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Defensive play

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Articles - February 2014
Tuesday, January 21, 2014
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Defensive play
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0214 DEF7
Cloud Cap Technology general manager Jim Siekkinen
gives a tour of the small factory where drone camera
systems are born.

In Hood River, Cloud Cap Technology’s components for small, unarmed drones offer another example of niche military products developed commercially. “We believe we’re not only creating great new products that our country’s defense requires and needs, but we’re also helping to pave a way for procurement in the 21st century that involves the supply base innovating and being able to offer ideas and products that meet the military halfway, to ultimately get what they need developed quicker and less expensively,” explains general manager Jim Siekkinen. That can mean taking the investment risk to create a new technology and then approaching the DOD with it, rather than waiting two to three years for a branch of the service to define its needs and develop its own specifications.

Drone technology became ideal for this contracting approach, as soldiers’ needs for intelligence, surveillance and reconnaissance (ISR in military speak) evolved rapidly over the last decade. Siekkinen equates today’s small unmanned aircraft to a pair of binoculars  —  if binoculars could search for combat hazards 20 or 100 miles over the next ridge. Founded in 1999 by two friends working at drone developer Insitu, just across the Columbia River, Cloud Cap provides the makers of unmanned aircraft with parts like autopilots, motors and stabilized camera systems.

Now a subsidiary of UTC Aerospace Systems, the company employs about 100 people and ships 100 to 200 systems each year. Siekkinen, a tall, former Minnesotan dressed in jeans and a blue vest on a cold afternoon, joined the company when Goodrich purchased it in 2009. He’s optimistic about the growth potential for unmanned systems, even as the company had to freeze some research and development projects last year because of uncertainty surrounding the 2014 federal budget.

In response, Cloud Cap is placing a greater focus on commercial markets and military spending abroad. That, too, provides a challenge because of the strictly enforced International Traffic in Arms Regulations. Every foreign sale involving a restricted item requires a detailed license outlining exactly what the customer will do with it. Smaller companies stretched in normal times to spend three to nine months completing that paperwork, then dealt with 2013 furloughs among the federal employees who review it. Restrictions have loosened in recent years. But Siekkinen says they still represent a significant competitive disadvantage in international sales, which represent about half of the market for small, unmanned systems.

Taking in the broader picture, though, Siekkinen says the outlook for unmanned aerial systems has nowhere to go but up. They’re significantly cheaper than manned planes, and they fit well within a larger shift in U.S. military strategy emphasizing special forces. “Dull, dirty, dangerous jobs are what UAS do best. So in that sense, they hold great promise for DOD to be saving money in the coming years,” says Siekkinen, who compares the technology’s current development to advances made in aircraft after their combat debut in World War I. 

0214 DEF3
At Crimson Trace, assembling the in-grip laser sights
is a labor-intensive process. In the factory, rows of
highly skilled technicians assemble the products to
extremely tight tolerances with the goal of delivering
a sight that will work right out of the box without the
need for further calibration. Many of the staff are also
customers and 100% of employees are NRA members.

Oregon will be a part of that. While the state has earned a reputation as a frequent enclave of antiwar politics, Siekkinen and leaders at several companies contracting with the Pentagon described their communities and Oregon’s elected officials as entirely supportive of their businesses. For example, the PNDC recently brought its agenda to reduce export restrictions and revamp procurement practices to a meeting at the office of Rep. Earl Blumenauer. “I think he would identify as the most progressive member of the Oregon delegation,” PNDC executive director Hunt says, “and that was just not a factor at all.”

With billions of federal spending in play, politicians tend to focus as much on the jobs that money creates as they do on the military clout it enables. Recent years have seen Oregon companies grow more coordinated and assertive in pursuing that business, even as the industry overall faces a shrinking defense budget. DOD spending cuts forced many to innovate in ways that may well bring more military business to the state in the form of exports and products developed commercially by nimble technology companies like Eid Passport and Cloud Cap. Looking ahead, the defense industry will remain a sliver of Oregon’s economy. Nonetheless, this niche market will continue to offer thousands of contracting opportunities to businesses across the state willing to take on the challenge.



 

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