Search, Detection, Navigation, Guidance, Aeronautical, and Nautical Systems and Instruments

SIC 3812

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing search, detection, navigation, guidance, aeronautical, and nautical systems and instruments. Important products of this industry are radar systems and equipment; sonar systems and equipment; navigation systems and equipment; countermeasures equipment; aircraft and missile control systems and equipment; flight and navigation sensors, transmitters, and displays; gyroscopes; airframe equipment instruments; and speed, pitch, and roll navigational instruments and systems. Establishments primarily engaged in manufacturing aircraft engine instruments or meteorological systems and equipment, including weather tracking equipment, are classified in SIC 3829: Measuring and Controlling Devices, Not Elsewhere Classified.

Industry Snapshot

In the early 2010s, U.S. companies involved in the manufacture of search and navigation systems and instruments earned a combined annual revenue of approximately $46.2 billion. This figure had held fairly steady through the economic recession of the late years of the first decade of the 2000s. The largest eight companies controlled about 75 percent of the market share, and the largest 50 had about 95 percent of the market share. The industry had grown throughout the 2000s as the U.S. military upgraded communication, defense, and weapons systems and the commercial use of global positioning systems (GPS) boomed.

The United States was expected to continue leading the world in new technology in this market for years to come. Both the military and civilian sectors, which remained lucrative markets for new technology, were developing new consumer technologies. The United States was expected to continue to be the leading exporter of search and navigation equipment, as other countries sought to upgrade their air safety and NATO allies continued to procure the latest defense technology.

Organization and Structure

With few exceptions, the principle suppliers of search and navigation equipment are the same contractors who comprise the larger U.S. aerospace and defense industry, to which search and navigation equipment contribute significantly. Although not necessarily the most prolific producers of search and navigation instruments, many of the largest and most recognizable corporations in the United States have been involved in the business, including AT&T, Boeing, General Electric, General Motors, and IBM.

Along with such aerospace sectors as the business and commercial jet, helicopter, aircraft maintenance, and spare parts industries, the search and navigation industry comprises a so-called "niche segment" of the larger aerospace manufacturing group. A substantial majority of the industry's product types fall into the avionics (aviation electronics) product classification, which includes aeronautic radar systems, air traffic control systems, weaponry sighting and fire control systems, and autopilots. Product groups traditionally associated with the avionics industry but excluded from the search and navigation industry include flight trainers and simulators, which are included in SIC 3699: Electrical Machinery, Equipment, and Supplies, Not Elsewhere Classified; and radio communications equipment and telemetry systems and equipment, which are classified under SIC 3663: Radio and Television Broadcasting and Communications Equipment. However, product groups classified as search and navigation industry products but excluded from the avionics industry's product mix include such nautical instruments as fathometers, hydrophones, sonobuoys, marine sextants, sonar fish finders and other sonar systems, and taffrail logs (torpedo-shaped instruments dragged behind ships to determine distance traveled or speed).
Historically, the primary customer for industry products has been the U.S. government, especially the Department of Defense, Federal Aviation Administration, and National Aeronautics and Space Administration. Industry sales to commercial establishments adhere to the traditional terms and conditions of the business marketplace, and products are evaluated in terms of competitive value for technical superiority, reputation, price, delivery schedule, financing, and reliability. Sales to the federal government, however, tend to follow a highly specialized and structured set of procedures.

Government Procurement
Funds for government search and navigation equipment contracts are authorized by Congress based on budget requests submitted by the executive branch for the agency or department requiring the equipment. Congress appropriates specific funding for programs on an annual basis, which often means that programs originally approved for development over several years are subject to adjustments or outright cancellation on a yearly basis. Contractors submit bids to government officials at bidding conferences attended by "prime" contractors--firms or consortia who submit the final integrated system directly to the end-user agency--and subcontractors who attend the conferences to seek out prime contractors with whom to team.

Contracts may be awarded to a single contractor in a "winner-take-all" competition or divided among several contractors or consortia as a percentage of the total awarded contract. Contracts may cover specific phases of the product development process: the concept/design or project definition stage, the prototype or demonstration/validation stage, or the execution or large-scale production stage. Government contracts also are awarded according to the method by which the contractor is paid. In cost reimbursement contracts, the contractor is paid for allowable or "allocable" costs such as engineering and manufacturing expenses, special tooling and test equipment costs, marketing and administrative expenditures, and the cost of the bid proposal itself. Cost plus fixed fee contracts involve payments of a pre-established fee to the contractor by the government regardless of the firm's actual final costs. Such contracts award contractors who deliver systems below the contracted price and penalize contractors who experience cost overruns. In cost plus incentive fee contracts, the government reimburses the contractor based on the firm's ability to meet certain targets such as cost guidelines, "mission success" parameters, and delivery time constraints. The average industry "win rate"--the ratio of contracts awarded to total contracts bid on--is about 25 percent in the aerospace and thus the search and navigation industry as a whole. Some firms, however, achieve win rates nearly twice as high.

