Ammo Makers Prepare for Drop in Demand

This 2004 handout photo provided by ATK Corporate Communications, shows an assembly line at the Lake City Army Ammunition Plant in Independence, Mo. The plant produces nearly 1.4 billion bullets a year, a dizzying figure driven by war demands. Although no one knows when the conflicts in Iraq and Afghanistan will end, the ammunition industry is preparing for a downturn in business, hoping to avoid a post-Cold War style drop-off that forced some to close doors. (AP Photo/ATK Corporate Communications) (AP)

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," said Thompson, who more than a dozen years ago co-authored a study of the ammunition industry.

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 multibillion-dollar weapons company headquartered in Edina, Minn.

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.

The bullets come in different types and sizes; the 5.56 mm round, used in the standard-issue M-16 rifle, is the most frequently fired by U.S. forces.

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.

Alliant now has 2,500 workers in Lake City making four times as much ammunition as it did seven years ago. Current output is 120 million rounds a month _ nearly 4 million bullets a day.

Profits have gone up as well. In May, Alliant's Ammunition Systems Group, which also operates a government plant in Radford, Va., reported sales of $1.28 billion, a 15 percent increase over the prior fiscal year, and an operating profit of $113 million.