Analysis: Year brings industry growth

By LEAH KRAUSS, UPI International Security Industry Correspondent  |  Dec. 28, 2007 at 9:59 AM
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HAIFA, Israel, Dec. 28 (UPI) -- The past year has seen report after financial report of increased earnings for the Israeli security industry.

Pinchas Bucharis, director general of the country's Defense Ministry, announced this week that Israel has overtaken Britain in the rankings and become the world's fourth-largest defense exporter. "Defense exports in 2007 reached more than $4 billion," Bucharis said via a ministry statement.

Large companies, such as Israel Aerospace Industries, Elbit, Rafael and Israel Military Industries, reported several quarters of strong growth.

At the end of November, IAI boasted $36 million in net profit for the third quarter of 2007. The company's vice president of corporate communications, Doron Suslik, told United Press International in a telephone interview at the time that on the military side of the company's operations, "significant activity" in the field of unmanned aerial vehicles drove much of the sales growth. The company's Hunter UAV is in use by the U.S. military in Iraq.

"There were a few ... big contracts," Suslik said of the UAV sales for the quarter.

Elbit has also had success with UAV sales this year: Earlier this week the company announced that South Korea would purchase the company's Skylark II UAV for tactical operations and border patrols.

"UAVs have a big advantage: they can be sent into war zones, into battle zones, without using manpower. (The vehicles) hover and immediately transmit pictures and intelligence on a situation, or on an enemy's position," IAI's Suslik said.

In November, Elbit also announced a new $30 million deal with the Israel Defense Force for the supply of UAVs.

"We are pleased to report another strong quarter of growth, which was based on organic revenue growth of 19 percent and contribution from acquisitions, bringing our overall revenue growth to 38 percent over last year," Elbit's president and chief executive officer, Joseph Ackerman, said at the time in a company statement.

Smaller companies, while sometimes unable to point to millions of dollars of new revenue, nevertheless boasted technical breakthroughs and financial gains.

Acro Security Technologies' product is the Peroxide Explosives Tester. Peroxide-based explosives are undetectable by devices that screen for conventional, nitrogen-based explosives like TNT and nitroglycerin. In September the company announced it was adding Turkey to its customer list, which already included U.S. soldiers in Iraq and Afghanistan, plus armies, police departments and security organizations in England, Australia and India.

"That someone will bring down a plane with TATP is not a question of if; it is a question of when," Ehud Keinan, the inventor of PET and Acro's chief scientific consultant, told UPI in a telephone interview. TATP is triacetone triperoxide, the compound behind some 90 percent of peroxide-based explosives.

Peroxide-based explosives, familiar on the scene at Israeli bus bombings for nearly 30 years, blasted onto the world's radar screen in 2005 when they were used in the July 7 bombing in London, Keinan said.

Meanwhile, another company modeled its anti-explosives technology on the human nose. "The Mini-Nose ... detects the presence of constituent elements of explosive materials by collecting and analyzing trace molecular evidence from the explosive or its vicinity," Doron Shalom, vice president of business development at Scent Detection Technologies, told United Press International in an e-mail message. Herzliya, Israel-based SDT unveiled the Mini-Nose in January.

"Trace detection is the ideal complement for X-ray scanners, CT systems and metal detectors, and closes security loopholes by detecting microscopic particles that remain on clothing, luggage, ID cards, and more, after explosives are handled," Shalom told UPI.

According to the company, the "sniffer" technology digitally recreates the mammalian olfactory process used to detect a wide range of substances accurately and quickly. "It's based on a technology called High-Frequency Quartz Crystal Microbalance (HF-QCM)," the online publication Israel21c noted.

Shalom said that while SDT's competitors in the explosives-detection market use a radioactive substance to detect the explosive traces, the Mini-Nose does not: "The sensors are capable of detecting trace amounts of material in gaseous and liquid phase and are capable of independent remote operation without any human interfering."

The outlook for 2008 is similarly positive. Business Monitor International, in a five-year market research report titled "The Israel Defense & Security Report," called the country's defense industry "one of the world's most advanced."

"Israeli arms exports are currently flourishing, with lucrative relationships created with major weapons purchasers such as India and Turkey. In 2005, transfers totaled some ($3 billion) in current prices, ranking Israel among the top six exporters in the world," Business Monitor International stated in its executive summary of the report.

Though the report makes note of some instability and uncertainty in Israel, the publication's assessment of the Israeli defense industry is confident: "The Israeli defense industry is set to thrive, regardless of the immediate political or security environment in which it operates."

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