Texas company stands at the forefront of emerging domestic drone market

Posted on: March 9th, 2012 by Teddy Wilson No Comments

Montgomery County Sheriff's officer with Vanguard Defense Industries made Shadowhawk unmanned aerial vehicle

Unmanned aerial vehicles, otherwise known as drones, are big business. With the war in Iraq over and the war in Afghanistan scheduled to draw down, defense contractors that manufacture drones are looking domestically to replace the revenue created from a decade of conflict in the Middle East.

According to one study, UAV spending will almost double over the next decade from current worldwide UAV expenditures of $5.9 billion annually to $11.3 billion, totaling just over $94 billion in the next ten years. The United States is leading the way, as the study finds that it will account for 77% of the worldwide RDT&E spending on UAV technology over the next decade, and about 69% of the procurement.

The public knowledge of drones has typically been limited to the use of them in war zones in the Middle East and the controversial targeted killing of American citizens. With the passage of H.R. 658, the FAA Modernization and Reform Act of 2012, America’s airspace is primed for an influx of drones. Within nine months the FAA is required to submit a plan on how to safely provide drones with expanded access.

As the domestic skies open up, so do possibilities for defense companies to take advantage of the emerging market. The primary customer of drones is the military; the Department of Defense has spent $8.5 billion on unmanned aircraft technology so far. Law enforcement agencies are also increasingly utilizing the technology.

According to an article in the Courier of Montgomery County, the Montgomery County Sheriff’s Office is waiting for the right moment to use a drone it purchased last fall from Vanguard Defense Industries. The estimated $500,000 piece of equipment was paid for through a Department of Homeland Security grant, and costs for operations are approximately $40 per hour.

Michael Buscher, founder and CEO of Vanguard Defense Industries, served for more than twenty years in the United States military, and is a veteran of both the wars in Iraq and Afghanistan. After retiring from the military Buscher was convinced that there were “major gaps” in the unmanned services. He thought that there was a market for rotary systems, drones that operate similarly to helicopters, which he believes is the best system.

After contacting several defense contractors it became apparent to Buscher that those companies were not interested in rotary systems, mainly because the companies felt they could make more money in fixed wing technologies. They also criticized the rotary systems for the difficulty they had in stabilizing a camera image. In 2009 Buscher built a prototype and in 2010 Vanguard signed its first multimillion dollar contract. An oil and gas company purchased one of the drones to use as an early warning device for their platforms operating off the coast of Africa in the Gulf of Aden.

Vanguard is a member of the Association of Unmanned Vehicle Systems International, a trade group that according to its website is “devoted exclusively to advancing the unmanned systems and robotics community.” The AUVSI works closely with the U.S. House Unmanned Systems Caucus, otherwise known as the “Drone Caucus.” According to the group’s website, its mission is “to educate members of Congress and the public on the strategic, tactical, and scientific value of unmanned systems.”

According to data from the Center for Responsive Politics, this year AUVSI has spent $280,000 lobbying Congress. Before 2011 essentially all of the AUVSI lobbying efforts were in issues dealing with national defense, but last year AUVSI lobbying interests included aviation, airlines, airports, transportation, and homeland security. This year the majority of AUVSI lobby efforts have been for provisions on unmanned aircraft systems in both the House and Senate versions of the FAA Modernization and Reform Act.

Does Vanguard expect that the domestic market for drones will be improved because of this legislation? “We certainly do,” said Buscher. “That legislation is going to be a tremendous help for this market. Law enforcement has been screaming for this product for the past ten years.”

Buscher said that Vanguard projects its domestic sales for next year to be between $35 million and $40 million, which would represent a 25% increase. Despite the projected increase in revenue, Buscher downplayed the reports of a boom in the domestic market for drones. “I don’t see the domestic market as being such a boom,” said Buscher. “Our bread and butter is still going to be overseas foreign military sales.”

Even though Vanguard is based in Texas, Buscher said a significant amount of their business is from out of state entities. Currently Vanguard contracts with eleven different agencies on all levels of government, from local to state to federal.

The use of private and corporate-owned drones has caused airline pilots and civil rights organizations to raise questions about the implications of their usage. United Press International reported that the Air Line Pilots Association (ALPA) stated that those who operate drones should meet the same training and qualification as pilots.

The American Civil Liberties Union (ACLU) raised questions about the “very serious privacy issues raised by drone aircraft” and said that the legislation pushes “the nation willy-nilly toward an era of aerial surveillance without any steps to protect the traditional privacy that Americans have always enjoyed and expected.”

“The interesting thing is that we’ve tried to engage with the ACLU on that issue,” said Buscher. He went on to say that he respects their views and that privacy needs should always be respected, but that he thought that this issue was past debate. “The fact is that you can put far more powerful cameras on helicopters than you can on unmanned aircraft. There are current requirements and we need to leverage those to keep our law enforcement safe. This is an argument that should have been levied 50 years ago.”

Buscher said Vanguard generally sides with the ALPA on safety issues, and touted the training of operators. “Any personnel that operate the aircraft we require to take an FAA Type 2 physical,” said Buscher. “In addition we require ground school and the ground school test. It is the exact same training that a full scale pilot would receive. We are the only company that does this.”

In addressing the safety concerns, Buscher pointed to the company’s integration of safety technology into the design of the drones. “All our unmanned vehicles are currently equipped with a Mode S transponder,” said Buscher. “This allows not only air traffic control but other aircraft to see the vehicle. This is not required or mandated. We thought it was the proper safety measure to take.”

According to Buscher, Vanguard is currently working with eleven different clients, spread out over local, state, and federal law enforcement agencies. While Buscher thought that Vanguard customers would primarily be based in Texas, they have signed contracts with agencies across the United States. Buscher pointed out that they had “received a lot of feedback” from the East Coast.

Currently in development are a number of different power sources that Vanguard hopes to use to increase the flight times of its drones. These include hydrogen fuel cells that are estimated to increase flight time to up to six or seven hours. In addition they are also developing battery cell packs that can last between two and three hours. Currently Vanguard’s drones use gasoline or jetfuel.

The Federal Aviation Administration has requested that drone manufacturers and the public comment on where drone testing facilities should be located. As the Texas Independent previously reported, several Houston area lawmakers requested that acting administrator of the Federal Aviation Administration, Michael Huerta, consider Ellington Field, a small airport in southeast Houston, as a new testing site for unmanned aircraft.

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