Ammunition, Except for Small Arms

SIC 3483

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing ammunition, not elsewhere classified, or in loading and assembling ammunition of more than 30 millimeters (more than 1.18 inches), including component parts. This industry also includes establishments primarily engaged in manufacturing bombs, mines, torpedoes, grenades, depth charges, chemical warfare projectiles, and their component parts. Establishments primarily engaged in manufacturing small arms are classified in SIC 3482: Small Arms Ammunition; those manufacturing explosives are classified in SIC 2892: Explosives; and those manufacturing military pyrotechnics are classified in SIC 2899: Chemicals and Chemical Preparations, Not Elsewhere Classified.

Industry Snapshot

According to Dun & Bradstreet, in 2010, 111 establishments engaged in manufacturing ammunition not elsewhere classified and/or loading and assembling ammunition more than 30mm in size, including parts. Industry-wide employment was 10,505 workers, and total annual sales were almost $455 million. A majority of businesses were small, with almost 70 percent employing fewer than 25 people. The leading states in terms of number of establishments in the industry were Florida and Pennsylvania. Kansas and Virginia were the top states in sales in 2010, with $222.4 million and $142.8 million, respectively. Together these two states accounted for about 80 percent of industry revenues.

Background and Development

Gunpowder was first employed to project missiles early in the fourteenth century, when large dart-like objects were propelled through the air during medieval battles. Darts were soon replaced by more reliable, rounded projectiles that were fired from cannon-type devices. Napoleon III released one of the first written works about artillery that included large ammunition used in 1338, titled Etude historique sur l'artillerie à cheval. Stone shot was replaced by iron shot in the mid-1300s because iron allowed greater penetration of stone walls. Subsequently, shells were invented that could be filled with gunpowder, fired from cannons, and made to explode. Rounded metal balls and shells remained the principal types of large ammunition from the fifteenth through the nineteenth century.

The large ammunition industry in the United States arose as a result of both internal and external military conflicts, particularly the Civil War and both World Wars. Development of the rifled artillery barrel and smokeless gunpowder in the nineteenth century led to the proliferation of elongated bullets and shells. This ammunition type dominated production throughout most of the twentieth century.

Although the production of some large ammunition types peaked during World War II, the manufacture of other types of projectiles and explosives proliferated between 1950 and the late 1980s. Nuclear bombs and guided missiles, particularly, contributed to industry growth throughout the Cold War. During President Reagan's administration alone, the ammunition industry had grown from just $1.8 billion in shipments and about 16,000 workers to reach about 26,000 workers and a former record of $4.3 billion in shipments per year in 1988.

The end of the Cold War in the late 1980s, punctuated by the demise of the Soviet Union, pummeled the large ammunition industry. As defense purchases decreased, sales dropped to $3.1 billion in 1990 and continued to drop in 1991 and 1992. Likewise, industry employment fell to about 14,500. Adding to employee woes were moderate increases in manufacturing productivity, which were the result of more than $600 million in capital investments by producers in the early and mid-1980s.

Bombs accounted for about 45 percent of U.S. large ammunition industry output in the early 1990s. An additional 40 percent of production included miscellaneous bullets and other projectiles, casings, and components. Rockets comprised the remaining 30 percent of shipments. Nearly 80 percent of all sales in 1991 were under U.S. government contract, mostly to the armed services. Another 15 percent of industry output was exported, and about 5 percent was consumed by various manufacturing sectors. Manufacturing uses included demolition and mining.

The industry declined precipitously in the mid-1990s, in part because of the end of the Cold War and anticipation of military spending cuts. While the industry had 415,000 employees in 1987, that number had dropped to 234,000 by 1992 and to only 12,000 in 1995, for a decrease of almost 75 percent, according to the U.S. Census Bureau. Those goods shipped in 1995 were valued at $2 billion, which was a slight increase over 1994 figures but still well below the $3.1 billion reported for 1992. Entering the late 1990s, large ammunition manufacturers faced continued cuts in U.S. defense expenditures by President Bill Clinton's administration.

Between 1997 and 2002, industry employment declined from 9,281 workers to 6,740 workers, but by 2005 had grown to 7,494. The 4,391 production workers in 2005 earned an average hourly wage of $18.13. Shipments for the industry were valued at $1.31 billion in 2005, up from $798.8 million in 2002. In addition, although the total number of operations and employees grew to 118 and 9,397, respectively, shipment values fell from $1.31 billion in 2005 to $663.6 million in 2008. Leading industry sectors in terms of shipment values were miscellaneous ammunition, not elsewhere classified, and ammunition loading and assembling plants.

Despite the decline in production and sales for U.S. ammunitions manufacturers, the U.S. government continued to call on them to provide specific supplies for the military. For example, industry leader Allied Defense Group's Belgium-based subsidiary, MECAR S.A., was awarded an estimated $43.5 million contract in February 2008 to produce 105mm tank ammunition for the U.S. Army, with a completion date of sometime in 2011. Also in 2008, General Dynamics was given a contract to produce 155mm M795 projectile metal parts with a value of approximately $151.8 million for the length of the contract. These contracts validated the ongoing war on terror and solidified demand for the ammunition industry sector.

Current Conditions

Like many U.S. businesses, in 2011 the ammunition manufacturing (except for small arms) industry was looking forward to a recovery from the economic recession of the late 2000s. However, it was also facing upcoming effects of possible budget cuts in the U.S. defense budget. Some in the industry also bemoaned the lack of funding for new projects and advancing technology. Nevertheless, industry leaders continued to receive million-dollar contracts for the production of large ammunition. For example, in 2011 industry leader General Dynamics received billions of dollars' worth of contracts to manufacture various ammunition components for the U.S. military, as did Alliant Techsystems.

These two companies were just two of the 111 operating in this industry in 2010, according to Dun & Bradstreet. About half of the total reported their main function was manufacturing ammunition except for small arms not elsewhere classified. Companies with more specific functions included manufacturers of ammunition components, mines and parts, bombs and parts, chemical warfare projectiles and components, rockets, and missile warheads. Five were counted as ammunition loading and assembling plants; these establishments were responsible for almost 50 percent of sales and about 6 percent of all industry employees in 2010. Although most firms were small, 70 percent of all employees worked in plants that employed more than 500 people.

Industry Leaders

One industry leader in the early 2010s was General Dynamics Ordnance and Tactical Systems (formerly Chamberlain Manufacturing Corp.) of Scranton, Pennsylvania. General Dynamics produced large ammunition (105mm to 155mm), mostly for the U.S. government. The company reported revenues of $27.2 billion in 2007 with an estimated 84,000 employees worldwide. Other industry leaders included The Allied Defense Group Inc. of Vienna, Virginia, which had 2010 revenues of $142.4 million, and Alliant Techsystems Inc. (ATK) of Minneapolis, which produced both large and small ammunition, as well as aerospace rockets, missiles, and other defense equipment. ATK reported $4.8 billion in 2010 revenues with 15,000 employees.

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