"When They Need a Special Cartridge They Come to Us"

IMI's Small Caliber Ammunition Division is the only supplier of small caliber ammunition to IDF. An exclusive visit to the manufacturing plant in Nazareth provided insights to IMI's innovative marketing methods, future plans and potential markets worldwide

Israel Shmilovitz, IMI's VP amd Managing Director of the SCA Division (Photo: Meir Azulay)

The Small Caliber Ammunition (SCA) Division of IMI is located in Nazareth, where they manufacture five primary cartridge types for a countless number of military organizations and civilian markets overseas. The people of the SCA Division are proud of the fact that the refinement of their marketing methods yields about one million ILS per employee per year. They have a total of 250 employees – make your own calculations.

The "Yitzhak" Division is one of the five divisions that make up IMI. It is named after the late Yitzhak Ironi (Grodtzer), who served as CEO of IMI and as Director General of the Israel Ministry of Defense. The flagship products manufactured at the Nazareth plant are 9mm Luger, 5.56mm (.223 Rem.), 7.62mm (.308 NATO) and 12.7mm (0.5") cartridges. In recent months, they have added the .338" Lapua Magnum sniping cartridge, the first batch of which is being delivered to IDF. We met with Israel Shmilovitz, VP of IMI Ltd. and Managing Director of the SCA Division, at the plant where the SCA Division operates. Shmilovitz, 60, immigrated to Israel from Romania at the age of 7 and has worked at IMI for 30 years. In his previous capacity, he managed the Company's chemical plants and for the past 8 years he has been with the SCA Division, serving as its head for the past 4 years.

"We are the only supplier of small caliber ammunition to IDF. When they need special cartridges, they come to us and we have here an engineering and development department that takes care of those needs. Naturally, the cartridges are developed in accordance with their requirements, as sometimes those cartridges are intended for a specific mission and we can produce such cartridges within just a few months," explained Shmilovitz. "We are qualified to supply our products in accordance with the world's most stringent standards. Naturally, the standard of IDF exceeds all of the other standards in terms of requirements and is the most stringent of them all, so we always aim to comply with that standard. Additionally, we are certified for the world's most stringent environmental standards," added the Managing Director of the SCA Division.

Ogling the US Market

A bit of history. The manufacture of small caliber ammunition by Israeli Military Industries had begun even before the State of Israel was established. Back in 1945, during the underground movement period, 8 meters under the ground at Giv'at HaKibbutzim (The Ayalon Institute) near the town of Rehovot, 9mm ball cartridges were manufactured clandestinely for the submachine guns subsequently used during Israel's War of Independence. Following the announcement of the establishment of the State of Israel, the plant relocated to Tel-Aviv and was even visited by Prime Minister David Ben-Gurion. Only 21 years later was the plant relocated to Nazareth, and some people say that the idea was to provide employment to many local inhabitants who were unemployed in those days.

In the late 1970s, SCAMP (Small Caliber Ammunition Modernization Program) lines were established. These lines are used at the plant to this day for the mass production of 5.56mm ammunition intended to fulfill the needs of the Israeli defense establishment mainly in emergencies, but they also produce ammunition for IDF, for the training activities of the various security organizations and so forth.

By the end of the second millennium, in the year 2000, the plant was NATO certified for two primary cartridges: 5.56mm and 9mm, which allowed it to supply these ammunition types to the most demanding NATO clients. Three years and five years later, respectively, two substantial contracts were finalized with the US Army for the supply of ammunition on a large scale. The combined scope of those contracts was more than US$ 200 million.

Unfortunately, in 2011 the last contract came to an end and was not renewed. In an attempt to avoid a crisis, the management of the SCA Division reached the conclusion that other markets must be found. Consequently, they tapped into the US civilian market where most of their present revenue comes from. It is an established fact that when wars are in progress, revenue increases, but when there are no wars – revenue decreases, so the civilian market enabled the SCA Division to 'play it safe'.