Contractors are generally paid through periodic "progress payments" for work performed with a final payment for remaining costs paid upon delivery of the product. Contracts may be extended through "replenishment" and "follow on" orders by the government customer and may be terminated without cause at the sole discretion of the government. Disputes regarding unpaid or overpaid amounts are handled by a Defense Contract Management District termination contracting officer to whom settlement proposals are submitted by the contractor for claimed expenses and "termination costs." The contracting officer may award the contractor funds for work performed prior to the contract's termination, or may require that the contractor reimburse funds paid out for canceled work.

The "monopsonic," or single customer nature of the government procurement market led to a unique division of operations in the search and navigation industry: one set of rules and procedures for commercial clients and a second, completely segregated set of rules and procedures for government contracts. The purpose of the complex government procurement apparatus is to protect the government's interest in fair and reasonable prices, eliminate contractor fraud, ensure equal access by all bidders, and guarantee that federal funds appropriated for government contracts reflect the economic and social priorities of the government. As a result, the process of bidding on federal contracts entails separate data collection and accounting procedures, conformance to supplier network requirements, adherence to hiring and personnel guidelines, and the disclosure of the contractor's corporate financial information to government auditors. These and other requirements regarding contractor certification and auditing and oversight conformance resulted in labor costs that have been historically three times higher for the industry's federal contracts (as a percentage of sales) than for equivalent commercial contracts.

Procurement Agencies
Several government agencies perform oversight and other procurement-related functions that directly affect search and navigation industry activities. The Defense Contract Audit Agency oversees expense, scheduling, and product performance reviews of industry contractors and specifies guidelines for planning and implementing federal contracts. The Government Accounting Office (GAO) and Office of Federal Procurement Policy of the Office of Management and Budget perform watchdog reviews of government contracts. "First tier" contractors are firms whose products are delivered directly to a prime contractor and may experience as many as 100 government audits in a single year for pricing, quality, and safety reviews. Similarly, an "operational readiness review" administered by a Defense Department branch can involve as many as 50 auditors assigned to a single contractor plant at one time.

Contractors may be temporarily suspended or permanently debarred from bidding on government contracts if they are found to be in violation of employment practice laws, standard accounting procedures, or product pricing guidelines. A contractor, for example, who falsely claims that a delivered product has passed more tests than it actually has may be given a "not a responsible contractor" designation and debarred from government bids. Improper enhancement of a product's capabilities in order to inflate the contractor's bill is termed "goldplating" and represents another significant area of potential abuse that government procurement oversight agencies monitor.

Other agencies, such as the Navy's Operational Test and Evaluation Force and the Department of Defense's Operational Test and Evaluation Office, perform the tests that gauge the delivered system's adherence to contracted performance specifications. Federal projects like the Army's Contractor Performance Certification Program recognize contractors who consistently deliver quality products, and the NASA-funded National Technology Transfer Center serves as a medium for sharing federal research project advances with firms in the industry.

Prime Contractors vs. Subcontractors
The Competition in Contracting Act of 1984 attempted to make government contracts equally available to all potential contractors. Nonetheless, major prime contractors continued to dominate the defense market and thus the search and navigation industry. The consolidation among these contractors as the defense budget dwindled throughout the 1990s had a drastic effect on subcontractors. For instance, AlliedSignal, a major prime contractor, which merged with Honeywell in 1999, planned even before the merger to reduce its number of suppliers from 3,750 in 1997 to 1,200 by 2000. Small companies also suffered from Defense Department policies that called for a smaller base of contractors with larger resources than before, giving companies working for the Pentagon special leniency in Justice Department reviews of their acquisitions and mergers. With these larger, more diversified contractors, the Defense Department then began to contract with a single company for an entire system instead of having to share the responsibility.

