Friday, June 22, 2007

Beretta gunning for growth in Accokeek

Italian company relies on military and commercial sales

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Fueled in part by a war half a world away, a family business that started in Renaissance Italy has been quietly growing in southern Prince George’s.

‘‘Since 1985, Beretta has been the official supplier of side arms to all five branches of the U.S. military,” said Elio Oliva, vice president of law enforcement and military sales and marketing for Beretta U.S.A. Corp. of Accokeek.

The top priority of the Italian firearms’ U.S. division is to ‘‘handle all of the U.S. military business,” Oliva said.

About two years ago Beretta U.S.A. competed for and won 13 military contracts for pistols and spare parts. As a result, the company increased its employment at the Accokeek factory, said Jeff Reh, vice general manager.

Beretta U.S.A. has more than 330 employees in the country, with about 280 at its 20-acre headquarters in Accokeek, Reh said. Craig Rovelstad of the county Planning Department and the former planner for Accokeek said he believes Beretta is the largest employer in the area.

‘‘Right now our sales are predominantly in the commercial market, but the military and law enforcement sales are a very important part of our business,” Reh said.

Privately held Beretta started in Italy in 1526. Its U.S. division was founded in 1977.

The Pentagon isn’t the company’s only military customer. The company recently won a contract with the Canada Border Services Agency for 2,400 pistols and related training, with an option to buy up to 6,400 more, Oliva said.

‘‘The Canadian Border Services have never been armed, so they were very careful to select a gun that would be easy to use and reliable,” he said.

Beretta’s model Px4 Storm semiautomatic 9mm pistol with tritium sights allows users to aim during low-light conditions, Oliva said. It also has interchangeable backstraps that can be adjusted to fit the shooter’s hand, which is important because hand sizes can vary widely among male and female officers, he said.

The contract amount depends on what options are selected, Oliva said, declining to release further cost details. The deal could run until 2011, he said.

The company has also won a $124,000 contract awarded by the U.S. Army Tank-Automotive & Armaments Command in Illinois.

Based on a review of publicly traded firearm companies, ‘‘we believe that we are the largest firearm manufacturer in the country in terms of revenues,” Reh said, while declining to disclose the company’s revenues.

The Iraq War isn’t hurting Beretta’s business, according to one analyst.

Having an active military and ‘‘being in a conflict” increases the demand for firearms and replacements, said Eric Wold of Merriman Curhan Ford in New York, who covers publicly traded Smith and Wesson, a Beretta competitor.

Three large domestic military orders are coming up for grabs, and one is a large Army contract for about 650,000 pistols, Wold said. Beretta currently has that contract, which is estimated to be worth between $300 million and $500 million, Wold said.

Holding onto that contract isn’t a done deal for Beretta, he said.

‘‘Beretta weapons have been jamming and malfunctioning in the field,” Wold said. And there has been controversy over U.S. military contracts going to foreign companies, he said.

About two years ago, Smith and Wesson started focusing on the military market and hired a former Beretta employee responsible for law enforcement sales. Since then, Smith and Wesson has won four Pentagon contracts for about $22 million, Wold said.

‘‘I think there will be pressure to give these United States military orders to a U.S. company,” he said.

Reh counters the notion that Beretta is not a U.S. company. Some competitors ‘‘gloss over” that Beretta U.S.A. is an American corporation with American employees, he said.

‘‘Our goal is to continue expanding our relationship with both the armed forces and law enforcement,” Oliva said. ‘‘There’s over 18,000 state and local law enforcement departments in the United States and we’re constantly competing for business.”

Beretta’s primary manufacturing facilities and offices are in Italy and in Accokeek, with retail centers and sales representatives around the world, Oliva said. The company supports select customers outside the United States, but ‘‘the bulk of international sales are handled out of Beretta Italy,” Oliva said.

Firearms Industry

The U.S. firearms industry includes about 200 companies with combined annual revenues of $2 billion.

The industry produces about 3 million guns per year.

The largest manufacturers are Remington Arms and Sturm Ruger.

Other companies that manufacture more than 50,000 weapons annually are Beretta U.S.A., Marlin Firearms, Mossberg, Smith & Wesson, U.S. Repeating Arms, Savage Sports Corp. and Hi-Point.

Although automation has increased, the industry is still fairly labor-intensive. Average annual revenue per worker is about $150,000.

Gun exports total about $300 million annually, with Canada and Japan the largest buyers.

Source: First Research

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