Ordnance and Accessories, NEC

SIC 3489

Companies in this industry

Industry report:

This category covers establishments primarily engaged in manufacturing ordnance and accessories, not elsewhere classified, such as naval, aircraft, anti-aircraft, tank, coast, and field artillery having a bore more than 30 mm. (more than 1.18 inch), and components. Establishments primarily engaged in manufacturing small arms and parts 30 mm or less are classified in SIC 3484: Small Arms; those manufacturing tanks are classified in SIC 3795: Tanks and Tank Components; and those manufacturing guided missiles are classified in Industry Group 376 (Guided Missiles and Space Vehicles and Parts).

The ordnance and accessories industry, valued at approximately $297 million by Dun & Bradstreet in 2010, peaked in 1984 with $1.93 billion in shipments and 14,700 production workers, according to U.S. Census Bureau figures. Its lapse began as the Cold War era ended in 1989, along with other high-tech industries, such as aerospace and the manufacture of search and navigation equipment. The decline in defense spending, along with the private sector recession of the early 1990s, were the main causes of the employment losses and downturns experienced in this industry during the late twentieth century.

The value of shipments in the industry was nearly $792 million in 1992, down 59 percent from 1984. By 1997 the industry had rebounded to $1.1 billion in shipments, and steadily increased during the early years of the first decade of the 2000s. Although still far short of its totals from the early 1980s, in 2004 product shipments were valued at more than $1.4 billion, a gain of 22 percent from 1997. Industry leader Alliant Techsystems Inc. demonstrated an impressive 44 percent increase in sales from 2001 to 2005, growing from $1.8 billion to $3.2 billion.

The industry is highly labor intensive, having only 19 percent as much investment per production worker as that for the manufacturing sector as a whole. The annual average hours worked by production workers are slightly lower than those worked in the manufacturing sector at large, although hourly wages are 49 percent higher. The U.S. Census Bureau reported that for 2001 the industry had 7,000 employees in 57 establishments, some 2,700 of whom worked in production, producing total shipments valued at $1.3 billion and receiving an annual payroll of $397 million. Employment figures had declined 34 percent in 2004 to 4,549 employees, and the corresponding annual payroll dropped nearly 36 percent. However, the number of production workers fell at a lower rate, with a 22 percent reduction to 2,094 production employees, despite a jump of nearly 21 percent in total establishments. By 2009 employment in the industry was down to 4,217, 41 percent of whom were production workers earning an average wage of $20.46 an hour.

Following the terrorist attacks on the United States on September 11, 2001, and the subsequent war on terrorism, there was a general increase in defense spending, which helped keep the industry on track for growth. In 2004, for example, planning began for the manufacture of antimissile systems for domestic commercial planes, and by 2008 these systems, which were in place on military planes, were being tested on U.S. aircraft. Also in 2004, Alliant Techsystems Inc. was awarded a contract to produce more than $100 million of tank training ammunition and precision artillery fuses for the U.S. Army. Other significant contracts with the U.S. Army followed for the company, including a $66 million order for small-caliber ammunitions in September 2006. In addition, Lockheed Martin Missiles and Fire Control received a $47 million contract in October 2006 to create missiles for the U.S. Army.

Despite the economic recession at the end of the first decade of the 2000s, the war on terror persisted, as did defense spending. For example, Lockheed Martin Missiles and Fire Control had a contract to produce additional missiles, bringing the total to 1,053 worth an additional combined $107 million in June 2008. Alliant Techsystems also received orders for additional medium-caliber gun and ammunition worth $88.5 million on top of the previous $53 million contract to produce Mk19 Mod-3 Grenade machine guns for both international and domestic customers in November 2008. These contracts solidified demand within this industry sector.

The top five industries and sectors buying the outputs of the ordnance and accessories industry at the end of the first decade of the 2000s were federal government purchase for national defense, with a 72 percent share; exports, with a 24.4 percent share; ordnance and accessories, not elsewhere classified, with a 2.4 percent share; change in business inventories, with a 1 percent share; and small arms ammunition, with a 0.2 percent share.

Current Conditions

According to Dun & Bradstreet, in 2010 there were an estimated 252 establishments producing ordnance products and accessories. Together these establishments generated $297.4 million in annual revenues and employed 3,568 people. A large majority of the companies were small, with almost 79 percent employing fewer than 10 people. However, about 55 percent of people who worked in the industry were employed by large firms with more than 100 employees. States with the highest concentration were Texas, Florida, California, Florida, Arizona, and, Pennsylvania. In addition to the ordinance and accessories, not elsewhere classified, sector, major categories included guns and gun parts (over 30 millimeters), howitzers, mortars, and related equipment.

Multimillion-dollar contracts continued to be granted to industry leaders in early 2010s. For example, in September 2011 Alliant Techsystems was given a $30 million contract by the U.S. government to produce nonstandard ammunition for troops in Afghanistan, and Lockheed Martin received contracts for more than $263 million for defense-related products from the U.S. government in that month alone. Defense spending remained a contentious issue, however, in light of the U.S. deficit, which was approximately 10 percent more than its gross domestic product in mid-2011, according to Time magazine. At the time, the U.S. national debt stood at about $14 trillion.

Industry Leaders

Despite the difficult economic environment, industry leaders were able to post positive results during end of the first decade of the 2000s and into 2010. ITT Corp. of White Plains, New York, posted revenues of nearly $11 billion in 2010. In 2011 the company, which employed 40,000 people, was in the process of separating its three divisions (Defense, Fluid, and Motion & Flow) into three separate, publicly traded companies. Another industry leader, Alliant Techsystems Inc. of Minneapolis, reported revenues of $4.8 billion in 2010 and employed 15,000 workers. More than 60 percent of its sales came from the U.S. government. Long-time industry giant Lockheed Martin, based in Bethesda, Maryland, posted revenues of $45.8 billion in 2010, up from $42.7 billion in 2008. With 132,000 employees nationwide, the company's market was dominated by the U.S. government, which accounted for 85 percent of sales.

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