Business Environment
The unique nature of the government procurement environment entails business trends uncommon in other U.S. industries. Although this industry's profit rates as a percentage of sales have historically been less than for other industries, profits measured in terms of rate of return on investment are comparable to rates enjoyed by other manufacturing sectors. Search and navigation firms, like other defense sector businesses, may invest in plants and equipment at half the rate of firms in other industries because government contracts often reimburse firms for aging or obsolescent equipment, make available government-owned plants and equipment to the contractor, and offer no guarantee that the plant or equipment utilized for the procured product will ever be contracted for again.

The Defense Department also motivates cost consciousness by writing incentives into contracts, basing payments and penalties on the producer's performance. In return for these cost restrictions, the Pentagon only specifies what the product should do, not how it should be built. This term allows the contractors to use more components that are readily available than in previous times, when they would have to create components according to Pentagon instructions. Like members of other defense industries, search and navigation contractors require less working capital because they can rely on regular government progress payments instead of depending on unpredictable commercial revenues.

The search and navigation industry is subject to business risks not shared by other U.S. industries. These include unusually high costs for obtaining skilled employees, intense domestic and international competition, a continual need to retrain employees and retool facilities, inevitable cost overruns resulting from untried technologies and advanced designs, and instability in the price of raw materials and supplies. Because defense-related products are driven by the requirement of continuing technological improvement and superiority, the rate of obsolescence for industry products is much higher and much more unpredictable than in other U.S. industries.

Product Groups
Search and navigation products can be divided into two broad divisions and several subcategories. Search and detection systems, as well as navigation and guidance systems and equipment, constituted approximately 87 percent of the search and navigation market in the mid-2000s. Product groups include light reconnaissance and surveillance systems; identification-friend-or-foe equipment; proximity fuses; radar systems and equipment; sonar search, detection, tracking, and communications equipment; specialized command and control data processing and display equipment; electronic warfare systems and equipment; and navigation systems and equipment, including navigational aids for aircraft, ships, and navigation applications.

The remainder of the industry's market consisted of aeronautical, nautical, and navigational instruments (excluding aircraft engine instruments). Product groups include flight and navigation sensors, transmitters, and displays; gyroscopes; airframe equipment instruments; thermocouple and thermocouple lead wire; nautical instruments; other aerospace flight instruments; and parts and components.

Light Reconnaissance and Surveillance Systems
This product group includes infrared, ultraviolet, and visible light reconnaissance systems excluding radar systems such as bomber-defense equipment, weapon fire control equipment, infrared fuses, infrared detection and warning systems, and such night vision equipment as sniper scopes, snooper scopes, and night driving equipment.

Radar Systems and Equipment
This category includes airborne, ship-based, and ground-based radar systems such as early warning radar, air defense and fighter control radar, harbor control radar, meteorological radar, highway speed control radar, bomber navigational radar, space satellite tracking radar, precision approach radar, and other forms of tracking radar technology.

Sonar Systems
This product group consists of airborne, surface ship, and submarine-based sonar systems including depth-finding equipment, guidance hydrophones, sonobuoys, sonar fish finders, navigation and mapping sonar, and anti-submarine sonar equipment.

Electronic Warfare Equipment
Electronic warfare systems include such missile-borne and non-missile-borne "countermeasures" equipment as radar jamming devices, underwater countermeasures technology, beam-riders, infrared homing systems, specialized signal processing and intelligence equipment, and other "active" countermeasures equipment, excluding such passive systems as chaff and windows.

Navigation Systems and Equipment
Included in this category are such navigational aids as beacons, transponders, collision warning systems, inertial navigation systems, radio compasses and direction-finders, autopilots, data systems/flight recorders, distance measuring equipment, pilots' "heads-up" instrument displays (HUD), aircraft proximity warning systems, flight directors/situation displays, and ship and submarine navigational systems.

Flight and Navigation Sensors, Transmitters, and Displays
This product group includes altimeters; compasses; artificial horizon instruments; and airspeed, acceleration, rate-of-climb, angle-of-attack, and bank and turn indicators.

Airframe Equipment Instruments
This category includes position indicators for landing gear and cowl flaps, hydraulic systems for liquid level and temperature indicators, and cabin environmental instruments such as air conditioning, cabin pressure, oxygen, and heating.

Background and Development

Before the invention of the floating gimbal gyroscope in the early twentieth century, sea navigators had relied on celestial azimuths, star tables, the sextant, timekeeping instruments, and dead reckoning (a type of inferential estimation) with a magnetic compass.

