Ammo Makers in Plunge to Near-Extinction

Among the cornstalks of eastern Ohio, the Army has kept its massive Ravenna ammunition plant ready to mobilize ever since the Vietnam War, when the complex was last pressed into service.

Now, the Pentagon believes it will never again need Ravenna’s gravity bombs and howitzer shells. The plant’s autoclaves and mixing kettles--where TNT was poured into bombs--are being junked, and most of the plant’s 1,600 buildings will be left as ghostly monuments of old wars.

The scrapping of the 34-square-mile production plant is emblematic of the state of the U.S. ammunition business. Aircraft makers, shipbuilders and missile producers may be reeling under massive cutbacks in defense spending, but nowhere has the Cold War ended with a bigger thud than at the doorstep of the nation’s ammunition industry.

Bullet and bomb manufacturers are scaling back their operations at a pace that few considered possible as recently as two years ago. The cuts mark a new low for a business whose public image and political clout have historically ranked at the bottom of the American defense industries.

It would take many years to revive the defense industrial capacity now being liquidated at today’s frenetic pace. Critics say the United States would be unable to mount a swift and largely painless military campaign, along the lines of the Persian Gulf War, if the planned cutbacks in ammunition and other key weapons continue in years ahead.

The Army has cut back its ammunition budget by nearly 80% in the past four years--a decline far sharper than any other defense sector. The service has plans to stop producing nearly half of its ordnance items. Industry employment has dropped from 90,000 in 1988 to about 20,000 in 1993 and is expected to sink to an estimated 15,000 next year.

The implosion in the ammunition business represents one of the thorniest issues in cutting the defense budget: how much should America pare its military machine and how long will the world’s only superpower remain unchallenged.

Amid the hand-wringing over how the Pentagon can maintain industrial capacity while steeply cutting current purchases, the focus has been largely on exotic big ticket systems like nuclear-powered submarines, jet fighters and tanks.

Ammunition has hardly figured in the public debate, even though multibillion-dollar weapons systems all need ammunition.

“A tank is a poorly-designed station wagon without ammunition,” said Angelo A. Catani, president of Olin Ordnance, the nation’s largest producer of ammunition. “We are literally walking away from the ammunition industry.”

In the past, the Army maintained 28 plants like Ravenna, ready to start production in the event of war. But future wars, according to Army plans, would be fought largely out of the existing inventory of munitions. The stocks would be replenished after the war ended.

Under the new policy, the Army is closing or deactivating 19 of its ammunition plants, operated mostly by private contractors. The closures, which are spread across the country, include the Riverbank facility near Modesto. Some 92,000 pieces of industrial machinery will be eliminated, mostly melted for scrap.

The new policy has raised concerns in the ordnance industry and Congress that poorly planned cutbacks will someday result in the ultimate calamity--a shortage of advanced technology ammunition during wartime.

“You either buy bullets or body bags,” said Toby Warson, president of Alliant Techsystems, a large Minnesota-based munitions manufacturer. “Unless we have the requisite quantities of the right kind of ammunition, people are going to get hurt. We forget that in World War I, the U.S. sent soldiers to France to train with wooden guns.”

The Pentagon, however, accumulated an inventory of 7.4 billion pounds of ammunition--more than one pound for every person in the world--during the Cold War, according to the Army’s recent planning report for the ammunition industry. Yet, as the Army has conceded, 87% of the ammunition is unsuitable for battle. Some dates as far back as World War II.

At the Ravenna plant, the Army plans to continue storing 200 million pounds of unused explosive powder in 700 underground magazines, according to Bob Kasper, the Army’s representative in Ravenna. Without money to destroy the powder, the Army is spending $1.8 million annually to store it, also thinking it might be useful some day.

But raw explosives contribute little to the Army’s battle readiness. The most serious shortages feared by critics are likely to occur in the newest and most lethal devices that helped win the Persian Gulf War with few casualties.

The newest ammunition--such as the 120-millimeter silver bullet cannon round used to obliterate Iraqi tanks--allows U.S. forces to fire on enemy troops while remaining beyond the range of their weapons. In some of these categories of new weapons, the Army is already short of its planned inventory levels.

