Monday, October 27, 2008

Flir Leads in Night-Vision Gear

Flir Leads in Night-Vision Gear

It's late at night on a foggy country road and you're behind the wheel of a new BMW 7 Series when you fail to notice a deer in your path 30 feet ahead. But an infrared camera, tucked inside the grille of your car, detects its body heat, produces an image of the deer on the dashboard screen, and sounds an alarm. You slam on the brakes, avoiding a potentially deadly collision.

Once found only in the imagination of science fiction writers, infrared technology is now being deployed to detect land mines in Afghanistan, scan the U.S.-Mexico border for drugs and weapons, and extend the nighttime vision of drivers beyond the distance of their headlights. These and other applications for "dual-use" thermal imaging (which means it's utilized by commercial and military customers) make up a $2.5 billion industry that's growing nearly 20% a year, according to market researcher Maxtech International.

And the leading provider of infrared technology is little-known Flir Systems (FLIR). The Wilsonville (Ore.) company, founded in 1978, may be less familiar to the public than the bellwethers that dominate BusinessWeek's ranking of Tech Hot Growth companies, such as No. 3 Apple (AAPL), No. 5 Google (GOOG), and No. 6 Microsoft (MSFT), but Flir ranks No. 8 on our list this year. (The company made its first appearance on our list last year, at No. 16).

Law Enforcement's Eyes

Flir is an overnight success 30 years in the making. The company's bread and butter has been the high-end infrared cameras it develops for commercial and government use—such as law enforcement and border protection—and then soups up for the military. Mounted on helicopters, ground vehicles, ships, and on the telescoping poles of foot soldiers, the cameras have proven crucial in nontraditional combat zones like Iraq and Afghanistan because they can locate explosives and also help discern civilians from armed insurgents. "What's happened is that there's been a change in the nature of warfare, and finding people in ones and twos and threes is more important now than in battle situations in the past," says Earl Lewis, Flir's chairman and chief executive.

Wartime has been a boon to Flir: Over the past eight years, the company has seen annual growth rates of nearly 25%. Sales last year reached nearly $780 million. On Oct. 23, the company reported third-quarter revenues of $276.7 million, a 45% jump over the same period last year. Although most of its business still comes from contracts with the U.S. and foreign governments, analysts believe Flir is well positioned to diversify into several emerging commercial markets.

Flir works with other manufacturers to integrate its technology into the dashboard of a car or the navigational screen of a boat. Vehicle makers then use Flir's technology as a selling point, touting the systems as safety options to customers. Flir also makes its own home-surveillance systems. And it sees potential in what's called thermography—handheld devices that allow building inspectors and homeowners to detect gas and water leaks, poor insulation, other inefficient use of energy, and structural damage invisible to the eye.

The company hasn't cracked the consumer market because its products are pricey: Most of its low-end consumer products run around $3,000. But the company hopes that its base of government and commercial contracts will help drive volume up across its many businesses, sending manufacturing costs down to the point where average consumers can afford the products.

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