Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, July 13, 1994 TAG: 9408040038
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: STEPHEN FOSTER and MICHAEL STOWE STAFF WRITERS
DATELINE: FIARLAWN LENGTH: Medium
But while $365 million and 3.5 million shares of Alliant stock will change hands, workers at the arsenal probably will not see a difference, officials said.
"Other than the fact that Radford will be run by a different company, nothing should really change," said Bob Hessler, director of public relations with Hercules' corporate headquarters in Wilmington, Del. "Employment should remain the same ... same benefits, same pay scale."
"All Hercules employees will become Alliant employees," said Rod Bitz, corporate communications director for Edino, Minn.-based Alliant.
Alliant is the largest supplier of ammunition to the Department of Defense. The chance to operate the arsenal was one of the most attractive aspects of the deal for Alliant, which now has to buy its propellant from an outside contractor.
"This will allow us to to do it all in-house," Bitz said.
The sale is not yet final, although the companies announced Tuesday that a letter of intent had been signed and the deal should be closed by the end of the year.
It would be subject to final negotiations and approval by Alliant shareholders.
The announcement took workers at the plant - and to a certain extent its owner, the U.S. Army - by surprise.
"Right now we don't have an answer to any questions," said Ken Thompson, president of Local 3-495, Oil, Chemical and Atomic Workers International Union. "It's just too early to try to determine what's going to happen."
"People are walking around in a daze today," said one worker.
"We knew it was in the wind, but that's not our business," said Brig. Gen. James Boddie, deputy commander for procurement and readiness at U.S. Army Armament Munitions Chemical Command in Rock Island, Ill., which oversees the arsenal.
"They've got to get it approved by a lot of people before it happens," he said. Regardless, "I really think ... the plant itself will see little change. I don't think they would buy Hercules if they didn't want the plant."
Under the deal, which Hessler said has been proceeding through negotiations since January, Hercules would turn over its aerospace division to Alliant for $365 million.
The division took in $660 million in revenues last year and operates eight plants in seven states. The Radford arsenal is the second largest of those, with 1,680 employees.
Alliant formed in 1990 when Minneapolis-based Honeywell Inc. spun off its defense contracting divisions into a separate company. Its entire business is contract work with the federal government, and the company, like Hercules, has been hurt by defense cuts, Bitz said.
A restructuring last year reduced Alliant's facilities and employees by one-third, he said. The company trimmed its work force from 5,700 to 3,900, although employment levels went back up 900 workers when Alliant bought three small companies right after the restructuring.
Bitz said he did not know of any organizational changes that Alliant has planned for the Radford facility.
Alliant's board decided the best way to grow during the defense downsizing is to purchase new companies, Bitz said. "This is by far our largest acquisition."
For Hercules, selling off the aerospace division means the multibillion-dollar corporation can focus on its chemical business, Hessler said.
Its aerospace division contracts with the federal government, employs 5,700 people and accounts for one-quarter of Hercules' $2.7 billion total in revenues. The division is not as profitable as the remainder of Hercules' business.
"You're dealing with an entity that has far more control than the free market," Hessler said of the government. "We're going to deal with the chemicals," in which Hercules sells to corporations like Dow Chemical Co., DuPont and others.
Under the terms of the sale, Hercules will hold a 26 percent ownership of Alliant. Hercules' chairman, its senior vice president and the president of Hercules Aerospace will serve on Alliant's board of directors - a point Rep. Rick Boucher, D-Abingdon, noted as another reason why workers at the Radford arsenal will be OK.
He said Hercules' people will be "highly influential" within Alliant, and professed no fears of a major shake-up in employment or direction at the arsenal.
"Not worried at all," Boucher said. "No reason to be."
by CNB