Rudimentary radio direction-finders consisting of large manually-rotated loop antennas for receiving the homing signals of coastal radio beacons came into wide use in the years before World War I. With the discovery that radio waves striking seagoing vessels produced measurable echoes, radar technology became possible, and by the 1930s, the first on-board VHF radars were installed on ocean liners and naval vessels. By the close of World War II, every capital ship in the U.S. fleet was equipped with a radar unit.

The invention of radar, however, had its greatest impact on air operations and immediately began to play a critical role in the European and Pacific theaters. Prior to its invention, pilots navigated using magnetic compasses, airspeed instruments, and direction-finding gyros. Radio beacons that enabled pilots to plot their position relative to intercepted radio signals came into use in the late 1920s. These early developments were followed by advances in flight control technology, including General Electric's first light control system in 1931 and Honeywell Inc.'s first electric autopilot in 1941.

During World War II, radar proved most effective as a fighter-interceptor tool, a strategic early warning device, an anti-submarine weapon, and as a navigation resource for bombardiers approaching enemy targets. Raytheon Company emerged as the leading producer of radar tubes and systems during the war, and General Electric Company produced more than fifty different types of radar for the U.S. armed services. A precursor of Texas Instruments developed the first anti-submarine detection system in 1941.

Sonar, which was based on the principal that transmitted sound waves deflecting against underwater objects could be used for detection and identification purposes, was invented by the U.S. Navy in 1922 and by World War II had become a strategic weapon for airborne, surface ship, and underwater surveillance. Electronic warfare and countermeasures technology grew out of the discovery that radars could be "spoofed" or "jammed" into misinterpreting returning signals. Strips of aluminum foil called "chaff" or "windows" proved to be effective anti-radar measures and led scientists to modify radar technology to overcome such obstacles. Most major radar technology breakthroughs since World War II, such as pulse and phased array, have been attempts to overcome existing or anticipated jamming or counter measure technologies.

The development of search and navigation systems in the post-war years was driven by revolutionary advances in jet aircraft, missile technology, satellite systems, digital computers, miniaturization of electronic components, and the specialized needs of the space program. The first inertial guidance systems for missiles and submarines emerged in the 1950s. By 1958, the submarine Nautilus was able to successfully navigate underwater to the North Pole using inertial guidance systems modified from Air Force cruise missiles. In 1955, a tactical air navigation system (TACAN) had been introduced, and one year later, the first efforts at developing an air collision avoidance system began.

In 1960 Litton Industries introduced an inertial navigation system using a central integrated digital computer for attack aircraft. Four years later, the Navy's Navigational Satellite System became operational with the launching of the Transit satellite. In the 1960s, sonar technology evolved beyond surface ship and submarine applications to networks of fixed sonar systems capable of identifying and tracking vessels from the ocean floor. The decade also saw the emergence of the modern automatic flight control system for aircraft. General Electric's systems for the F-105, F-111, and F-4 used sensors and computerized components that issued automatic commands to the aircraft's flight control surfaces for stabilization and control. In 1967, the first automatic landing using guidance systems designed for low visibility landing approaches was made at JFK Airport, and Texas Instruments developed the first solid-state radar using semi-conducting materials and components. Two years later, Texas Instruments delivered its first laser-guided missile systems to the U.S. Air Force.

During the 1970s, the Global Positioning System satellite network first came under development. Inertial navigators using digital computers also became common on civil and military aircraft. In the early part of the decade, Sundstrand Corp. developed a multimode radar for mapping terrain and seeking airborne targets. The late 1970s and early 1980s saw the emergence of radical new "stealth" or radar-evading "low observable" technologies in the form of the B-1, F-117, and B-2 aircraft. Using radar absorbing materials, innovative airframe shapes, and a variety of other design techniques, the radar "signature" of the B-2 bomber on enemy radar screens was estimated to be the equivalent of a large insect. The emergence of stealth technology and the likelihood that it eventually would become available to potentially hostile nations compelled search and navigation manufacturers to investigate alternative radar detection technologies, such as infrared, ultraviolet, and electro-optical detection, and to search for new, more sensitive radar technologies capable of counteracting stealth "invisibility."

Space programs begun by NASA in the 1960s generated new navigation technologies for satellites, interplanetary probes, lunar landing and "roving" vehicles, and, in the 1980s, the space shuttle. In 1985 Texas Instruments developed a new phased array radar technology that offered greater sensitivity and versatility over previous radar systems and, in the late 1980s, land navigation systems for automobiles, emergency vehicles, and rental cars began to be developed for complex urban environments. In 1989 the first five global positioning system satellites were launched, offering unprecedented accuracy up to a few yards to system users.

