Security firms tackling business boom

Some Israeli firms have a head start in the expanding market for solutions to security problems, but competition will be fierce, observers say.Spread out in the sprawling Kiryat Gat industrial zone, Shalon Chemical Industries has seen some hard times. The …

Some Israeli firms have a head start in the expanding market for solutions to security problems, but competition will be fierce, observers say.Spread out in the sprawling Kiryat Gat industrial zone, Shalon Chemical Industries has seen some hard times. The nation’s only producer of gas masks, it has closed line after line of its plant during the post-Gulf War decade, as demand declined and its products’ durability improved.



But since Sept. 11, the phones haven’t stopped ringing at the privately owned factory, as Shalon – which also produces protective equipment against nuclear, biological and chemical warfare – has received thousands of orders from European and U.S. customers.



“We opened new lines which had been closed for a long time, and went from a 13-hour day to around-the-clock shifts,” said Erella Shwartz, head of research and development at Shalon.



On Sept. 11, just 125 people were employed at Shalon. Today that number stands at 600, and the new workers have raised production from 35 percent of capacity to 100 percent.



“And we still can’t fill all of the orders,” Shwartz said. “Our products have a good reputation, and therefore there is a great demand for them. So we are now in negotiations to open new lines in the United States.”



Shalon’s first commitment is to Israel’s Defense
Ministry, but it is trying to fill orders placed by civilian companies in the United States that are dealing with nuclear, biological and chemical contamination. All of the orders from private distributors are on standby.



Shalon is just one of hundreds of security-related companies in Israel hoping to cash in on the post-Sept. 11 windfall. And they are playing on Israel’s martial image, forged by wars, terror and non-conventional threats for more than 50 years.



“We are not wiser, nor have we become geniuses, or have some kind of secret weapons,” said Max Livnat, director of the investments promotion center at the Ministry of Industry and Trade. “But we have the greatest experience regarding anti-terror, airport and airline security, defense against Scud attacks, and all sorts of dangers that might arise. Our main contribution is our ability to integrate, to build security systems according to clients’ needs.”



According to Israel’s Ministry of
Industry and Trade, there are about 200 companies in Israel that deal with terrorism prevention, security and emergency medical response. The terror attacks in the United States, coupled with the emerging anthrax threats, have shifted world attention to the methods and technologies employed in the fight against terrorism.



Some are media shy. One of these includes a Jerusalem-based company that recently signed a deal with the U.S. Defense Department to sell a patch worn by soldiers that changes color when it detects a biological or chemical attack.



Companies that deal with personal security and paramilitary training are even less keen to appear in the press. According to reports, some of these firms are run by former senior Israel Defense Force and Shin Bet officers who have trained mercenaries, including even the private armies of Colombian drug lords.



Besides the Sept. 11 attacks, the wave of anthrax-tainted letters being spread in the American mail has also sown the fear of biological and chemical attack.



One Israeli company, Nufar High Tech, immediately began marketing “security rooms,” which it claims can withstand the anthrax microbe and other biological and chemical attacks for several days.



“They can be set up on a home’s patio,” one of their advertisements said. “And during peacetime they can be used as an office or guest room.”



The company said it hopes to sell the shelters – costing about $40,000 each – in the United States, where it said no existing security rooms are being produced.



Another area where Israeli firms are increasing their sales is in medical response to biological and chemical attacks.



Dexon, a privately owned pharmaceutical company, is producing 24 million tablets of various medicines daily, and is currently supplying the United States with Doxycycline for treatment of anthrax. Dan Oren, chief executive of Dexon, estimates this year’s sales will increase from $56 million to $70 million, and will reach $200 million by 2005.



The manager of one security company, who requested anonymity, said there are several areas in which other countries could benefit from Israel’s products and expertise. But he warns that directors of Israeli companies should not think they are the only ones who can supply adequate security products to the rest of the world.



“There are certain items [for which] Israel can find a niche, but there are many instances where similar items available in America are better,” he said. For example, Israel is not as experienced at producing electro and magnetic sensors, and fences and closed-circuit TV systems are also cheaper in the United States.



According to this manager, who has a rich resume in representing Israeli security industries, Israel is competitive in the fields of ground radar, night vision and night cameras, and night-vision products.



He also believes that the country’s rich experience in training security guards and anti-terror combatants is certainly an area where foreigners look up to Israel.



“We can think in the mind of the terrorists, and in this matter our experience is very important,” said the manager, a former air marshal for El Al. “Foreign bodyguards don’t learn how to deal with bombs. It isn’t like McGyver [the American TV hero] trying to remember if it is the blue or the green wire to cut. Here our training for bodyguards includes learning how to really deal with bombs.”



Still, some in the security profession here fear that any hysteria-sparked potential profits may wane once Osama bin Laden and al-Qaida is eliminated. So Israeli businesses are looking ahead to see how they can find their place in the post-Sept. 11 security business world.



Bill Hutman, head of Armor Group’s Middle East division based in Nicosia, Cyprus, said all indications show that security awareness will not drop over time – quite the contrary.



“The security world will never be the same,” said Hutman, whose company provides solutions for global security risks and business intelligence. “Prior to Sept. 11, the issue of security for many companies was not a priority. Now most international companies are making it a higher priority, even those who deal solely in Europe or the United States.