they struggle to keep pace with demand; the California based company, which manufactures security screening systems for passengers and cargo, has grown from 200 employees to 800 as orders from DHS poured in for screening systems at airports, sea ports, and borders
Thanks to the flurry of security spending in the past decade, companies like Rapiscan have seen profits skyrocket as they struggle to keep pace with demand.
The California based company, which manufactures security screening systems for passengers and cargo, has grown from 200 employees to 800 as orders from DHS poured in for screening systems at airports, sea ports, and borders.
This fiscal year OSI Systems, the parent company of Rapiscan, reported $656.1 million in revenues, a 10 percent jump from last year, while Rapiscan has averaged a 17 percent growth rate in annual revenues.
”Since that point, the company has opened two additional manufacturing plans, one in Ocean Springs, Mississippi, and one in Apex, North Carolina,” he said.
In addition, the company has more than tripled its workforce hiring employees to develop sophisticated new screening equipment as well as workers to manufacture the devices.
“We put out 3,000 systems a year,” Kant said. “There are lots of people working on those manufacturing floors.”
Meanwhile companies like L-3 Communications, which provides sensors, communications systems, and scanners, and Smith Detection, which manufacturers metal detectors, x-ray scanners, and other detection systems, have also seen explosive growth in their revenues.
The growth in the security industry is due in large part to the dramatic increase in federal security spending. The National Priorities Project found that homeland security spending has increased 300 percent over the past decade from $16 billion to $69.1 billion.
Even with current efforts by lawmakers to cut spending and reduce the deficit, homeland security expenditures are expected to remain intact due to lingering fears of terrorism.
“I really do think that there was a genuine concern, a genuine understanding that there was a greater need for a greater investment in homeland security after 9/11,” said Guy Ben-Avi, the author of a Center for Security and International Studies on DHS spending. “The thinking was ‘it happened once, it can happen again, we need to be better prepared.”
Ben-Avi pointed to bolstering aviation security as the “snowball that caused an avalanche of investment in homeland security more broadly… and a catalyst (of efforts) to counter the emerging threats that are out there and that will be targeted at us in the foreseeable future.”
Representative Robert Aderholt (R – Alabama), the chair of the House Appropriations Subcommittee on Homeland Security, echoed these sentiments when he said that he will walk a fine line between fiscal concerns and security.
The Congressional debt deal has placed limits on homeland security spending and Gavin Long, the managing director of Civitas, a national security management consulting firm, warned that not all security sectors will continue to grow.
“From a macro level, I’m not so bullish, but there are market segments that are receiving a lot of growth, and there are market segments that have plateaued and are frankly going to see declines,” he said.
Meanwhile, business is expected to continue booming for Rapiscan. Deepak Chopra, the president of OSI, said that its security division has a “backlog of $304 million as of June 30, 2011 is 27 percent higher than the prior fiscal year, and represents a new record year-end backlog.”