Army running out of ammo, seeks bullets from foreigners
BLOOMBERG NEWS
The U.S. Army said it will seek bullets from commercial and foreign producers because its biggest ammunition supplier, Alliant Techsystems Inc., can't keep up with demand.
"The hope is to get it from the U.S., but worldwide suppliers are out there that provide this and it might not be totally available in the U.S.," said Lieutenant Colonel Matthew Butler, Army product manager for small- and medium-caliber ammunition.
Edina, Minnesota-based Alliant Friday said demand is rising to its highest level since the Vietnam War.
To make up for the shortage, the Army recently awarded contracts to state-owned Israel Military Industries Ltd. and Olin Corp.'s Winchester unit, each for 70 million rounds, Butler said in a telephone interview. He said he couldn't disclose the value of the contracts.
The Army wants to buy about 1.4 billion bullets this year and have the capacity for 2 billion rounds a year, Butler said. That is more than Alliant can make, and there are few other companies that can make military ammunition on such a large scale. The Army plans to seek a company able to coordinate production of as much as 500 million rounds by a number of smaller producers, Butler said.
"The strategy now going forward is to go through an integrator or someone who brings all that worldwide capacity together for us," said Butler, 41. "I don't think there is anyone out there who could do it and make U.S. ammo."
The Army on May 18 will meet with as many as 18 ammunition makers in Rock Island, Ill., to seek an integrator. That contract, the value of which hasn't been determined, will be awarded between December and April, Butler said.
Besides Israel Military and Winchester, another potential supplier is Montreal-based SNC-Lavalin Group Inc., Butler said. He wouldn't say which companies will attend. Danielle St. Pierre, spokeswoman for SNC's ammunition unit, said she couldn't immediately comment.
Alliant will make 1.2 billion bullets this year, up 20 percent from last year, and plans to add capacity for another 300 million rounds, Chief Executive Officer Daniel Murphy said Friday during a conference call. The Army will seek the balance from other suppliers, Butler said.
The U.S.-led coalition in Iraq is struggling to control rising violence that in April alone killed more U.S. soldiers than during last year's war, which lasted about six weeks. With U.S. troops engaged abroad, live-fire training exercises to boost preparedness have also increased demand, Butler said.
"It's a surprise they are using so much ordnance over there," said Philip Finnegan, an analyst for the Teal Group consultancy in Fairfax, Virginia. "No one would have expected this a few months ago."