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A glimpse into the potential of the drone industry

A Predator drone operated by U.S. Office of Air and Marine (OAM), taxis towards the tarmac for a surveillance flight near the Mexican border on March 7, 2013 from Fort Huachuca in Sierra Vista, Ariz. The OAM, which is part of U.S. Customs and Border Protection, flies the unmanned -- and unarmed -- MQ-9 Predator B aircraft an average of 12 hours per day at around 19,000 feet. The drones, piloted from the ground, search for drug smugglers and immigrants crossing illegally from Mexico into the United States.

Today President Obama announced a major shift on his policy on overseas drone strikes. He's placing new restrictions on who can be targeted for attacks. This announcement comes on the heels of a plan to transfer control of the CIA's drone program to the Pentagon. As a result, Congress will have more oversight, and it could mean big changes to the program's budget.

It's tough to say exactly how big the drone industry is. A lot of the information is classified. The Department of Defense budgeted $3.8 billion this year for drones or, as the industry calls them, unmanned aerial vehicles or UAVs.

Next year that number will decrease. But this is an industry in its infancy, and according to Phil Finnegan at the Teal Group, there will be a revival in spending based on a reorientation of the military's drone fleet.

"The U.S. is looking at the development of a new set of drones which are able to penetrate defended airspace," Finnegan says.

Unlike much of the existing drone fleet used in Afghanistan and Iraq, these new drones will be built specifically for use in Asia and other countries with highly contested airspace -- they'll need to be faster and have stealth capabilities. Finnegan says that as foreign governments start buying drones to keep up, the global demand will explode.

The best place to see the booming drone industry is San Diego. "San Diego has the lion share, probably well north of 60 percent of UAV activity in the U.S. when it comes to manufacturing and research and development," says Erik Bruvold, who studied the economic impact of the industry in San Diego.

The report he co-authored found $1.3 billion flowed into the county as a result of drone spending. "And that supports about 7,000 jobs," says Bruvold. About 2,000 of those were aerospace jobs that pay roughly twice what the average private sector worker makes. The other 5,000 were indirect jobs that ranged from warehouse employees to waitresses.

"Our expectation, which is a fairly conservative estimate, is that worldwide demand for UAVs will double over the next 10 years," Bruvold says.

That includes an increase in commercial drones. In 2015, the FAA plans to open U.S. airspace to drones. Farmers could use them to dust crops in rural America while police in the city could pursue fugitives from the sky. And as the price of drones drops and individuals can afford them, there will no doubt be all kinds of things to do with a drone that we haven't thought of yet.

About the author

David Weinberg is a general assignment reporter at Marketplace.
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