The Gulf War between Iraq and a coalition of international forces demonstrated the degree to which search and navigation industry products could influence the outcome of military conflicts. The so-called "Microchip War" was the first conflict fought directly with real-time support from satellite surveillance and communications systems, and Raytheon's Patriot missile--a ground-to-air defensive missile system employing advanced seeking technology--proved itself as a reliable and effective weapon system.

The search and navigation instrument industry shipped $32.5 billion worth of equipment in 1997 and employed almost 186,000 people. While the value of shipments marked the second consecutive year of growth after the industry had declined throughout the 1990s, the employment figures indicated only stabilization in the size of the workforce. Previously, employment had dwindled at an annual rate of 10 percent. Both trends indicated that the mergers and acquisitions that occurred after the end of the Cold War had begun to pay dividends, increasing the value of goods produced while reducing labor costs.

Industry shipment values, which were $31.9 billion in 2001, represented an increase over 2000 levels of $29.9 billion. As the United States ramped up for war with Iraq, shipment values increased to $32.2 billion and $34.2 billion in 2002 and 2003, respectively.

During the mid- to late years of the first decade of the 2000s, the U.S. military continued to invest heavily in technology to advance communications, navigation, search, and detection equipment as it prepared to implement its planned Future Combat System, an intensive program to upgrade and integrate all military systems. For example, in April 2005, DRS Technologies Inc. was awarded a subcontract with Raytheon Co. to provide key components to the U.S. Army's Long Range Advanced Scout Surveillance System (LRAS3). The LRAS3 would give battalion, light cavalry, and Stryker brigade combat team scouts the ability to conduct around-the-clock surveillance and reconnaissance at safe distances, outside the range of direct fire of identified threats. Using second-generation infrared technology, the LRAS3 provides precision-based far-target location, global positioning, and a laser range finder. The Army's Night Vision and Electronic Sensors Directorate, a research and development division, instigated numerous advancements in night vision, infrared sensor technologies, thermal imaging for weapons targeting, and surveillance that have been used by the U.S. military in Iraq and Afghanistan during the first half of the decade.

Both the military and civilian use of GPS had expanded rapidly into the late 2000s. The system is based on 24 U.S. government-launched main satellites and several backups that move in six different orbital groupings some 11,000 miles above the earth under the control of a joint military/civilian board. Originally used for military guidance of troops, vehicles, and weapons, GPS also has become a commercial success. Using high-frequency radio signals, GPS systems provide target latitude, longitude, and altitude, accurately pinning location within a matter of feet. When GPS first entered the consumer market, equipment was bulky and expensive. However, by the mid-2000s, advances in wireless and network technology led to the proliferation of GPS systems in automobiles, cell phones, personal data assistants, and even watches.

In 2000, GPS production values were $7.5 billion; by 2008, the industry was valued at over $21 billion. Factory sales of GPS units, both hand-held and automobile-based, surpassed 725,000 units in 2005. In 2001, 162,000 units were sold at an average price of $888, while in 2005 the average price of a GPS unit was $473. Automotive and asset-tracking GPS devices and services accounted for approximately half of revenues. In the mid-2000s, more than 8 million automobiles were equipped with GPS capabilities, and those numbers increased as the country entered the second decade of the twenty-first century. Handheld/handset and people-tracking markets were expected to experience the most growth; in 2010 there were an estimated 500,000 GPS devices in use in the United States.

In 2005, Lockheed Martin completed the first GPS 2R-M satellite. The upgraded satellite provided increased power to existing signals and also added two military signal frequencies and one additional civilian frequency. That year, Lockheed Martin also announced the completion of the first technologically advanced, highly sophisticated Space-Based Infrared System High (SBIRS High) geosynchronous orbit satellite. Once launched, the SBIRS High would anchor the U.S. military's next-generation anti-jam missile warning system and provide global coverage of missile launch detection and defense data.

With the rapid expansion of GPS use by both the military and civilian sectors, the Navstar GPS Joint Program Office announced that it was rethinking the long-term needs for GPS capabilities and developed a plan to implement the third-generation system (GPS III), a project valued in excess of $80 million. Funding for GPS III ebbed and flowed as military and federal priorities shifted from budget to budget.

Another military advance in the mid-2000s was the U.S. Army's preparation to begin testing an "active protection" system on its Stryker combat units to determine their effectiveness in defending against anti-tank guided missiles and rocket-propelled grenades. The system uses radar that scans all directions for incoming threats at very short distances and launches a pre-positioned interceptor to destroy the threat before it impacts the vehicle.