In the Gulf War, the Army only used its high-technology ammunition on hand and ended up asking the allies for more, according to Richard Palaschak, a retired Army ammunition officer who is now director of the Munitions Industrial Base Task Force, an industry trade group. In any future war, inventories would be even lower.

During the next five years, the Army expects to spend $6 billion on ammunition, but it will need another $4.2 billion to fund the Clinton Administration’s strategy of fighting in two regional conflicts, according to the Army’s own report.

“We are heading for an industrial base that is incapable of executing the security strategy that has been laid out for the nation,” Palaschak said. “We have a crisis.”

Yet, Brig. Gen. William R. Holmes, deputy chief of staff for ammunition at the Army Material Command, rejects the possibility that ammunition could run out in a war.

“I have a high level of confidence that we have adequate ammunition stocks and the capacity to replenish those stocks in a necessary time frame,” he said. “But who can say what the situation will be in three years.”

While ordnance executives acknowledge that their industry must shrink, they believe the capacity is being cut far too quickly and haphazardly.

“One ammunition line after another is going down, without regard for preservation of the equipment,” Catani said. “I don’t think there is any plan.”

An ammunition trade association was formed this year to raise public awareness of the issue, but the industry has had an image problem dating back to World War I when munitions makers were branded as “merchants of death.” The stigma endures, leaving the industry with little political clout and an easy target for spending cuts.

John Maniatakis, a vice president at the ammunition firm NI Industries in Vernon, says his wife insists on not discussing his occupation at cocktail parties because people sometimes ask how he can live with himself.

To his detractors, however, Maniatakis answers: “Without ammunition, you have got nothing. You can’t survive without me.

“The industry is dying,” he adds. “We are not sexy, romantic or unique. Nobody considers banging out bullets as a sophisticated industry. Now, we won’t be able to respond to any kind of war.”

The Army has reached the same conclusion. In its 36-page planning report, the service noted on Page 35: “Due to budget reductions, the ammunition base is in danger of disappearing.”

While Gen. Holmes said he does not agree with the report’s conclusion, he acknowledged that the ammunition sector is in trouble and that the problem “is something we are trying our best to work over.” But there are no easy choices, since the Army plans to end production of 53 major weapons systems by 1995, according to internal planning documents.

The Army is now buying less ammunition than it is consuming each year for training, according to both Army documents and industry officials. Warson, the Alliant president, estimates that 50% of the ammunition consumed for training now comes out of war reserves, which are supposed to be held in storage for battle use.

According to Warson, the Persian Gulf War “was the worst thing to ever happen to this country,” because the easy victory created a complacency about the nation’s military superiority.

While cutting back purchases, the Army is also transferring production of some ammunition rounds from privately owned plants like NI Industries to government facilities, according to NI President Robert Toering. Toering claims the decisions were influenced by politically powerful members of Congress protecting jobs in their home districts in Pennsylvania and Louisiana.

Employment at NI, a large-caliber cartridge manufacturer, has dropped from 2,500 in 1985 to about 500 currently and is headed to 350 in the next few months. Meanwhile, the Army has ordered NI to dispose of 500 pieces of government-owned industrial equipment at its plant.

The problem is further compounded by sales of old ammunition held in Europe at fire sale prices, said Catani

“Why would anybody want to buy a 105-millimeter tank round from me when they could get it for $29 from the U.S. Army Assistance Command?” Catani noted. The round costs $700 to $1,000 to produce.

Alliant and Olin, the two largest ammunition makers, agreed to merge last year in an effort to create a single business with adequate sales volume to survive. But the Federal Trade Commission blocked the merger after the George Bush Administration prevented the Army from supporting the deal.

Today, Alliant is using only 60% of its capacity as it tries to compete with Olin. The result is higher prices for the Army.

Meanwhile, the industry doesn’t put much hope in defense conversion. While the Clinton Administration has established a $19.5-billion defense conversion program, ammunition companies haven’t received any of the money and executives doubt their ability to convert.

“I can’t make kiddie toys out of explosives,” Catani said. “We load warheads.”

NI Industries is trying to find new markets for its metal forming expertise. But so far its most profitable new business is processing industrial sewage trucked in from other companies to a waste water treatment plant that the state forced NI to build during the 1980s.