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Business Boom
Firm Merges Cannon, Ammunition Divisions In Mesa As War On Terrorism Boosts Revenues
(ATK is located in Dover Industrial Park, a Daedalus development in North Mesa)

Publication: Arizona Republic, The (Phoenix, AZ); Date: 05/19/2006

By Max Jarman

Gary E. Martin is taking a page from the telecommunications industry's playbook and applying it to the defense industry.

Martin, 43, is bundling Alliant Techsystems Inc.'s ammunition with its guns to create a Mesa-based one-stop shopping experience for U.S. and foreign militaries.

Like people who buy telephone and Internet services from two different companies, customers had been buying guns and bullets from separate entities, both owned by Alliant, also known as ATK.

Consolidating the businesses in Mesa gives customers one point of contact and one place to go to resolve problems, Martin said.

"We're trying to look at things from the customer's point of view, be more customer-friendly," he said.

He arrived in the Valley eight months ago from Minnesota to take over the gun-manufacturing business ATK bought from Boeing Co. in 2002.

The operation makes 25mm, 30mm and 35mm automatic cannons that are carried on ordnance such as Apache Longbow Attack Helicopters, Bradley Armored Fighting Vehicles and British frigates.

"It's one of ATK's core businesses," said Peter Arment, an analyst who covers the company for JSA Research in Newport, R.I. "Their products are being utilized in the war on terrorism, and there is a healthy outlook for the future."

Arment said the company stands to benefit from the sale of new products as the military buys updated equipment. It also is expected to gain considerable business reconditioning and upgrading products.

Meanwhile, Martin is moving ATK's medium-caliber ammunition business from sites in Minnesota and Virginia to Mesa. The manufacturing will stay in Virginia.

Combining the $50 million-a-year gun business with the $100 million-a-year ammunition business resulted in about 25 jobs being moved to Mesa. About 105 people are employed at the facility, and there are openings for 14 more.

Combining the operations makes particular sense with the introduction of "smart bullets" that require more integration between the weapon and its ammunition. The bullets can tell how far they travel and will explode at a specific distance instead of on impact.

ATK's so-called chain guns are set apart from competitors by a chain drive that kicks out the spent shell and reloads the gun up to 625 times per minute.

Other weapons use gas from firing to eject and reload the gun.

"If a shell fails to fire, the gun stops," Martin said, noting that the guns would eject the dud and keep firing.

The company is ramping up to remanufacture 30mm guns that are coming back from Iraq and Afghanistan. The guns are mounted on the Apache helicopters.

Remanufacturing and military activity in Iraq are expected to boost ATK's gun sales to $70 million this year and ammunition revenue to $130 million.

Martin said there is typically a lag between the start of a military conflict and its economic impact on defense contractors such as ATK.

"The military has a lot of weapons and ammunition stockpiled that get used before they purchase new ones," Martin said. The wave has now reached ATK Medium Caliber Systems Co., as the combined Mesa business is now known.

"There is no question the war in Iraq has increased our volume," Martin said.

Martin has set his sights on the Army's planned future combat system, which connects soldiers with weapons and information systems via a mobile network. The system would result in a variety of new manned and unmanned attack vehicles that could be outfitted with ATK weapons. An alternative to new vehicles would be an upgrade of the Bradley's 25mm cannons to more powerful 30mm ones. In either case, ATK is positioned to benefit.

"They have exposure to some very solid defense programs that are going to be around for a long time," said Patrick McCarthy, an analyst who follows ATK for Friedman Billings Ramsey in Arlington, Va.

ATK also is finding markets for its guns in foreign militaries. The British Royal Navy recently ordered 26 of ATK's 30mm cannons for its new Type 23 frigates, and the Czech Republic army recently ordered $20 million worth of the guns to be mounted on its Pandur II armored vehicles.

Although ATK's ammunition is sold almost exclusively to the U.S. military, Martin noted that 50 percent of its guns are being sold to foreign militaries.

Products in the pipeline include a version of the 25mm cannon that shoots lightweight ammunition and a .50-caliber machine gun that could be mounted on smaller vehicles and boats.

ATK's guns
Some of the guns produced by ATK Medium Caliber Systems Co. in Mesa:
* The Bushmaster series, comprising the 25mm M242 Bushmaster cannon and the 30mm Bushmaster II automatic cannon. The M242 gun is the primary armament on the U.S. Army's M2 and M3 Bradley Fighting Vehicles, the U.S. Marine Corps' LAV-25 light armored vehicle, U.S. Navy patrol boats and a growing number of vehicles for international defense forces.
* The MK 44 30/40mm automatic cannon, a derivative of the Bushmaster II. The U.S. Marine Corps has chosen the MK44 for its new advanced amphibious assault vehicle.
* The 30mm M230 automatic cannon is part of the weapons system on all AH-64 Apache helicopters.

Gary E. Martin
Responsibilities: Heads Alliant Techsystems Inc.'s Mesa-based medium-caliber ammunition and gun business.
Age: 43.
Born: Pittsburgh.
Education: Bachelor's degree in chemical engineering, Pennsylvania State University.
Career: Various positions at Alliant, which he joined out of college.
Family: Married, three daughters.
Recreation: Golf, hiking.

ATK Medium Caliber Systems Co.
What: Medium-caliber ammunition and gun-manufacturing business.
Headquarters: Mesa.
Owner: Alliant Techsystems Inc.
Founded: In the 1960s by Howard Hughes.
Employees: 105.
Revenue: $150 million in 2005.
See Sidebar: "Hughes founded venture"

Copyright (c) The Arizona Republic. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc.

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