Current Conditions

At the start of the second decade of the twenty-first century, this industry was poised for further growth. As the economy recovered from the economic recession of the late 2000s, industry experts expected spending on search and navigation devices to increase. According to a 2011 report by IBISWorld, "An increase in research and development will drive the industry's growth [in the 2010s]. Operators will likely benefit from continued advances in navigational, measuring and control instrument technology, increased government and private equipment expenditures, and higher industrial production." Downstream demand from the energy, health, and biotechnology sectors was also expected to increase significantly.

One of the challenges the GPS segment of the industry faced in 2011 was the potential problem created by the introduction of "the nation's first wholesale-only integrated 4G-LTE wireless broadband and satellite network," according to the website of the system's creator, LightSquared. The company already had satellites in the air and agreements with major providers including Spring and Best Buy; however, as of mid-November 2011, the Federal Communications Commission had not yet approved the launch of the system due to the concerns about interference it may cause with GPS systems across the country. Although LightSquared claims that it has already solved most of the interference problems by moving to a different frequency, "there [is] still a lingering problem with high precision GPS devices which are used in agriculture, surveying and construction," according to a statement released by the company in November 2011, and others anticipated much larger scale problems. Kathy Ray of the U.S. Department of Transportation, for example, held that "the release of the [LightSquared] redacted and withheld portions would foreseeably cause harm to the government's deliberative process."

Industry Leaders

Many of the largest search and navigation industry firms were prominent Fortune 500 multinational corporations whose highly diversified corporate activities covered a wide range of industry groups including heavy construction equipment, engineering services, electronic components, business credit services, office furniture, ship construction, oil and gas services, semi-conductors, computers, and radio and television equipment. Additionally, many of the major firms in this industry reached their status through mergers and acquisitions, often attempting to increase their competitiveness by creating the economy of scale that comes with large, diversified corporations. This strategy also presented the challenge of bringing together the varied practices and atmospheres of previously separate companies into one larger organization.

Lockheed Martin Corp., headquartered in Bethesda, Maryland, led the way in aerospace mergers in the late twentieth and early twenty-first centuries, bringing together Lockheed and Martin Marietta in 1995. These companies were already heavily involved in guidance and navigation equipment, as Martin Marietta had purchased General Electric Aerospace in 1992. The combined companies went on to acquire another leading company in the field, Loral Defense Systems, in 1996. Lockheed Martin produced navigation instruments for land, sea, and air use. The leading U.S. defense contractor, the company had steady growth during the 2000s with 2010 revenues of more than $45.8 billion and 132,000 employees. Electronic systems was its largest division, and about 85 percent of sales came from the U.S. government.

Raytheon Co. of Waltham, Maryland, also increased its size through acquisitions, purchasing six other large corporations or divisions of corporations throughout the 1990s. The acquisitions of Texas Instruments' missile and defense operations and the defense operations of Hughes Electronics made Raytheon a large company and one of the most significant ones in navigation equipment. Its electronics division, which manufactured radar and guidance equipment, brought in about half the company's sales. Raytheon reported annual revenues of $25 billion with 72,000 employees in 2010. The U.S. government accounted for about 90 percent of company sales.

The company known as Honeywell was acquired by and combined with AlliedSignal in 1999. Each company had to sell some of its search and navigation lines to comply with Justice Department guidelines to avoid monopoly status. Honeywell International in Morristown, New Jersey, reported sales of nearly $33.3 billion in 2010 and employed 130,000 people. Over the course of roughly 25 years, Honeywell supplied some 30,000 emergency locator transmitters to the global airline industry, serving leading aircraft manufacturers like Boeing and Airbus.

In the early 2010s, leading brands of commercial GPS units were poised for further growth. U.S.-based GPS providers included Garmin International, Inc., headquartered in Olathe, Kansas; Magellan, headquartered in Santa Clara, California; and Lowrance, headquartered in Tulsa, Oklahoma.

Workforce

Employment in the search and navigation industry declined steadily through much of the 1990s and into the 2000s. According to the U.S. Census Bureau, from 253,000 employees in 1992 industry employment fell to 147,586 in 2007. By 2009 that figure had fallen to 142,920. Of these, just under 30 percent were production workers earning a total payroll of $2.3 billion.

