?>

End of Fighting and Budget Cuts Mean Hard Times Ahead for Military Depots

by: Matthew Potter
November 22, 2010

Category: Alliant Techsystems, Business Line, Companies, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, logistics, production program, Restructuring, Services, States, U.S. Army | RSS 2.0

This weekend the Obama Administration made clear that it will start winding down the U.S. and its Allies commitment to Afghanistan next year with a goal of total withdrawal by 2014. Along with the planned movement of most U.S. troops from Iraq over the next few years combat operations by U.S forces will gradually decline. This means that the defense budget will reconfigure itself to buy less of the things being consumed in daily combat to investing in new equipment and rebuilding stocks.

One area that may see significant decline is the production of ammunition. The U.S. has increased greatly its sources for small arm rounds as well as those used by key systems such as Apache attack helicopters and mortars which are providing the majority of fire support in Afghanistan. This has mainly been done by using the Army depots as a traditional source but by leasing out space and equipment to private companies. ATK for example operates facilities at different depots to make small arms ammunition and pyrotechnics.

The Services have also tried to get private companies to use the resources of the depots including their workforce for other means. This contracting out has helped pay for support services and investment in the physical plant of the depots aiding them in their basic mission of supporting the military.

Blue Grass Army Depot in Kentucky for example has been “attempting to market itself to defense contractors and non-defense manufacturers to bring in more funds.” The depot hopes that any partnership it may establish with a defense contractor or other company to help it stay in business. Right now the depot primarily manufactures parts for 81 mm mortar rounds. It also is about to start up a chemical demilitarization and destruction operation to remove its stocks of chemical weapons from the cold war.

The problem that may face Blue Grass and the other depots is that once fighting ends the Army will rebuild its stocks of 81 mm mortar rounds but then only replace those used in training or reaching their service life. Most of the older rounds will have been expended already as traditionally the military uses up those first in combat.

Like the situation where the U.S. Army completed buys of the ubiquitous HUMVEE a year earlier then planned due to combat losses not being what was predicted and the total quantity needed had been reached the depots making ammunition could see the same happening. This means their work and workforce will be reduced and as in the last major downturn the depots closed or realigned.

The ultimate effect of cuts in the defense budget will be jobs lost across the country. Ending a program without starting up a replacement or new one means those jobs won’t be replaced even in another location. The economic affect of that will be lasting.

Photo from The U.S. Army Flickr photostream.

Share this:
Share this page via Email Share this page via Stumble Upon Share this page via Digg this Share this page via Facebook Share this page via Twitter

Tags: , , , , , , , , ,


| Give a Comment | trackback

No Comments

Leave a Reply

You must be logged in to post a comment.

    Like Us On Facebook

  • Search This Site

    Custom Search
  • Upcoming Events

  • FREE Business Downloads

  • Widget Area

    This is widget area, add your widget here from your widget on appereance on your admin panel

>