Morpho Detection, Inc. (MDI) will best be able to grow in the long-term by diversifying its customer base globally, finding new markets with its current product set and eventually expanding its product portfolio, according to the company’s new chief, Brad Buswell.
The company is currently limited to its two major product lines, explosives detection systems (EDS) for screening checked baggage, and explosives trace detectors (ETD), but needs to expand beyond these products to become more competitive in other market sectors, Buswell tells TR2.
“My intention is that we grow to a leadership role in the aviation checkpoint,” Buswell says. “The emerging air cargo sector is very interesting” with new regulations being implemented for supply chain security and it’s not a “problem that’s going away anytime soon,” he says.
MDI has been selling its ETD products into the air cargo security market, mainly its Itemiser DX, but Buswell, like some of his competitors, believes there’s more room to grow here, particularly on a global scale. MDI exhibited at the Paris Air Show this summer and one of the takeaways for Buswell was continued interest from potential customers for air cargo security solutions, particularly among the third party logistics providers such as FedEx, UPS and DHL.
In fact, MDI recently received a $5 million order from one of the major logistics providers for its Itemiser DX.
Moreover, he believes there are also near-term opportunities for ETD products in other market segments such as infrastructure protection and field-type operations.
As for expanded product offerings, MDI is developing a system to detect explosives in palletized cargo for the air cargo market. Funding for that effort is being provided by the Department of Homeland Security’s (DHS) Science and Technology Directorate.
Buswell believes that government investments are critical if effective palletized screening systems are going to become a reality. There are currently no palletized screening solutions that DHS believes are effective for explosives detection that can be widely used throughout the air cargo supply chain.
While MDI’s Itemiser DX systems are in widespread use at airport security checkpoints, particularly with the Transportation Security Administration in the U.S., Buswell says the current core product at the checkpoint is the Advanced Technology X-Ray system for screening carry-on bags. These systems, at least for the U.S., are currently supplied by OSIS Systems [OSIS] and Smiths Detection although L-3 Communications [LLL] also has a system that is certified by TSA.
Acquisitions and Partnerships
The seemingly obvious way to gain a foothold with AT X-Ray products is through an acquisition although Buswell suggests that another way is to partner with a hardware vendor to take advantage of MDI’s core expertise in developing detection algorithms.
“We are looking at combining our core expertise with other potential partners that have hardware,” Buswell says. A potential hardware partner doesn’t have to be one that has a currently certified product for aviation security, he says.
Still, MDI will be keeping acquisitions in mind.
“At end of day, if you look across the industry, I think it’s at a point in time where we’re going to start seeing some strategic moves, consolidation, and so we need to make sure that we’re strategizing around that as well,” Buswell says.
The current leader in the detection area in terms of sales is Smiths Detection, with other competitors less than half its size. Buswell says that for is a plenty of room for acquisitions or joint ventures for companies to compete against Smiths Detection with more complete product lines. One glaring absence in Smiths Detection’s portfolio is computed tomography-based EDS for checked baggage screening.
One product area that Buswell says MDI won’t be getting into is whole body imagers that the TSA is currently buying and installing at airport checkpoints to detect anomalies hidden beneath passengers’ clothing. He doesn’t see room for a new entrant in this product category and doesn’t believe there is widespread traction for it internationally.
MDI at one time sold a walk through explosives trace portal to the TSA although that program was canceled due to maintenance issues with the system. More recently, MDI acquired mass spectrometry experts Syagen Technology, which also has a “top notch” trace portal that Buswell believes has potentially strong global business opportunities because it can detect a range of explosives, not just conventional, and because it does not emit radiation or present privacy concerns (TR2, Aug. 3).
“We are looking at the right way to relaunch the effort on trace portals,” Buswell says.
MDI is also working with Syagen to develop a new explosives trace detection desktop system based on mass spectrometry. This will provide a detection capability for homemade type explosives, Buswell says.
MDI is part of France’s Safran Group, which also operates two U.S.-based identity solutions firms, MorphoTrak and the former L-1 Identity Solutions, MorphoTrust. At the recent Paris Air Show MDI and MorphoTrak unveiled a concept for a future checkpoint that combines their respective detection and biometric solutions as an integrated approach to meet evolving risk-based screening requirements (TR2, June 22).
Buswell says that the high-throughput, trusted-traveler lanes that TSA is beginning to experiment with ultimately means it needs to be “as hands off a process as possible.” Safran’s combination of detection and identity management capabilities gives it the ability to possibly offer a “totally automated trusted traveler lane,” he says.
Sales for many of the detection companies have been lumpy from quarter to quarter and year to year. Buswell says for MDI to grow long-term and to smooth out revenue intake, international sales are critical.
Last spring MDI established MDI International based in Paris, which is responsible for all MDI sales and service activities outside the U.S., Canada and Germany. MDI International is outside the Special Security Agreement that MDI has with the U.S. government, making it easier to leverage MDI’s products for global sales, the company believes.