Occupational categories employed in the industry included production workers such as machinists and assemblers, administrative support staff, administrators and executives, and engineers and other technical personnel. The industry employed a wide variety of engineering professionals from aeronautical, civil, electrical, mechanical, quality assurance, and manufacturing engineers to computer and digital systems, hardware, software, logistical, and algorithm systems engineers.

Because the search and navigation industry historically depends on multimillion dollar, large scale, limited duration government contracts, fluctuations in employment can be severe. The streamlining effect of mergers and acquisitions exacerbated this effect. Overall, ongoing mergers and acquisitions are expected to stymie employment growth in this industry, with worker populations likely to shift with changes in military spending and overall economic health.

America and the World

Historically, the United States has led the world in developing and manufacturing search and navigation instruments and systems. The nation has experienced trade surpluses, reflecting its advantage in developing advanced technology. However, imports increased throughout the 1990s and into the early 2000s, increasing almost 22 percent from 1999 to 2000, and more than 6 percent from 2000 to 2001, when values reached approximately $1.7 billion. Imports remained steady at $1.7 billion during 2002. The U.S. trade balance in this industry in 2003 was $1.7 billion, just slightly more than the trade balance in 1998. In 2010, imports again outpaced exports with totals of $5.5 billion versus $3.1 billion, respectively.

Joint Ventures
The globalization of the search and navigation market offered the potential for enhanced efficiency, improved market access, and increased worldwide competition. Rationalization, standardization, and interoperability of technology and the growing number of international business arrangements resulted from an increasingly interlinked global marketplace for search and navigation equipment. Joint ventures, in which a technologically superior U.S. manufacturer typically teams up with a less advanced foreign partner firm, are the most common industry business arrangement and often hinge on the U.S. firm's willingness to surrender technology to the foreign producer in exchange for less expensive labor costs, larger markets, or some other "sweetener." In offset agreements, an exporter agrees to obtain domestic markets for the products of the purchaser, and in some cases the exporter is obliged to buy products within the purchasing nation equal to a certain percentage of the contract's value. Offset agreements also may require the production of the product in the purchasing country or some form of co-production under a licensing arrangement.

Government Intervention
Some domestic aerospace and defense contractors have claimed that the historical unwillingness of the U.S. government to imitate foreign governments by actively intervening to aid exporting companies has weakened U.S. competitiveness. Competitive financing of exports by government bodies, such as the U.S. Export Import Bank, federal funding of "blended" commercial/military foreign sales, or government guarantees of commercial financing for military products have been among the remedies advocated by some industry leaders to increase the U.S. position internationally in search and navigation and other defense sectors.

In 1993, President Clinton signed into law a National Cooperative Production Amendments Act that modified U.S. anti-trust law to reduce penalties imposed on U.S. firms for engaging in joint ventures. The legislation also included provisions allowing industry firms to share technology, pool resources, and share the burden of risks associated with equipment and research and development costs. The act enabled foreign firms to engage in joint ventures with U.S. firms if equal treatment to U.S. firms was extended by their home country.

Research and Technology

Research and development (R&D) costs for new technology in the search and navigation industry are assumed by both the federal government and industry contractors. Most government funding comes from the Department of Defense and the Department of Transportation. The two departments integrated their goals and defined their responsibilities for R&D in a joint report, the 1996 Federal Radionavigation Plan. In spite of this plan, funding for research in this field continued its downward trend into the twenty-first century. For example, both departments received significantly lower funding than either had requested for the development of GPS-related technologies in 2000. Developments such as these caused industry firms either to begin replacing that support with company funds or to reduce their R&D investment.

Long-term R&D contracts made by industry firms with the federal government are often signed with no expectation of immediate profit. These so-called "loss contracts" sometimes involve grants of exclusive data or technical rights to the contractor, which enable the firm to become the sole producer of the technology should it eventually reach a production phase.

The search and navigation industry is one of the most technologically sophisticated sectors of U.S. industry. Major advances in virtually every product group continue to occur at a rapid rate because, unlike many other industries, search and navigation and other defense sectors are driven not only by intrinsic market competition but by a government-sponsored national security mandate to produce technologies superior to future projected threats as well as existing ones.

