Companies look for answers to the drop in military spending
May 14th, 2012
11:58 AM ET

Companies look for answers to the drop in military spending

As the Obama administration seeks to bring to a close the Afghanistan war and the Iraq war already in the rear-view mirror, the companies that for the last decade have earned millions, if not billions, of dollars supplying equipment are looking for what to do as the war well runs dry.  Two recent articles point to different strategies by some cutting edge companies.

In the Boston Globe, Bryan Bender reports on the intense lobbying effort by iRobot. The company, which is probably better known in the U.S. for its automated Roomba vacuum cleaners, has spent hundreds of thousands of dollars on teams of lobbyists to stave off defense cuts. It appears to be money well spent.

"The House Armed Services Committee this week voted to provide nearly $100 million in new funding for unmanned ground systems and has listed as one of its priorities this year funding programs to counter improvised explosive devices and to bolster “unmanned intelligence’’ projects," Bender writes.  IRobot provides just such devices.

IRobot's defense and security unit has seen a major boost to its bottomline in the last decade thanks for military contracts, notes Bender, with revenues rising from $11 million in 2003 to $187 million last year, mostly due to the sale of 5,000 systems to the military, "including the the so-called Packbot used for close-up surveillance of roadside bombs."

But for one of the military's biggest manufacturers of unmanned aerial vehicles, the solution is in opening new markets for its wares. New Federal Aviation Authority rules will allow for law-enforcement departments to fly small drones. In the New Yorker, Nick Paumgarten looks at the new growth market for drone makers like

"The military contractors will suddenly have some eighteen thousand potential new customers. As of now, only a tiny percentage of municipal and state police departments have any air presence, because most can’t afford helicopters or planes. Small camera-loaded U.A.V.s are much cheaper," Paumgarden writes.  Paumgarden visits AeroVironment, maker of smaller drones, which supplies the military with 85% of its U.A.V.s.

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