New contracts, products: BAE hiring in Berthoud

BERTHOUD – BAE Systems Inc.’s facility in Berthoud has doubled in size since the defense industry giant acquired a local container manufacturer two years ago, and what was Engineered Plastic Designs Inc. is now the second largest private sector employer in the small town.

And there is little indication of slowing. BAE recently landed a $3.8 million contract to provide 527 containers for the U.S. Navy’s Joint Standoff Weapon or JSOW.  The JSOW is a first-strike weapon, fired from an aircraft typically to destroy anti-aircraft weapons at distances of 60 to 80 miles. The BAE containers are designed to ship, store and load the weapons.

Last year, BAE’s Container Division shipped 380 JSOW containers. Mike Anderson, director of programs at BAE’s Berthoud site, said shipment on the new contract will likely continue through November. He anticipates another order coming through before then that will ship through next year.

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“This is probably one of our bigger programs right now,” Anderson said. “It’s definitely our biggest customer.”

One of the advantages that the Berthoud facility has over its competition is onsite testing equipment, used to drop, shake, submerge, sandblast, heat, cool, and otherwise punish the containers. BAE’s container competitors usually have to contract with other companies for their testing, which  raises costs, reduces flexibility and puts a strain on time.

Anderson feels that the testing equipment is one of the reasons the division has been so successful at landing contracts.

“We call it a one-stop-shop,” Anderson said. “I think it’s been a deciding factor a lot of times.”

The Container Division is hiring additional employees to accommodate its growing stream of work. Anderson said they are especially interested in aluminum welders and machinists – high-paying jobs for the region.

Leveraging resources

With the original founders still on staff, BAE’s Container Division has been able to keep some autonomy while leveraging the reputation and resources of a multi-billion dollar company.

The Container Division began as Engineered Plastic Designs in 1994, when founders Barry Van Everen and John Dinsmoor acquired the Berthoud facility from the then-consolidating Ball Aerospace Corp. EPD produced specialized containers typically used for military munitions, such as missiles and bombs, as well as containers to handle and transport major subassemblies for aircraft and space systems.

Minneapolis-based United Defense Industries Inc. picked up the specialized container company in January 2005 for $8 million. At the time, United Defense was among the nation’s largest military manufacturers, developing and producing a variety of weapons and vehicles as well as providing ship repair and maintenance for the U.S. Department of Defense.

Three months after closing on the acquisition of EPD, United Defense entered into an agreement to be acquired by BAE Systems, the U.S. subsidiary of United Kingdom-based BAE Systems plc. The United Defense deal, which included stock and debt assumption, was valued at about $4.2 billion. United Defense essentially became BAE’s armament systems division, retaining its Minneapolis headquarters.

Since the acquisition by BAE, the division has nearly doubled its employment, from 79 to 150, and has grown its top-line sales by 100 percent.

“Obviously, we’ve grown,´ said Van Everen, now CEO of the Container Division. “(BAE) certainly has given us a number of opportunities.”

BAE often contracts with other defense companies. The Container Division’s biggest customer, and maker of the JSOW, is defense technology giant Raytheon Co., headquartered in Massachusetts.

Future looks good

The Berthoud site is gearing up now for an even bigger program for multinational General Dynamics Corp., based in Virginia. The program is not built out yet, but the Container Division will soon launch a volume production line to support it.

Developing another new product – a “smart” container for Raytheon – will mark an innovative direction for the Container Division. The container will include an electronics system that can charge a power supply for a missile system. The division is contracting with Loveland-based Ensign Power Systems to develop the electronics component.

Initially, the order is only for a handful of prototype and test units but has the potential to grow into a large program on a relatively expensive product.

Business is good for the Container Division, and it is likely to continue that way for the foreseeable future. Peter Arment, vice president of Rhode Isand-based aerospace industry analysts JSA Research Inc., has been following the evolution of Engineered Plastics. The company came to his attention just before the United Defense deal, when it became an acquisition target of another player in the defense industry.

Arment said that the container business is an attractive one. While many defense products have a relatively long lifecycle, the containers tend to take a beating.

“It’s almost like a consumable business,” he explained.

Overall, the defense industry is on fire, as  spending has remained high under the Bush administration, to support continued troop deployments to Iraq and Afghanistan.

“In general, we’ve been seeing some pretty strong activity,” Arment said.

Arment added that while there seems to be strong spending on research and development, which usually slows during wartime, a majority of the spending now relates to maintaining older systems.

System maintenance has led to some non-container work for the Container Division. Because of the local welding expertise, BAE Systems transferred a Humvee armor retrofit program to the Berthoud site a little over a year ago. Last year, the facility churned out more than 900 armor kits.