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Global Shipping in the Security Age

Since September 11, Osram Sylvania -- like most major U.S. manufacturers -- has become painfully aware of just how vulnerable it is to security breaches. Based in Danvers, Mass., just outside Boston, the company is a unit of Osram, a Siemens subsidiary with sales of about $4 billion a year, ranking it among the world's three largest producers of lighting products, with General Electric and Philips.

As a global, vertically integrated company, Osram regularly ships materials and products across borders. In the wake of September 11, this process has suddenly become far more complicated -- threatening to increase the cost and slow the efficiency of much of U.S. manufacturing.

Nowhere is the problem more apparent than at the U.S.-Canada border. The two countries have the world's most extensive trading relationship, each year shipping hundreds of billions of dollars of goods across the world's largest undefended border. Facilitating this trade was a major aim of the North American Free Trade Agreement.

INSPECTION DELAYS. Ever since the September attacks, however, big delays have been regularly cropping up along the border, as officials insist on carefully inspecting trucks for potential terrorist-related problems. This has created problems for General Motors and Ford in Detroit and, in turn, Osram Sylvania, a major supplier of lighting products to the auto industry.

Now, Osram might be part of an innovative solution. In response to all the complaints, the U.S. Coast Guard suggested testing out a new, high-tech system for tracking sea containers, which could eliminate the need for time-consuming border checks. Osram Sylvania was asked to be a guinea pig for the experimental system, using its big plant in Hillsboro, N.H.

The first test of the system is now under way. Here's how it works:

A shipment of bayonet-style auto lamps (used in cars) is packed into a sea container at Osram's plant in Slovakia. Once the container is inspected, it's tagged by officials from the U.S. Transportation Dept. with a special tracking device that allows Osram to monitor the container's whereabouts. More important, this tracking device will detect any effort to tamper with the container -- such as a terrorist trying to stuff it with explosives.

FAST PASSAGE. Test containers move through the port of Hamburg, Germany, and then to Montreal. On arrival in Montreal, these test runs are shipped via truck to Hillsboro. Under normal circumstances, the trucks would have been detained at the U.S. border for a lengthy inspection that included opening up the containers.

Not Osram Sylvania's trucks, however: They're allowed to speed through the border to Hillsboro, where the containers will be carefully examined to see if the tracking devices have detected any tampering. Assuming all is O.K., they're then unloaded and the product distributed.

Ron O'Brien, a spokesman for Osram Sylvania, argues this is a "fail-safe" system that could be used on a widespread basis to tighten up U.S. border security. He cites a recent incident where people broke into and concealed themselves in a sea container in a bid to enter the country illegally.

THE PRICE OF SAFETY. Any such tampering would be spotted immediately by the devices being used by Osram Sylvania. Moreover, the process of shipping these containers into the country would be vastly accelerated.

These high-tech tracking devices aren't cheap: They can cost up to $2,000 apiece, vs. just $1.50 for more vulnerable mechanical seals. But the price would presumably drop with volume production. And if terrorism becomes an even greater threat, that may well be a price U.S. industry is willing to pay.

For more homeland-security coverage, see:

BW Online, 6/4/02, "Uncle Sam's Ally: Corporate America"

BW Online, 5/31/02, "America's Biggest Job"

BW Online, 5/31/02, "Tom Ridge on Safety's Fearful Price"

The McGraw-Hill Companies' Homeland Security & Defense special report By William Symonds in Boston

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