Business Booming for US Military Contractors

January 2nd, 2007 - by admin

Daniel Lovering / Associated Press – 2007-01-02 23:19:15

Business Booming for US Military Contractors
Rebuilding, Upgrading Iraq Equipment

LEMONT FURNACE, Pennsylvania (December 28, 2006) —Dozens of military vehicles plucked from the battlefields of Iraq stand idle and partly dismantled outside a rural Pennsylvania plant, awaiting mechanics, welders and painters who will prepare them for another tour of duty.

The Bradley Fighting Vehicles, stripped of their treads, scarred and simply worn down from being driven long miles (kilometers) in harsh desert conditions, are the latest of hundreds refurbished or upgraded annually by their maker, BAE Systems — one of many defense contractors whose business has grown throughout five years of fighting in Afghanistan and Iraq.

BAE Systems has seen its Bradley business roughly double since the start of the war in 2003, and like many defense companies, is poised to benefit further from soaring government spending as the military replaces, repairs or upgrades combat equipment used in Iraq and Afghanistan.

Earlier this year, the military began shipping thousands of battered Humvees and other pieces of equipment — from helicopters to tanks — from Iraq to the United States to be rebuilt.

Another major defense contractor, General Dynamics Corp., has been awarded contracts to overhaul hundreds of its Abrams tanks since 2004, according to Tom Peterson, the company’s M1A2 Abrams program manager. It has also established a major repair depot in the Middle East for its eight-wheeled Stryker troop carriers.

Other defense companies doing refurbishment work include Boeing Co., the Chicago-based maker of Apache and Chinook helicopters; Lockheed Martin Corp., the Bethesda, Maryland-based F-16 fighter jet manufacturer; and L-3 Communications Holdings Inc., a New York-based maker of specialized communications systems.

BAE Systems was already refurbishing or upgrading the vehicles, built between 1981 and the mid-1990s, before the Iraq war began, but the fighting has brought a big increase in the number of Bradleys that need fixing or improving. The Army currently has about 4,500 of the vehicles.

The work largely entails basic automotive work — rebuilding diesel engines, transmissions and suspension systems. Relatively few show signs of combat damage. Andy Hove, director of the company’s Bradley Combat Systems division, said a typical Bradley might have been driven between 800 (1,300) and 1,000 miles (1,600 kilometers) per year before the war, but might cover as many as 10,000 miles (16,000 kilometers) per year in Iraq.

As a result, they need to be refurbished more frequently. “It’s routine work, but instead of seeing these vehicles every 10 years, we’re starting to see them every one year,” he said.

This warehouse-size plant about 40 miles (60 kilometers) southwest of Pittsburgh has been receiving as many as 500 Bradleys annually from an Army depot in Texas. The company later sends them to a larger BAE Systems facility in York, Pennsylvania, for reassembly and testing.

Inside the Fayette County facility, a roof-mounted crane lifts a gun turret out of a Bradley and gently carries it to another part of the floor. Workers crawl around the aluminum shells of some vehicles, drilling fresh holes or welding on brackets that eventually will hold new equipment. Some Bradleys are still clad in thick steel armor.

Like many employees at the plant, Joe Snyder has military experience. An Army National Guard reservist, he was deployed to Iraq for about nine months last year.

“I know where these vehicles are going and I know what they’re going to be put through,” he said.

Some vehicles carry traces of the troops who rode in them. Spent shell casings are often found trapped under floorboards. Compasses, soda cans and sunglasses have also been discovered in the vehicles’ recesses.

“Occasionally, we get little notes,” said Deborah Fox, the plant’s manager. “We found a wedding ring once and sent it back to the government and they got it back to the guy.”

A message scrawled inside one vehicle appears in a photograph at the facility: “This Bradley saved the lives of six soldiers from C/116th in Ft. Riley, Kansas. This Bradley struck an anti-tank mine and proved itself as a savior …”

The company disassembles the Bradleys, overhauls their salvageable parts and rebuilds them. Other Bradleys are remanufactured, or upgraded to newer specifications by adding electronics such as targeting systems and other features.

The process generally takes slightly less than six months, assuming needed materials are available, said Hove, the Bradley program director.

Upgrading an older Bradley to the latest version — the Bradley A3 — costs slightly less than $2.5 million dollars, while a basic overhaul of an existing configuration can cost between $1 million to $1.5 million, depending on the vehicle’s condition, he said.

The Bradley overhauling and remanufacturing businesses totaled about $1.4 billion in 2006 compared with $500 million to $800 million in pre-war years. The company’s London-based parent, BAE Systems PLC, had 2005 sales of more than $28 billion.

Government spending on military operations in Iraq and Afghanistan in 2007 is expected to reach its highest level since the Iraq war began, possibly growing to as much as $200 billion. About $120 billion was spent in the 2006 budget year, according to the Congressional Budget Office.

Some $70 billion has already been approved for the budget year that began Oct. 1, and more money is needed to replace lost or worn-out equipment.

“We’re getting into that cycle now where all that equipment over there is breaking down and needs to be refurbished,” replaced or upgraded, said Stephen Trimble, Americas bureau chief for the defense industry magazine Jane’s Defense Weekly.

Demand for the equipment has become acute because the conflict has dragged on for nearly four years, he said.

“It starts getting really pricey and companies have been making a lot of money doing this,” Trimble said. “It’s certainly something that for the next few years is going to be nice for their bottom lines.”

On the Net:
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• General Dynamics Corp.: