Drones are Exploding . . . Sales-Wise So Why Isn’t Central Oregon Benefiting?


(Sam Shawe, Founder/Owner of Outback Manufacturing Inc. standing next to one of his high tech CNC (Computer Numerical Control) machines used for the production of drone components | Photo courtesy of Outback Manufacturing)

“Drone sales surpassed the $1 billion in revenue mark for the first time, as both hobbyists and companies are tapping into the flying devices for a growing number of uses — from taking selfies to inspecting railroads,” wrote Kim Hart, Axios Managing Editor, on the U.S. drone industry in 2017.

If that’s not surprising, how about this industry growth fact? In 2013 just a few hundred thousand units were sold. By the end of this year, that number will jump to 4.45 million units according to the Consumer Technology Association.

Now there’s a mind blower.

So are these units all going to 13 year-old kids who have moved beyond remote control cars?

Well, not really. But personal drone sales are exploding these days. Think of them as extensions of smart phones. Mounted with cameras, drones can take aerial photos and action videos of everything from wedding photos to mountain bike adventures.

Regarding the business use of personal drones, they’re used for real estate tours, outdoor photography, equipment inspections, agricultural surveys and many other applications.

And then there’s the truly commercial use of drones. Specialized and high tech, these drones are designed for package delivery (think Amazon…more on this later), inspecting industrial sites and 3D mapping to name just a few applications.

“There are an awful lot of industries that are incorporating the use of drones these days,” said Karl Baldesarri, Central Oregon Community College’s (COCC) aviation program director. “Over the last five to six years the number of new companies using drones for purposes other than real estate tours has grown from a handful to more than 30.”

So the future seems very bright for the Unmanned Aerial Systems (UAS) industry. And maybe best of all for consumers — pizza deliveries hovering at your front door……

And just think of all the new UAS-related companies with new jobs that should be springing-up here in Central Oregon. We’ve already got several aircraft and component supply companies — and COCC’s UAS Degree Program to meet their needs for trained, qualified workers.

But that’s not what’s happening. Whaaat?

Maybe you’ve heard of the Federal Aviation Administration (FAA)? A division of the U.S. Department of Transportation, the FAA’s primary mission is to ensure safety of civil aviation — and that includes drones.

Because their primary mission is safety, here are a few of the current rules for commercial drone operators: Drones must fly less than 400 feet high, must stay within “visual line of sight only,” cannot fly over people, no nighttime operation and they cannot weigh more than 55 pounds. (The complete FAA regulations can be viewed at https://www.faa.gov/uas/media/Part_107_Summary.pdf.)

Safety makes sense, right? I sure don’t want a drone being sucked into the engine of my commercial flight as I depart from Roberts Field.

So forget having that 55-inch Smart TV drone-delivered on Christmas Eve from Amazon. At least not in the immediate future.

“Just think, if you can’t operate a drone outside of the line-of-site, or over 400 feet, you’ve reduced the actual capability of that drone remarkably,” Baldesarri said. “Delivering a package halfway across the country would be impossible with these regulations.”

Earl Bowerman, VP of operations with Kawak Aviation Technologies in Bend and former executive director with SOAR Oregon, does not believe that the FAA regulations alone are slowing down UAS growth.

“Look, managing air space for UAV’s (Unmanned Aerial Vehicles) is not developed yet, we’re years away from an Amazon delivery system because integrating unmanned traffic management systems into manned systems is years away,” said Bowerman.

Baldesarri agrees that the FAA is not the bad guy here and that safety is very important. “Opening up that air space too much, too quickly would produce a safety problem,” Baldesarri said. “There would be highly qualified and certified drone operators – and then there would be kids flying 100-pound drones in the air space of planes.”

But Baldesarri believes he knows why there are no companies manufacturing drones here in Central Oregon. The investment at this time would not be worth it. “The opportunity (to start manufacturing drones in Central Oregon) would be a function of the FAA regulations,” Baldesarri said. “As the regulations become broader and less restrictive that might open the door to someone who might be interested in jumping into the industry.”

Perhaps it’s not economically viable to manufacture drones here now — but that hasn’t stopped drone parts manufacturing.

Outback Manufacturing Inc. is a Bend-based full-service machining facility which employs about 25 people. For the past 13 years they’ve been manufacturing components found in a wide range of precision instruments — defense stealth drone components are a big part of their business.

“In years past it’s been as high as 80 percent of our business,” said Sam Shawe, founder and owner. “Now it’s about 60 percent.” And the majority of their components wind up at Insitu.

The “big dog” in the UAS industry, Insitu is a subsidiary of The Boeing Company. They design, develop, produce and operate high-performance unmanned aircraft systems. Based in Bingen, Washington, the company employs approximately 800 people and has sales of approximately $500 million.

Outback proves that it is possible to profit from the growth of the UAS industry. But Sam Shawe is leery about expecting explosive growth. “A lot of people are chasing rainbows in the industry,” said Shawe. “The fallacy is that everyone’s going to get rich building drones.”

Like Karl Baldesarri at COCC, Shawe believes the government is getting in the way of growth. “Government (FAA) regulations are the biggest inhibitor of growth,” said Shawe. “Other countries are way ahead of us with drone regulations and applications.”

Both Sam Shawe and Earl Bowerman also point to the failure of Oregon’s political leaders to understand, support and fund the attraction and growth of the UAS industry. “EDCO (Economic Development for Central Oregon) worked hard a few years back to recruit UAS manufacturers,” said Bowerman. “And nothing came of their hard work, the politicians didn’t get or support it.”

On a brighter note, Oregon now has three FAA test sites for drones. The Confederated Tribes of Warm Springs UAS Test Range encompasses 645,000 acres along reservation borders. The two other test sites are in Tillamook and Pendleton.

Oregon’s ranges operate under the Pan-Pacific UAS Test Range Complex, which is administered by the University of Alaska, Fairbanks.

So it’s hard to say whether Central Oregon will benefit from the rapid growth of the UAS industry in the near future.

But here’s one thing to ponder about the industry’s future — Amazon Prime Air wants to use drones to get packages to customers in less than 30 minutes. It demonstrated this at a conference in 2017.

I’m betting the richest man in the world (Jeff Bezos) will shake-up this industry as well. How about you?


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