Sig Sauer’s $4.5 billion Army contract seen as a ‘historic’ opportunity

It’s a classic question: Which came first, the chicken or the egg?

It’s a query that can be applied to Sig Sauer’s multibillion-dollar contract to supply the U.S. Army with its next generation of weaponry: Which came first, the bullet or the gun?

In this case, the bullet was created first, then a rifle and machine gun were developed around it, providing Sig Sauer a “historic” opportunity in the words of Tom Taylor, the company’s chief marketing officer and executive vice president, commercial sales.

“There’s never been anything of this magnitude in terms of small arms,” said Taylor.

The award came after a 27-month evaluation process. “The U.S. Army is taking a bold step toward command of the 21st century battlefield, and Sig Sauer is immensely proud to be the selected provider for this historic revolution in infantry weapons,” said Ron Cohen, company president and CEO. “The fielding of the Sig Sauer Next Generation Squad Weapons System will forever change the dynamic of military engagement for America’s warfighters with American innovation and manufacturing.”

Per Taylor, here is how the contract will affect Sig Sauer, which has seven facilities in New Hampshire, one in Arkansas and one in Oregon:

• The contract with the U.S. Army is worth $4.5 billion to produce 400,000 of the new rifles and machine guns, suppressors for each of those guns and 1 billion bullets.

• Sig Sauer’s employee roster in the Granite State, which now stands at about 2,400, will grow to between 2,800 and 3,000. The headcount in Arkansas will jump from 340 to roughly 1,340. Oregon will need an additional 50 to 100 people on top of its current 175.

• In terms of production space, according to Taylor, the New Hampshire facilities will need another 400,000 square feet of space, Arkansas will need another 250,000 square feet, and Oregon another 60,000 square feet.

• The bullets will be made in Arkansas.

What Taylor called “the guts” of the guns and suppressors will be produced at its Rochester plant.

‘We just can’t wait’

In 2020, Sig Sauer acquired a multi-building campus within the Crossroads Industrial Park to relocate its Dover operation and expand overall New Hampshire operations. Its current 110,000 of production space is expected to at least double to about 210,000 or more.

To meet the contract, Sig Sauer needs to be in full production of the new weapons by late 2024.

“We need to be breaking ground on some of these facilities within 60 to 90 days,” said Taylor. “We just can’t wait. We have to begin the process on all these buildings immediately.”

The new rifle will be the successor to the current M4, developed during the 1980s as the replacement to the Vietnam War-era M16. It will be the M5 in the military’s hands; right now at Sig Sauer the rifle is known as the XM5. The Army’s current light machine gun, the M249, will be replaced by the Sig Sauer XM250, ultimately known as the M250.

“If you think about the weapons that are in our arsenal right now, most of them are between 50 and 60 years old,” said Taylor.

Both the new rifle and machine gun were made for more ergonomic ease, including technology that reduces the recoil — the kick — each time the gun is fired. Instead of the equivalent of a 13-pound weight striking a soldier’s shoulder each time the current machine gun is fired, for example, the kick on the new gun will be about the equivalent of a 2.5-pound weight.

Each gun uses the same suppressor, attached at the end of the muzzle of the gun.

The new suppressor not only helps muffle the sound of the firing gun but also reduces potentially harmful gas backflow and muzzle flash.

It is the bullet, according to Taylor, that is the most improved part of these weapons.

Citing brass cartridge ammunition, Taylor said, “ammunition technology hasn’t changed since 1840. While the technology is better and bullets are bigger and faster, the technology is basically the same.”

What the company calls its new “6.8 hybrid” uses a patented lightweight metallic case designed to handle pressures higher than conventional ammunition, resulting in dramatically increased velocity and on-target energy in lighter weapons. It’s a hybrid, because it has a steel cap and brass casing. It is also 20 percent lighter, but delivers a more powerful punch and greater accuracy, what Taylor calls more “lethality.”

“Our soldiers, while more advanced with all of our equipment in terms of the guns and small arms, we were outgunned,” said Taylor.

He noted the current rifle cartridge used by NATO forces as well as many non-NATO countries is called the 5.56 NATO cartridge developed in the late 1970s. “When we went to a 5.56 NATO round, it put us at a little bit of a disadvantage,” Taylor added.

BFA financing

Sig Sauer, whose corporate headquarters at the Pease International Tradeport in Portsmouth, has a significant stake in the state’s economy. It has seven locations in the state: two at Pease, one in Dover, one in Rochester, two in Exeter and its training facility in Epping.

The Executive Council in 2020 approved allowing the Business Finance Authority to provide $21 million in financing and an unconditional state guarantee of up to $19 million for Sig Sauer’s expansion in Rochester that will ultimately replace operations in Dover.

Sig Sauer already has the contract for the Army’s pistol, the P320 awarded in 2017.

U.S. Sen. Jeanne Shaheen, D-NH, called the new Army contract a “generational investment for the state.”

“This contract reaffirms the powerful role that Granite State businesses play in support of our national defense. Through this federal contract with the U.S. Army, New Hampshire will manufacture and deliver all Army soldier weapons for decades,” said Shaheen.

She added the contract “will create hundreds of new jobs and ensure the Granite State remains at the forefront of our national security for decades. New Hampshire is renowned for its manufacturing capabilities in support of national priorities, from the defense sector to the aerospace industry and beyond. I’m thrilled Sig Sauer is further bolstering our state’s proud reputation.”

It is likely, according to Taylor, that as the new weapons system gets into the field, more and more U.S. allies will want the guns themselves. England and Australia have already made inquiries, said Taylor.

Taylor knows full well the challenges of hiring an additional 600 people in New Hampshire, a state with an unemployment rate of just 2.5 percent. Despite the shallow workforce pool, he’s confident there’s something beyond pay and benefits that will attract people to Sig Sauer.

“One of the things that works to our benefit is the passion of the employees here.

Companies don’t arrive, as Sig has arrived, as the largest gun manufacturer in the world in such a short period of time without a passionate leader who has been able to hire passionate people,” said Taylor.

“When you have an employee base of almost 3,000 employees and 35 percent of them are veterans, they take great pride in doing what we do here for both the civilian market as well as the defense market,” he added.