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ATK Follows Others and Moves to Washington D.C. Area

Following in the footsteps of other defense contractors Alliant Techsystems (ATK) announced that it would re-locate its corporate headquarters from Minnesota to Washington D.C. Recently Northrop Grumman (NOC), much larger then ATK, did the same transferring its personnel out of California and settling in the Northern Virginia suburbs. These moves are to aid the companies in preparing for future reductions in the U.S. defense budget by allowing better and easier engagement with Congress, the Pentagon and other Federal offices.

ATK will now be near the majority of the larger defense contractors as Lockheed Martin (LMT), General Dynamics (GD) and SAIC (SAIC) are also in the D.C. suburbs. This means that of the biggest defense contractors only Boeing (BA) and Raytheon (RTN) maintain their headquarters somewhere else. Boeing in Chicago and Raytheon in Massachusetts. Certainly the tax and economic situation in their states could easily see them moving at some time in the future to Virginia.

ATK is a mid-size defense contractor who primarily make ammunition, pyrotechnics and rocket engines. They serve a variety of U.S. defense customers as well as NASA. They have done quite well in the last decade due to the U.S. demand for small arms and heavier rounds for machine guns, tanks and artillery often used in Afghanistan and Iraq. Recently ATK has seen some contraction in their business with the last quarter reporting a drop in earnings and revenue.

A few months ago the company lost the contract to run the Army’s Radford plant making explosives to BAE Systems (BAE:LSE). This would have had a further significant effect on future earnings and the company protested. Before the protest could be resolved the Army decided to carry out a new competition which gives ATK hope of staying the incumbent.

The move to DC will not only help the company with its lobbying and engagement with customers but also allow easier business development efforts as being co-located with so many other companies will allow easier discussions of teaming and participating in larger contracts. Somewhat ironically BAE and ATK have teamed together to develop the new defense system for U.S. Navy aircraft called JATAS. Being in Washington may facilitate further contract efforts like this.

If companies feel they need to do this to gain a competitive advantage or even to maintain there current level of business we may see more moves. It used to be that companies did not feel the need to have a large office in D.C. and maintained headquarters across the country. Now it seems that in order to fight for every penny of reduced defense budgets this may be one way to gain an upper hand.

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One Response to “ATK Follows Others and Moves to Washington D.C. Area”

  1. Alliant Techsystems Faces Double Dose of Bad News | Defense Procurement News on January 23rd, 2012 5:42 pm

    […] may have recognized that the future might get tough as they moved their headquarters from Minnesota to the Washington D.C. area. In this they followed Northrop Grumman (NOC) which left California. It places them nearer […]

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