Booming business

Booming business
War drives demand at U.S. ammunition manufacturers.

Published Tuesday, July 24, 2007

WASHINGTON (AP) - The Lake City Army Ammunition Plant in Independence 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, Davies and other ammunition industry executives understand the heavy orders won’t last forever.

So as they churn out the military’s most essential pieces of hardware, 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 and other munitions, forcing suppliers to cut payrolls and mothball manufacturing equipment. Some closed.

"The demand is fast when it comes, and then it can drop off very quickly," Davies said.

After the Sept. 11 attacks, 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 northwest New Jersey.

President George W. Bush is under pressure to begin withdrawing U.S. troops from Iraq early next year. The 2008 elections 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 during 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 in Arlington, Va.

The experience at Lake City illustrates the renewed attention paid to ammunition producers. Built in 1941, Lake City is operated by Alliant Techsystems, a multibillion-dollar weapons company.

When Alliant began managing Lake City in April 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 war in Iraq began in 2003. Lake City now has 2,500 workers making four times as much ammunition as it did seven years ago. Current output is 120 million rounds a month.