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16 May 04. The FT reported that Northrop Grumman expects US homeland security to offer new sources of growth in all of the defence group’s divisions, with estimates of $500m of business this year probably conservative, according to Ron Sugar, chief executive.

He said his response was “wow” when Northrop put together a list of its programmes in homeland security, adding that projections of $500m in business from homeland security could be cautious. “Actually, we think we could do more than that,” Mr Sugar told the FT in an interview.

Northrop’s case highlights the fast accelerating market in anti-terrorism and domestic security for defence groups. Big US defence contractors have positioned themselves to capture some of the market resulting from the terrorist attacks in New York and Washington on September 11 2001.US government efforts, on levels ranging from federal to municipal, have produced a new source of growth for defence groups.

Specifically, the US Department of Homeland Security has a faster growing budget than the military defence budget. Homeland Security department investments are expected to grow more than 10 per cent each year until 2009. Between fiscal 2004 and 2008, its total investment is projected at $37.3bn. The defence budget is $402bn for fiscal 2005. Investment funds for new equipment are expected to grow about 6 per cent on average until 2009.

Northrop is strong in this emerging market, Mr Sugar said. Its programmes for homeland security include Deepwater, a modernisation of the US Coast Guard, the US Postal Service bio-terrorism detection system, and building the secure data network connecting all government agencies in the Homeland Security department.

Mr Sugar also sees possibilities for its intelligence and reconnaissance products, including Global Hawk, a long-range unmanned aerial vehicle that was used successfully in Iraq and Afghanistan.

In Deepwater, a joint venture with Lockheed Martin, Northrop’s work includes supplying the ships for the Coast Guard such as six new “national security cutters”. Mr Sugar points out that this is like
supplying the world’s fourth-largest navy. “The mission is more important than ever,” he said. “The world is a dangerous place, and it’s not getting any safer.”

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