Posted on: Sunday, October 28, 2001

The September 11 attack | Coping with the aftermath
Tech firms help buoy economy

By John Duchemin
Advertiser Staff Writer

STI electrical engineer technician Ross Uchida examines a littoral airborne sensor, hyperspectral, an imaging device that the military might use in its terrorism war. The ability to help with this endeavor is giving research and development firms such as STI an economic boost. Cory Lum • The Honolulu Advertiser

Seven weeks after the Sept. 11 terrorist attacks, Hawai'i's economy is still steeped in gloom, but its tiny military research-and-development community is providing a few rays of hope.

The armed forces are showing an increased interest in high-tech equipment to help fight terrorism, and many in Hawai'i expect a big boost for local research-and-development companies. The Defense Department has its eye on several new technologies developed in Hawai'i, including some sophisticated detection devices, and is preparing to back its interest with a beefed-up budget.

A critical defense appropriations bill, soon to be drawn up in the U.S. Senate, could bring many millions of dollars more than normal to Hawai'i if Sen. Daniel Inouye, chairman of the Defense Appropriations Committee and a supporter of the bill, can help shepherd it through Congress.

While the money isn't flowing yet, observers say the business climate for military contractors is healthy and hopeful. And while this segment of the economy is tiny, with a handful of companies employing several hundred workers, several of those companies are saying they will add jobs and increase revenues in the near future — welcome news when thousands of tourism workers have lost their jobs.

"The defense bills being proposed bode very, very well for Hawai'i sci-tech companies," said Gary Baldwin, chairman of the executive committee for the Kaua'i Economic Development Board. Baldwin's board has helped attract several research companies to the Pacific Missile Range Facility at Barking Sands.

Several officials in the local military contracting scene say the Defense Department is seeking $10 million in new research money for Hawai'i in this fiscal year's budget. Much of it is to develop and refine sensor and detection equipment. Companies including Honolulu-based Science & Technology International and Orincon, a San Diego firm with a Kailua branch, stand to directly benefit from the money.

Ten million dollars is not much compared to the hundreds of millions of dollars of tourism losses expected this year, but it's perhaps two to three times the usual amount the Defense Department normally requests for Hawai'i, said Joe DeTommaso, business development director for Orincon in Hawai'i.

"This would be a very large appropriation," DeTommaso said. "For this tiny island, anything above $3 million would have to be considered really big."

Help from Inouye

The amount is not final. The Senate defense appropriations bill has yet to be "marked up," the term for adding line items like the Hawai'i research proposal. It must pass through committees, be approved by the full Senate, and be "reconciled" with a House of Representatives version of the bill, and finally signed into law by President Bush.

As usual, Inouye could play a key role in getting the Hawai'i military money approved. Inouye staffers would not comment on the specifics of the Defense Department request, but said it could help the University of Hawai'i and companies producing mine detection and other sensing equipment, as well as those working at the Air Force's Maui High-Performance Computing Center, the Haleakala observation station and the Pacific Missile Range Facility.

"Technology that could aid our troops is clearly in demand, and the position we're taking is we've got smart guys up here, making appropriate, applicable technology," said Jennifer Goto Sabas, Inouye's chief of staff in Honolulu.

The money would probably be divided into chunks of several million dollars each, split among companies and research agencies.

Orincon's DeTommaso said such contracts could mean dozens of high-tech jobs. Orincon would probably hire 10 to 15 new people in Hawai'i if it lands some of the money.

Dual-use firms tapped

But it's not just the Defense budget proposal that has excited Hawai'i's small "dual-use" community, which consists of several companies developing products for both military and commercial use.

In the days after Sept. 11, federal defense agencies have called directly to local dual-use companies, asking for any new products that could be put to use by the military in the next few months.

For example, a military research-and-development group known as the Defense Advanced Research Projects Agency called Bill Friedl in September to pick his brain for useful technology in Hawai'i.

"The question was, what was available for immediate application, or in the pipeline, that would benefit from an infusion of money," said Friedl, technical director of the National Center of Excellence for Research in Ocean Sciences, a federally funded Hawai'i program that funnels government money to Hawai'i researchers.

Friedl forwarded nine likely candidates, and the agency selected two prospects for further review — a sensing system developed by Detection Limit Technologies, a small startup based in Kailua; and a sea rescue device being developed by a consortium of local companies.

"There's clearly been a spike in interest of these sorts of technologies," Friedl said.

The military has also asked Science & Technology International to speed up work on an imaging system that can pick out submarines, mines, enemy encampments and other objects that would be invisible to the naked eye.

New jobs likely

Nick Susner, owner and chief executive of STI, said the increased work will lead to a 20 percent increase in revenues for the 120- employee company.

As it ramps up production, STI has offered jobs to nine people, and wants to immediately hire 15 more engineers, scientists, machinists and other employees, Susner said.

Observers said these requests show the military not only is hungry for new devices to add to an already formidable arsenal, but is becoming more willing to take risks on unproven but promising technologies.

That means an opportunity for small research firms in Hawai'i, which in normal times may be crowded out by big firms like Boeing and Raytheon, said Pat Sullivan, founder and president of Oceanit, a Hawai'i research- and-development firm with a work force of 100 statewide.

Oceanit has a few dozen government projects in the works, many with the military, and has landed a multimillion-dollar federal contracts since Sept. 11 to help develop an Air Force space-scanning telescope network.

"There's much more openness, interest in new ideas and in creative thinking," Sullivan said. "When you're at war, you have to take risks."