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Europe is focus of security technology
By James. H. Smith
January 13, 2006
Recent terrorist attacks have demonstrated the urgent need for the European
Union (EU) to enhance its security capabilities, particularly at its
borders. This is driving the implementation of security technologies at
major entry/exit points with demand for biometric
identification/authentication systems, radio frequency identification (RFID)
and explosive detection systems projected to surge over the next decade,
according to consulting group Frost & Sullivan research analyst Friso Buker.
"Technologies that can increase security capabilities and supply chain
efficiency as well as reduce costs at the same time are poised to experience
significant demand growth over the next ten years," said Buker in a recent
report.
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He added that, biometrics will be more widely deployed at airports for
passenger processing and electronic access control, as the technology
provides an opportunity to reduce labour costs while at the same time
maintaining, or even potentially increasing, security capabilities.
By 2014, the European homeland security technologies market (comprising
biometrics, screening, RFID, unmanned aerial vehicles (UAV) and closed
circuit television (CCTV) technologies) is set to amass nearly EUR874
million, Buker said.
Airports are expected to display significant demand for
identification/authentication and screening technologies from 2005-2014.
Seaports will exhibit notable uptake of screening technologies and
particularly, tracking technologies. Borders will generate the lowest level
of demand for screening technologies in the first half of 2005-2014.
However, the overall border demand will increase in the second half of this
period, spurred on by the growing importance of UAVs, according to Buker.
The EU market will provide increasing opportunities for companies in the
defense technology sector.
Buker points out in his report an ongoing theme in this column: as the
market expands, small industry participants are likely to be taken over by
different types of industry participants that, in turn, are likely to be
acquired by other companies that may not have existing expertise in the
homeland security market, but are looking to gain a foothold in this
lucrative industry.
Strategic partnerships and alliances with regional leaders will advance the
prospects of potential market participants. Moreover, an in-depth
understanding of the regional market along with its particular business
idiosyncrasies will advance revenues in the long term.
What may assist US companies in penetrating the European market is a defense
bill approved by Congress that would allow an open competition for a
multibillion dollar contract to supply refuelling tankers for the Air Force.
The bill, which President Bush is expected to sign, would reverse a
House-approved measure making it illegal for the Pentagon to buy military
equipment from the parent company of European jet maker Airbus SAS. The
House bill would have helped Boeing regain the lucrative tanker contract,
which it lost in 2004 amid an ethics scandal.
The House bill would have barred the Pentagon from purchasing goods and
services from foreign companies that receive government subsidies. While no
companies were named, lawmakers said the amendment was aimed at
disqualifying Airbus' parent company from bidding on the tanker contract.
US legislators interested in keeping defense-related contracts for
constituent companies would be upset over efforts to remove "buy America"
language from pending legislation.
However, bankers familiar with the bill maintain that removal of the
language could bode well for US companies seeking to sell into the European
defense market.
Whether US companies benefit from the US government's largesse is yet to be
seen. But the banking community has reason to be optimistic.
Companies that expand generally need to tap banks for funding.
Jim Smith, is a freelance writer and may or may not hold
long or short positions in any of the stocks mentioned in this article and
those positions can change at any moment. InvestorIdeas.com,
Homelanddefensestocks.com (HDS) Disclaimer:
www.InvestorIdeas.com/About/Disclaimer.asp, The opinions and content of
the Defense Market Report are soley that of the freelance writer, Jim Smith.
InvestorIdeas or HDS are not affiliated or compensated by the companies
mentioned in the articles.
Nothing in the articles should be construed as an offer or solicitation or
recommendation to buy or sell any specific products or securities. Past
performance does not guarantee future results.
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