Ammunition Supply Deja Vu


July 24, 2007, 09:21 AM
Ammunition manufacturers preparing to bite the bullet


WASHINGTON — The Lake City Army Ammunition Plant in Independence, Mo., produces nearly 1.4 billion bullets a year, a dizzying figure driven by the demands of war.
"It’s actually mind-boggling," said Karen Davies, Lake City’s general manager.
The question is, for how long? Although no one knows when the conflicts in Iraq and Afghanistan will end, ammunition industry executives understand the heavy orders won’t last forever.
So as they churn out the military’s most essential pieces of hardware — and millions hope for an end to the war — ammunition makers are preparing for a downturn in business.
They worry about a return to the post-Cold War period when the Pentagon slashed spending for small-caliber rifle rounds, forcing suppliers to cut payrolls, mothball manufacturing equipment and lose hard-to-get environmental permits. Some closed their doors.
"The demand is fast when it comes, and then it can drop off very quickly," Davies said.
After the Sept. 11 attack, when the need for ammunition spiked, the Pentagon scrambled to meet requirements. Nearly $93 million in taxpayer money was spent overhauling domestic facilities. Foreign suppliers, including one from Israel, were called in to fill the gaps.
Military officials now talk about a need to protect the industrial base, but they also say it makes no sense to spend money for bullets and bombs the troops might not need.
"We have to recognize we aren’t producing ammunition for the sake of producing ammunition," said Bob Kowalski, business manager for maneuver ammunition systems at the Army’s Picatinny Arsenal in New Jersey.
President Bush is under pressure to begin withdrawing U.S. troops from Iraq early next year. The 2008 elections, which could result in Democrats running both the White House and Congress, add to the uncertainty.
"You don’t want to go down to nothing and then say, ‘Oh my gosh! We’ve got to ramp up again,’ " Davies said.
Producing this firepower is a network of public and private facilities that has changed dramatically over the past three decades.
In 1978, there were 318 plants in the United States involved in ammunition production. By 1995, six years after the Berlin Wall fell, there were fewer than 100, according to Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Va.
U.S. spending for ammunition dropped 78 percent.
"Anytime the industry shrinks, you lose expertise and skill," Thompson said.
Officials at the military’s Joint Munitions Command in Rock Island, Ill., say there are now more than 170 commercial ammunition companies that make everything from gunpowder to grenades.
Adding to that base are 10 weapons-production plants, including Lake City, that are owned by the government but managed by contractors. Three others are owned and run by the government.
Of these 13 facilities, four will close by 2011, victims of the military-base-closing round conducted by the Pentagon in 2005.
The experience at Lake City illustrates the renewed attention paid to ammunition producers. Built in 1941, Lake City is operated by Alliant Techsystems, a multibilliondollar weapons company.
Spread over nearly 4,000 acres, Lake City is the largest producer of the small-caliber ammunition used by the Army and the other military branches. General Dynamics manufactures an additional 300 million rounds a year.
When Alliant began managing Lake City in 2000, it had 650 employees there making 350 million small-caliber rounds annually. After the United States invaded Afghanistan, orders increased and continued to escalate after the Iraq war began.
Alliant now has 2,500 workers in Lake City making four times as much ammunition as it did seven years ago. Current output is nearly 4 million bullets a day.
Profits have gone up as well. In May, Alliant’s Ammunition Systems Group reported sales of $1.28 billion, a 15 percent increase over the prior year.

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