New Technologies
Overall trends in search and navigation systems include increased reliability; "fault-tolerance" (i.e., ability to operate through system failures); and reduced size, cost, weight, and power consumption of system components. Specific innovations in the area of flight control and guidance included night-vision helmets for pilots in which flight instrument data are displayed on a visor; "three-dimensional" synthesized cockpit voices that help pilots to visualize threats surrounding the aircraft; aircraft optical sensors that can imitate the processes of the human optic nerve for increased sensitivity and responsiveness to external threats; and wind shear warning systems that can give pilots up to 90 seconds advance notice of dangerous conditions. Other advances included moving map displays projected onto the cockpit windscreen for navigation, voice-controlled avionics that respond to pilots' verbal commands, and on-board "Stormscope" systems that can detect lightning threatening commercial aircraft.

The major technological development in the field of search and navigation instruments was the growth of Global Positioning Systems (GPS) for the commercial, and especially for the consumer, markets. By late 1996, U.S. automobile makers were offering GPS systems as an option on select vehicles. Like other GPS systems, automobile navigators rely on satellite signals to plot the car's position and direction on an electronic road map stored in computer memory. In the United States, Hertz and Avis began to offer navigation systems in select areas on their rental units. By 1997, General Motors had made its OnStar navigation system available to purchasers of 24 of its car and truck models. The company was able to keep the price of the system down by integrating telephone and emergency service with GPS location and mapping.

Other electronic systems being adapted for automobile applications included radar, intelligent cruise control, and night vision. Intelligent cruise control automatically decreases the automobile's speed as it approaches a slower moving vehicle. This system became available on a limited number of high-end European cars in the early 2000s. The price for this equipment remained high, adding $2,300 to the cost of a Jaguar XKR coupe in England. Also radar systems were developed that could monitor a vehicle's blind spots for approaching automobiles and provide a visual warning signal in the side and rear view mirrors.

The National Highway and Traffic Safety Administration, however, was leery of many of these devices. The concern was that a plethora of electronic devices may prove distracting to a driver and cause accidents rather than prevent them. However, a study focusing just on the advantages of instruments providing rear-end, blind spot, and lane-departure warnings showed that if all cars had such devices, highway crashes would decrease by 15 percent. More sophisticated features, such as collision-warning devices to alert a driver in a precarious situation, posed a daunting task for programmers trying to make such a system sensitive without creating false alarms. Other industry insiders fear that the high cost of these systems will scare away consumers. One approach involved integrating the features the consumers most desire into one unit. Research showed that emergency services, traffic updates, navigation, and the ability to track a stolen vehicle were most important GPS-related features for consumers.

Another large market for GPS devices was the consumer/cellular or hand-held GPS receivers. These instruments were about the same size as TV remote controls and were used by outdoor enthusiasts intent on not getting lost. These devices were sold by major retailers like Wal-Mart and L.L. Bean and cost around $3,000 in 1989. However, by the mid-2000s, prices were at an all-time low, making the technology available on the mass market. Approximately 900,000 units were sold in 2006, with sales exceeding $4 billion the following year. Additionally, GPS buyers increasingly purchased smart cell phones that had GPS/navigation capabilities.

Into the early 2010s, manufacturers continued to upgrade and enhance features of GPS systems in an effort to provide the most detailed and useable information, especially for public consumers. For example, in 2011 Navizon Inc. introduced Navizon I.T.S., which according to Navizon CEO Cyril Houri, "breaks new ground in the location industry, adding room-level indoor location to Navizon's global positioning solution. We call the combination of these two technologies Global Micropositioning because they allow for precise and easy-to-read geolocation anywhere in the world--outdoors and indoors. It closes the location information gap left from prior technologies." With this system, individuals can track the location of a specific device (or the person carrying it) in an indoor environment, as well as pinpoint his or her own location within a building or other indoor location.

Advances in nautical and marine search and detection technology include mine-hunting sonar systems, vessel alert systems for oil tanker navigation in dangerous seas, sonar fish finders that project live-action sonar images onto display screens, and digital sonar systems that can see through large ocean-bottom objects to detect severed cables or an aircraft's submerged black box. The U.S. National Oceanic and Atmospheric Administration, which is part of the Department of Commerce, also uses search and navigation instrumentation to make U.S. waterways safer for commercial ships and recreational boaters. Automated nautical charts, a Differential Global Positioning System, and a Real-Time Tide and Current System are part of this agency' innovative approach to maritime safety.

As the United States continued to focus on the prevention of terrorist attacks and the need to provide military personnel in Iraq and around the world with the most technologically advanced defense and weapons systems, research and development in this industry was expected to continue unabated into the 2010s, despite continuous shifting of federal funding. In addition, as commercial uses continued to be derived from military innovations, the industry expected a carryover into the consumer sector.

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