Among the US' military contractors, Alliant Techsystems Inc is dwarfed by competitors like Lockheed Martin, Boeing, General Dynamics and Raytheon. Alliant will have sales of about US$2.1 billion this year, compared with US$10 billion and up for those larger, better-known companies.
But Alliant, based in Edina, Minnesota, plays a crucial role in the fighting in Iraq. It makes all of the army's small-arms ammunition, used in rifles and machine guns, and about half of the medium-caliber rounds fired by armored vehicles and the devastating antitank chain guns in attack helicopters.
And it also supplies important parts of so-called smart weapons, including advanced fuses for smart bombs like the Joint Direct Attack Munitions, satellite-guided bombs that proved effective in Afghanistan and have already been used in the current Iraq campaign.
"It's a fairly obscure company," said Loren B. Thompson, a military analyst at the Lexington Institute, a research group in Arlington, Virginia. "People outside of the defense industry don't realize what a critical part they play."
While bigger companies like Raytheon usually have a delayed benefit from a war, in the form of increased long-term orders, Alliant makes "the kind of thing that is used up very quickly," Thompson said.
"They are well positioned to benefit from military activity in the short term," he added.
An analysis by the US' Congressional Budget Office concluded last September that in a war in Iraq with a large allied ground force, replenishing arms would account for a surprisingly large part of the overall cost. It estimates that combat would cost about $9 billion in the first month, with the replacement of munitions, including cruise missiles and other weapons as well as ammunition for rifles and machine guns, accounting for 41 percent of that total.
Alliant's munitions sales were up 45 percent in the quarter ended Dec. 31, compared with the period a year earlier. The increase reflects a surge in military sales as well as the acquisition of a unit of Blount International that makes ammunition for hunters and target shooters.
Clearly, though, the company's main market remains the military and domestic security. Alliant was awarded a US$92 million contract by the army last year for 265 million rounds of small-caliber ammunition, ranging from 5.56mm rifle ammunition to 30mm rounds for aircraft cannon. Over all, Alliant makes more than 500 million rounds annually at its plant in Independence, Missouri.
In February, Alliant received contracts totaling US$113 million to make ammunition for the Abrams battle tank.
Alliant, created in 1990 when Honeywell spun off its military businesses after the Cold War, also supplies ammunition to law enforcement agencies, including the New York Police Department and the FBI.
Paul David Miller, Alliant's chief executive and a retired admiral, plays down the possible effects of the war in Iraq on his company, noting that the military, for now, is drawing from its munitions stockpiles. Thompson, the military industry analyst, said that Miller was being discreet because it is considered bad taste in the industry to highlight the returns generated by war.
Recent acquisitions
The military buildup and recent acquisitions have clearly bolstered Alliant's bottom line. For the fiscal year ending March 31, Alliant said it expects its sales to rise more than 16 percent, to US$2.1 billion from US$1.8 billion the previous year. Analysts at Credit Suisse First Boston estimate that Alliant's operating profit will rise to US$278 million, or 13.2 percent of revenue, from US$224 million, or 12.4 percent of revenue, the previous year. And the company has generated about US$125 million in cash.
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