Search, Detection, and Navigation Equipment Manufacture

Industry Overview

The US search, detection, and navigation equipment manufacturing industry includes about 500 companies with combined annual revenue of about $37 billion. Major companies include Garmin, Furuno, and Raymarine. Divisions of large integrated companies such as Boeing, Northrop Grumman, and Raytheon also manufacture search, detection, and navigation equipment, primarily for national security and defense applications. The industry is highly concentrated: the largest eight companies have about 75 percent market share, and the largest 50 have about 95 percent market share.

Competitive Landscape

Demand depends on discretionary consumer income, general economic conditions, and federal budgets for defense and homeland security. Large companies have advantages in purchasing power, manufacturing volume, and distribution efficiencies. Small companies compete by offering specialized products and subcontract manufacturing to larger system integrators. Annual revenue per employee is about $270,000.

Products, Operations & Technology

Major products include radar (RAdio Detection And Ranging); sonar (SOund NAvigation Ranging); and GPS instruments and systems. Manufacturers develop a wide array of products for commercial and military markets. Products for commercial markets include depth finders; fish finders; air traffic control systems; navigational aids for ships, planes, and land vehicles; and speed detection devices. Military applications include most of these products, along with radar defense systems.

Radar was discovered in the late 1800s. Many advancements have been made in the technology, but the underlying scientific principle remains: a radio (electromagnetic) signal traveling at the speed of light is emitted from a transmitter and, when a solid object is in its path, the signal rebounds (echoes) off the solid object and returns to a receiver. The direction and time required to receive the echo is used to calculate the exact location, distance, and speed of the object.

Sonar operates under a similar principle, employing sound waves that travel much slower than radio waves. Sonar, therefore, typically is good for underwater search and detection applications where slow moving ships, fish, or permanent objects are targets.

GPS technology was developed for the US government in the late 1970s and became available for public use in 1994. A series of 24 satellites orbit at about 12,000 miles above the earth’s surface to support land, sea, and air navigation. Unlike radar and sonar, GPS is purely a directional and distance aid and does not provide any search or detection capability.

GPS satellites transmit electromagnetic signals, which are picked up by receivers (the commercial product) and tuned to compatible frequencies. Users must receive a signal from at least three of the orbiting satellites and, through the mathematical concept of triangulation, can determine, within 10 meters (and much more precisely if required), their exact location on earth, and the direction and time to any other location. The federal government removed some substantial restrictions for commercial users in 2000 by eliminating Selective Application (SA), a feature that limited non-military users to an accuracy of 100 meters and restricted use in certain areas of the world.

Raw materials and parts used in the manufacturing process include printed circuit boards; receivers; transmitters; semiconductors; liquid crystal displays; miscellaneous components and accessories for electronic circuitry; sheet metal; and other metal assemblies, primarily of aluminum and steel. Raw material costs are about one-third of revenues.

Commercial products are typically built to stock with emphasis on low cost. Manufacturing processes are highly automated for smaller stationary and portable units. Some manufacturers produce 300,000 or more units monthly to keep up with demand. The manufacturing process involves assembling and integrating parts (receivers, transmitters, controllers, switches, screens and monitors), followed by enclosing contents in metal or plastic covers. Quality is checked using statistical testing.

Large systems for defense applications are custom-made and may take several years to manufacture to complex design specifications. Prime contractors often use subcontractors to fill an order. Due to extended development and manufacturing times, contracts may be awarded in phases. The government monitors, inspects, and signs off on periodic progress reviews and awards progress payments. Subsequent phases proceed based on satisfactory performance to date. Some projects involve leading-edge technology developments, so the initial contract award is for R&D only. Upon successful proof of concept, the company is then awarded a manufacturing contract as the next step of a multi-phase contract.

Company R&D drives revenues. Commercial manufacturers bring many new products to market annually via new additions, upgrades, and modifications to existing technologies. Companies may benefit from R&D paid for by government agencies.

High-volume manufacturers use enterprise resource planning (ERP) systems extensively, which improve purchasing and inventory management from raw material receipt through finished goods delivery. Transportation and shipping software aid in efficient product distribution to warehouses and retailers. Companies are also automating the product development process through electronic design software, 3D visualization software, and automated testing systems.

There's more: Quick insight to make your sales call count.