The sole domestic source for black powder, a key ingredient in the production of many military explosives such as bullets, mortar shells, and artillery rounds, was shut down nearly two years ago after an explosion destroyed much of the plant in Minden, Louisiana.
The mill is set to reopen in Summer 2023 under new ownership.
This scenario highlights a problem that has become far too common. Supply chains related to national security can be brought to a halt by an unexpected crisis at a lower tier supplier. Defense industry consolidations have exacerbated this problem, and the U.S. is in need of swift action to regain control of materials and supplies critical to national security.
This post is based on The Week article, U.S. production of bullets, shells, and missiles sidelined by explosion at 1 Louisiana gunpowder mill, by Peter Weber, April 27, 2023; the PR Newswire press release, Estes Energetics to Extend the GOEX Black Powder Production Legacy, by Estes Energetic, January 31, 2022; the Wall Street Journal article (behind paywall), The U.S. Military Relies on One Louisiana Factory. It Blew Up., by Gordon Lubold, April 26, 2023; the Greater Baton Rouge BusinessReport article (behind paywall), ‘Incident’ at north Louisiana gunpowder facility highlights Pentagon struggles, by Daily Report Staff, April 26, 2023; the US Department of Defense post, Defense Department Invests to Re-Establish Domestic Production of Critical Propellant, by DoD Staff, August 10, 2022; and the YouTube videos in the Spotlight. Image source: US Army Photo/Alamy Stock Photo
1. How did purchasing patterns by the U.S. Defense Department contribute to the consolidation of companies vital to national defense? Explain why many key materials or supplies now come from only one source of supply.
Guidance: The Pentagon’s order quantities and frequency are not consistent over time. Order quantities can vary wildly, depending on the U.S. military’s inventory levels, budget priorities, and the extent to which materials are being used in training or combat.
Variability in demand makes it difficult for a supplier to maintain a steady profit. This is especially true when a company produces a limited range of highly specialized materials or products, such as black powder, and has costly regulations to follow. These irregularities also make it difficult for more than one supplier to even exist for certain materials and components, as there is not enough business to go around.
The Minden powder mill was purchased in 2009 by Hodgdon, and at the time orders were plentiful. Over time, orders diminished, making it difficult to remain profitable. After the 2021 explosion, Hodgdon decided to stop production entirely and eventually sold the mill.
These “single source” supplier problems can also be traced back to the consolidation of the defense industry several decades ago, when a substantial reduction was required in the number of prime and lower-tiered suppliers.
Now, with the past year’s involvement in Ukraine, there has been a serious drawdown of critical military supplies that needs to be replenished, but in many instances it has become very difficult to do so.
2. Why is it dangerous to have the military’s materials supply chain rely on single source suppliers?
Guidance: It is risky for the United States to rely on foreign countries, whether friends or foes, for provisions of products and materials key to its national safety and defense. When the Minden mill shut down in June 2021, the sole domestic source of black powder production halted. Military contractors have had to use stockpiles of black powder, drawing down this important resource.
In the case of black powder, other sources of supply exist in U.S. allies like Germany, and in other countries such as China. However, it can be dangerous to rely on non-domestic sources for a material critical to the production of so many types of weapons and munitions. This is a key weakness in the United States’ military supply chain that must be addressed to maintain national security.
Other supply chain bottlenecks mentioned in the Wall Street Journal article involve a shortage in workers trained in casting and forging, and limited production capabilities to manufacture batteries and microchips.
3. What maintenance-related issues have surfaced as the factory prepares to restart GOEX black powder production?
Guidance: The mill was purchased by Estes Industries, which spun off a subsidiary, Estes Energetics to run it. Estes is set to begin filling military contracts as early as Summer 2023.
The mill was upgraded with the assistance of $3.5 million from the Pentagon under the Defense Production Act to help reduce America’s reliance on foreign countries for materials that are key to its national security.
Part of the upgrading process has involved testing and repairing every machine. Early in the Wall Street Journal article, it is stated that “all of the building’s equipment” was destroyed. The end of the article, however, states that old machinery that has sat unused tends to experience breakdowns, thus necessitating extensive testing prior to reopening. Perhaps this suggests that some equipment at the mill was spared from the explosion but needs to be brought back to reliable operating condition.
The article also mentions the opening of the new facility has been delayed several times because of issues such as a broken water main on the factory grounds. A great deal of testing, for both reliability and safety purposes, is taking place before black powder production resumes.
4. Why is Louisiana a desirable location for a black powder factory? How will mill upgrades help improve the facility’s safety further?
Guidance: Under the prior ownership of DuPont, the black powder mill operated in Pennsylvania until 1971. Gearhart-Owen (later named “GOEX”) purchased the mill after two workers perished in an explosion. GOEX then moved the plant to Minden, Louisiana.
Many different factors can play a role in making a location decision. In this case, climate was a key factory in making Louisiana a desirable location for the mill. A humid climate reduces sparks that can trigger explosions.
Unfortunately, despite this precaution, an explosion did end up decimating the facility two years ago. Now, with the recent upgrades, the mill boasts a top-of-the-line fire suppression system with water guns strategically poised to quickly avert any problems in vulnerable production areas.