Magazine article National Defense

Defense Companies Make Calculated Bets on New Technologies

Magazine article National Defense

Defense Companies Make Calculated Bets on New Technologies

Article excerpt

The road to long-term economic recovery lies in the nation's ability to create innovative technologies that will result in tomorrow's jobs.


That was the philosophy behind President Obama's call to make permanent for U.S. corporations a research and development tax credit that has been extended yearly since 1981.

"I ... believe that government should do for the people what they cannot do better for themselves," Obama said in a September speech. "And that means making the long-term investments in this country's future that individuals and corporations can't make on their own: investments in education and clean energy, in basic research and technology and infrastructure."

The private sector needs incentives because companies don't do "long-term" very well, said one industry technologist. Short-term pressures to make profits often force companies to be more risk averse.

"It's something corporations struggle with because nobody wants to invest in the long term anymore," said Ed Campbell, executive vice president of Raytheon BBN Technologies.

"Certainly in the country there is a lack of patience for letting technology develop," he added. "You look around for some of the corporate labs that used to exist. Many of them don't exist anymore."

Three companies that work in the defense sector and have a reputation for coming up with innovative technologies--BBN, Rockwell Collins and FLIR--were asked how they invest in long-term projects that may or may not lead to new products.

Company representatives all said they did not rely solely on government contracts from service laboratories or other agencies to lead their research and development efforts. And all said they plowed portions of their profits back into long-term R&D projects. However, none were willing to go into blind alleys. At the end of the day, there has to be something they can sell.

John Miller, director of the Army Research Laboratory, explained how the synergies between industry and the military work, and how they have benefited both sectors, and society at large.

Many ubiquitous technologies widely used today were originally funded by Defense Department investments in basic research that came out of Defense Advanced Research Projects Agency or the service laboratories. Specialized materials found in personal electronics such as cell phones are examples. The private sector--after seeing that the developmental risk had been reduced--adapted the technology for everyday use and sold it in the commercial market.

"Many of these [materials] early on in their development were initially pushed by investments from the DoD," he told an industry conference.

Today, these handheld devices are less expensive for the military services to buy because they are produced in mass quantities and their prices are lower.

Company representatives said they have to know there is a gap that needs to be filled and a customer waiting for a product before they roll the dice on undeveloped technologies.

David Strong, vice president of marketing at FLIR Systems Inc., said, "Everything we do is 100 percent focused on getting real products in production volumes and into the hands of customers."

FLIR began as a company that sold its sensor systems and cameras to foreign markets. Overseas customers generally do not have the big research and development programs that are found in the U.S. defense and intelligence sectors. Early on, the company had to rely on its own labs to do its research.

"We gladly accept government funding, but the vast majority of our R&D funding comes from our own revenues," Strong said. Roughly 10 percent of its profits are put back in its research and development centers, he added.

About half of the 18 percent of revenues Rockwell Collins spends on developing new technologies comes from its own profits. …

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