[CPEO-MEF] WGI finds new profits in weapons destruction

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Idaho
WGI finds new profits in weapons destruction
Ken Dey
The Idaho Statesman

Washington Group International Inc. compiled a legacy of building
impressive projects like the Hoover Dam, but the company’s newest legacy
may come from what it’s now destroying.
While United States leaders are rattling sabers and demanding that Iraq
give up its chemical weapons and other weapons of mass destruction, the
U.S. is busy destroying its own stockpile of chemical weapons.

Russia has the largest concentration of chemical weapons, and the U.S.
is second. In 1993 world leaders decided it was time to eliminate those
stockpiles.

The American weapons are stored in Army depots from Oregon to Maryland,
and Boise-based Washington Group has contracts to destroy nearly 70
percent of them. WGI also has a contract to dismantle the former Soviet
Union´s arsenal of intercontinental ballistic missiles in Ukraine and
Russia.

“This makes a real contribution to the world, and we feel very good
about it,” said Ambrose Schwallie, president of Washington Group´s
defense unit.

A ’nice niche’

The destruction work has also helped the company´s bottom line.

In the first nine months of 2002 the company´s defense business unit,
which includes the chemical weapons destruction work, has become a major
part of the company´s revenue, contributing more than $400 million.

“We have done a lot better then I ever thought we would,” Schwallie
said. “We´ve grown tremendously and exceeded all (expected) revenues.”

Analysts say the focus on chemical weapons destruction will continue to
provide a solid source of revenue.

“They´ve carved out a nice niche for themselves,” said John Rogers, an
analyst with D.A. Davidson in Portland.

Rogers, who doesn´t own Washington Group stock and whose company doesn´t
have a banking relationship with Washington Group, said the chemical
weapons work is a great business to be in because of the long-term
nature of the contracts and because the work isn´t sensitive to
“economic ups and downs.”

The combined value of all of Washington Group´s long term contracts that
stretch out nearly a decade is about $4 billion.

The Boise-based company is now destroying thousands of tons of chemical
weapons including everything from mustard agent, which was used in World
War I, to sarin agent, the kind of gas that killed a dozen people and
injured thousands in 1995 when a doomsday cult unleashed it in a
Japanese subway.

During the 1940s through the late ´60s, while in an arms race with the
Soviet Union, the U.S. military built massive stockpiles of chemical
weapons.

American production of chemical weapons ended during President Richard
Nixon´s administration, but it wasn´t until the early ´90s that
countries around the world agreed to start destroying the weapons they
had stockpiled.

At one time more than 30,000 tons of chemical weapons were stockpiled at
eight Army depots across the U.S. and on the Johnson Atoll in the
Pacific Ocean. Of those eight depots, Washington Group has
responsibility or joint-responsibility to destroy weapons at five —
amounting to about 70 percent of the Army´s stockpile.

This article can be viewed at:
http://www.idahostatesman.com/story.asp?ID=32572

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