ROME - The Via Tiburtina, the old Roman road that heads east out of  the Italian capital, is home today to various Finmeccanica outposts. But  amid the units of the state-controlled giant stands Elettronica, the  small family-run firm that has become a leading light on Europe's  electronic warfare scene.
Sixty  years after its founding, Elettronica is pushing into a new market it  believes will help secure its future: infrared (IR) countermeasures for  aircraft that do a better job than flares at playing havoc with the IR  guidance systems of shoulder-fired missiles.
"With directional  infrared countermeasures [DIRCM], we will be covering transport  aircraft, helicopters and VIP platforms ... so we are moving into the  world of homeland security," CEO Enzo Benigni said. "We see the market  value for DIRCM rising above the 1 billion euro [$1.44 billion] mark."
Elettronica's  supply of electronic warfare (EW) systems to large European programs  like FREMM frigates, the NH90 helicopter and the Eurofighter Typhoon has  allowed it to build revenue from 165 million euros in 2006 to 195  million in 2010. But Benigni knows the likes of the Typhoon program are  due to wind down, and has been seeking new opportunities.
The  firm's new DIRCM product, the ELT/572, is based on technology initially  developed by Elbit Systems. Elettronica jointly funded the program and  is now co-owner, divvying up potential markets with the Israeli company.
"Elbit  proved to have the most advanced know-how to develop and industrialize  the DIRCM, based on fiber laser, dual-color principles," Benigni said.
South  America, India and the Middle East are key markets, he said. But the  launch customer is the Italian Air Force, which has signed a 25 million  euro contract to install five ELT/572 systems, each based on two  turrets, on C-27J and C-130J transport planes and AW101 utility  helicopters.
The ELT/572 also may be flown on the Air Force's new  767 tankers, P180 VIP/light transport and ATR maritime patrol aircraft  and the Army's new Chinook helicopters.
Gen. Giuseppe Bernardis,  chief of the Air Force, has said that Northrop Grumman DIRCM was  unavailable in time for military export.
With its own product,  Elettronica can exploit the demand for systems that lack U.S.-made  components subject to Washington's International Traffic in Arms  Regulations. The company also may stress the technical advantages the  ELT/572 offers, with officials citing a potentially faster reaction time  between the missile warning alert and the laser flash.
The new  countermeasures work follows a series of joint initiatives planned with  Israeli industry, a useful partnership for Italian industry after it was  excluded from EW workshare on the international F-35 Joint Strike  Fighter.
"Our work on Eurofighter helped us evolve to a level that gives us an undisputed technological advantage," Benigni said.
If  Italy decides to acquire a new signals intelligence aircraft and opts  for Israeli systems, he said, Elettronica would be a partner. 
"And  if Italy sells an armed version of the M346 jet trainer to Israel, we  would be exploiting that opportunity, too," the CEO said.
The firm  already has a strong presence in the United Arab Emirates, with  business worth 1 billion euros contracted since the 1980s and a local  joint venture. Electronic warfare, electronic support measures and  electronic intelligence systems have been supplied for Dash-8 maritime  patrol aircraft, new ships, including Baynunah corvettes, ground systems  and Mirage 2000-9 fighter jets.
Orders from outside Europe now  account for 9 percent of the firm's revenue, a figure Benigni said he  would like to see rise to 40 percent within 10 years, alongside an  overall revenue increase of 5 percent per year.
Benigni said he is encouraged by the Italian government's newfound desire to back defense exports.
"The  [Ministry of Defense] is really assisting us, which is a huge change  from the past," Benigni said. "Marketing in India requires a good deal  of political support, particularly in the fighter contest, where I would  not exclude the U.S. fighters re-entering the competition."
Founded  by Benigni's uncle, Elettronica employs the CEO's son and daughter,  suggesting the family tradition will continue. Stakes held by  Finmeccanica (33 percent) and French company Thales (32 percent) are  stable, he said. That leaves Benigni the majority shareholder.
DIRCM  apart, Benigni said a second trend to watch is the combining of  different emitters in one turret, which is attached to an aircraft's  exterior. 
Elettronica signed up in 2005 to an Italo-Swedish  program to combine radar, EW and communications into one system with no  interference. Though limited funding for research into the  Multifunctional Active Electronically Scanned antennas was in the  Italian defense budget last year, Benigni said funding is stalled.
"This was a missed opportunity," he said. "We know it's the future, and the first country to do it will have big advantages."
In  the meantime, Elettronica will continue to benefit from ongoing work on  the defensive aids systems it supplies for the Typhoon. Last September,  a 400 million pound ($656 million) deal was handed to a European  consortium, including Elettronica, to supply the Praetorian  self-protection system for 112 Tranche 3A Typhoons.
But with no  more Typhoon buys in the cards from Britain, Germany, Italy and Spain,  what has been a solid revenue stream looks set to wind down. Benigni  said a large part of the 80 percent of Elettronica revenue that comes  from European programs came from Eurofighter. 
"Elettronica is ...  dependent on Eurofighter but has developed other technologies which are  bearing fruit and can therefore maintain a good position in the  market," said Michele Nones, head of the security and defense department  at Rome think tank Istituto Affari Internazionali. 
"Having  Thales and Finmeccanica as shareholders could present problems since  they are competitors, but they tend to balance each other out," Nones  said. "And the firm has the attention of the Italian government since it  is considered strategic. Italy believes it needs EW capability."
With a focus on engineering, Benigni said Elettronica's small size and niche status is an advantage. 
"A big company does not have the same mentality. The Israelis have shown that," he said.
Elettronica  recently fought off tough Israeli competition to win a contract for a  naval electronic support measures system from an East Asia customer, the  CEO said.
Benigni said the victory came thanks in part to  Elettronica's focus on what he called "the science of architecture" -  the arrangement of components in an electronic system that leaves room  for growth. 
About Elettronica
2010 revenue: 195 million euros.
Employees: 754.
Sectors (percentage of total revenue):
■  Fighter aircraft (44).
■  Product support (35).
■  Naval vessels (8).
■  Helicopters/maritime patrol aircraft/transport aircraft (12).
■  Land (1).