USIC 2012: Unmanned Systems is Big Business for San Diego



By Danielle Lucey



San Diego has a long history of military presence, but it’s the still-growing business of unmanned systems that is supplying a major part of the Southern California city’s economy.



At the AUVSI San Diego Lindbergh Chapter‘s Unmanned Systems Interoperability Conference 2012, held last week, the National University System Institute for Policy and Research released a report finding that unmanned systems accounted for $1.3 billion locally in 2011. The 7,135 jobs related to unmanned systems in San Diego — primarily centered in North County, which Northrop Grumman and General Atomics call home — make this sector the largest portion of the military market in the region.



“We expect or anticipate there’s some slow down in spending, but we’re seeing that UAVs are actually increasing, and the market is expanding beyond defense even, so there’s huge opportunities here,” said Kelly Cunningham, senior fellow and economist for NUSIPR. “I think we were able to assess that, and we wanted to show to the whole community of San Diego that there’s a tremendous industry here.”



Erik Bruvold, president of the institute, cautioned that the industry needs to talk about how to move forward with this knowledge. 



“Clearly over the next decade budgets are going to be tight in Washington, and when your principal customer is facing those signs of constraints, doing business and the high cost of doing business in a place like San Diego is going to be a challenge,” he said.



In addition to the cost of manufacturing in the area, Bruvold highlighted San Diego’s very busy airspace as a hurdle, versus less congested communities like Grand Forks, N.D.



Rep. Duncan D. Hunter (R-Calif.), congressman for the northern and eastern parts of San Diego, participated in a panel discussion at the conference. He views San Diego’s one-stop-shop for defense as a boon to the area, despite Bruvold’s concerns. 



“There are a lot of things you can make here in California and immediately test,” he said. “If you want to be with the admiral of whatever fleet here in San Diego, well guess what? He’ll probably be in town at some point, and you can show him.”



Jim Zortman of Northrop Grumman echoed Hunter, saying San Diego’s access eases doing local business in the unmanned systems industry. However, he cautioned that strict export laws are still a major concern for the defense sector and could put the brakes on growth, much like happened to the space systems industry.



“We’ve got a chance to not repeat that mistake in the unmanned business,” he said. “And we’ve got a fairly narrow window to do that.”



Much like the dawn of manned aviation, Zortman said he anticipates the civil and commercial markets will end up being the most valuable for unmanned systems.



“San Diego starts with a set of initial advantages, but there’s a number of things we have to do to protect those if we’re going to be able to capitalize on it and not fall into some of those previous traps.”