Your Friendly Neighborhood War Profiteer

It's not just Alliant Techsystems. Hundreds of small Minnesota companies are cashing in on America's defense industry.

Retired Army Officer Louise Morgan stands at a podium, flanked by six flags: one each for America, Minnesota, the Army, Navy, Air Force, and Marines.

Two large projection screens float on a wall above her head. She fiddles with a laptop, queuing up a short video promoting the missile launchers, big guns, and ammunition manufactured by BAE Systems, her employer in Fridley.

The video, accompanied by a pulsing and triumphant soundtrack, is a blitz-montage of computer-animated Navy guns firing, real-life missiles launching, and pictures of Baghdad burning. BAE, she narrates, makes the things that "make the big booms."

The throwable Recon Scout by Recon Robotics
The throwable Recon Scout by Recon Robotics
Chip Laingen, director of Minnesota Defense Alliance
Chip Laingen, director of Minnesota Defense Alliance

Morgan's audience is Minnesota's defense industry, and the occasion is a meeting of the Defense Alliance of Minnesota, a network of companies big and small, most of them obscure, that draw billions of dollars to the state each year through Defense Department contracts.

Democratic Sen. Amy Klobuchar is there, too. When she takes the podium she shares a laugh with the crowd about a Defense Alliance meeting she spoke at a year earlier. She enjoyed it, she says, "despite the protesters."

"I support the work you're doing," she tells the room full of charcoal sports jackets. "Our state hasn't gotten quite the portion of contracts" other states have enjoyed.

She's right about that. Minnesota ranks a lowly 34th among states in receiving defense allocations—just $1.5 billion in 2006 (the most recent data available), compared to $31 billion for first-place California. That Minnesota figure counts only big contracts to big contractors, the local divisions of defense giants who win the so-called prime contracts (over $5 million and often more than $100 million): names like Alliant Tech, Lockheed Martin, General Dynamics, BAE Systems, and even Hormel Foods, which gets tens of millions each year to keep the U.S. military fed.

But what those statistics don't show are the hundreds and maybe thousands of small and medium-sized companies who also make up Minnesota's defense industry. Across the state, from the Twin Cities to the smallest rural towns, are often-scrappy companies with a handful of employees who work contracts from the low thousands to the low millions.

"There is an incredible diversity of work being done in Minnesota," says Chip Laingen, a retired Navy officer who heads the Defense Alliance of Minnesota. Nearly 300 companies have joined the Alliance, which holds regular networking events and studies the state's defense industry. Laingen estimates there are 2,000 companies doing defense-related business in Minnesota.

Few of them do business directly with the Defense Department. They are small subcontractors, endlessly pitching their obscure innovations to the local giants. Or they may be entrepreneurs who work the civilian and military markets simultaneously—pushing adopted technologies at trade shows even as they try to elbow their way through the endless bureaucracy of the U.S. military.

They are nuts-and-bolts companies like Fastenall in Winona, with a $400,000 contract for "hardware and abrasives." Or Dodge Oil & Gas of Rochester, with a $100,000 contract for "fuels, lubricants, oils, and waxes." Or Winona-based Peerless Industrial Group, which has a $23,000 contract for "rope, cable, chain, and fittings." Or the Occupational Development Center of Thief River Falls, with a $6,000 contract for "textiles, leather, apparel, shoe findings, tents, and flags."

More intriguing are the small technology companies, which provide a window into what the Minnesota defense industry could be if it leveraged the enormous tech-industry infrastructure it is famous for. Sen. Norm Coleman has been a champion of tech startups looking to do business with the Pentagon, winning nearly $47 million in earmark money from the 2008 Defense Appropriations Act.

Minneapolis-based Phygen, for example, won $3 million to design a method of cold sterilization of medical instruments for war zone medics. Humanetics Pharmaceuticals of Eden Prairie got $3.8 million to develop a vaccine for radiation. Speechgear of Northfield won $1.8 million for its instant language translation systems. And Shield Technologies of Eagan got $1.6 million to develop a method for preventing corrosion of Navy weapons and deck equipment.

Funneling defense dollars into the state's fledgling economy is about more than munitions, says Defense Alliance's Laingen. "It's about protecting soldiers and their vehicles. It's about clothing, logistics, and training. These things are a far greater piece of the Department of Defense than the things that blow things up."

Here is a closer look at a few of the thousands of small Minnesota companies that have managed to infiltrate the labyrinthine world of defense contracting: 

Company: Recon Robotics

City: Edina

Product: Scout Throwable Robot

Funding: Private investment and more than $6 million in federal research grants

Last month, Recon Robotics CEO Alan Bignall flew to Paris with a black hard-shell suitcase. Inside was a small, durable, remote-controlled robot with a tiny surveillance camera built in.

His destination: a meeting of the special operations commanders for each of the 26 NATO member countries, where Bignall had been invited to demonstrate—and hoped to sell—his $6,500 robot.

The product started with a mid-'90s Pentagon challenge to create a surveillance robot that could be fired from a grenade launcher. Military planners were haunted by the ambush in Somalia—they wanted to see around corners and into buildings without sending a living, breathing scout.

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