"One must realize that the US civilian market is twice as large as the military market. It is definitely a place where we wanted to be, so in that year we embarked on aggressive marketing activity opposite that market," explains Shmilovitz. "Initially we obtained some contracts through the ATK Company, a significant company in the USA, and supplied them with ammunition for the US civilian market, which consists of intensive hunting and sport shooting activities. The Americans like to practice shooting, as it is in their DNA, so they are very appreciative of quality ammunition that demonstrates good performance," he added. Incidentally, the most interesting marketing method is based on American bloggers who test the products personally and then serve as public opinion leaders in the extensive US civilian market.

National Knowledge Center

The primary production line at the plant manufactures the 5.56mm cartridge. As stated, this is the smallest caliber cartridge manufactured here, and it is regarded as the flagship product which currently accounts for 70% of all revenue. The production line yields more than one million components per 24 hours and operates around the clock in three shifts (excluding Saturdays). It was imported especially from Australia in the 1990s and is manned by a total of five employees per shift. These employees must wear gloves and use earplugs and are legally bound to undergo medical examinations once a year, owing to their direct contact with various hazardous substances.

The plant itself is fitted with a networked system that controls the quality data. The managers can access the production line data so as to analyze the daily, monthly and annual production and efficiency statistics. "A cartridge is made from several components. The components we produce at the first line are the shells and bullets, which are manufactured using machining processes. After production, we test them here at the plant," says Eyal Zeevi, the Division's operations and production manager. "We serve as the national knowledge center on metal annealing. Other industries come to us to learn how to perform high-quality annealing. That is how the raw materials can comply with the requirements of actual firing. The shell must be sufficiently rigid, but at the same time sufficiently flexible," boasts Zeevi, and continues his explanation about the manufacturing process: "We purchase the gunpowder and primers from outside sources. We fill the shell with gunpowder, fit the primer and bullet and that is how we produce a cartridge. Following several tests and inspections, we package the cartridges according to the client's requirements. After that we melt the surplus metal and sell it."

As the products are mass-produced, it is impossible to inspect each and every item, so the testing is based on sampling – a process managed by the bright minds of the statistics department. "We do not actually fire every cartridge we manufacture," they share the local humor with us. At the same time, 100% of the cartridges are scanned by a specialized X-Ray scanner to verify that the shell contains gunpowder and that the bullet tip contains lead, so as to avoid any errors.

But beyond production and inspection, the most important thing, eventually, is the result. A given number of rounds should produce a 2cm group at 100 meters – this is the assurance given by IMI to all of its clients (with the minimum order requirement being one full sea freight container – D. R.).

This is the point where Thomas Konami (40) and his team come into the picture. Konami, who gained an impressive track record in various IDF combat units, runs the local shooting laboratory – the first and last authority on ammunition performance. The tests conducted by the people of the shooting laboratory are divided into two categories – ballistic shooting and action shooting. "Action shooting is easier to test, as we have to ensure that the ammunition is serviceable using the client's firearms," explains Konami, who personally fires about 120,000 rounds each month. "Ballistic testing is more complex and the actual shooting is carried out using dedicated equipment. In this context we address critical details regarding performance, safety, bullet velocity, accuracy, penetration and so forth. A test for IDF, for example, involves the firing of 2,500 rounds using seven different firearms they provide under extreme temperatures. We have state-of-the-art chambers that can operate in temperatures between minus seventy degrees and plus seventy degrees," he concludes.

It is interesting to note that the local firing facility has a range of 24 meters only and uses fixed barrels to test and calibrate the ammunition. Shooting tests to ranges of 100 meters are conducted outside the plant, in military ranges, where the results are obtained using electronic targets rather than using a ruler on paper targets as was the standard practice in the past.

Adapting to the Changing Reality

The proximity to the city of Nazareth does not bother the people of the SCA Division, who are involved in such sensitive activity. According to them, they have high fences and highly-trained security personnel, so they are OK. Internally, too, they have particularly critical procedures, which include surveillance cameras everywhere and strict inspections at the gates, so that no one may enter or leave while carrying any 'resources'.

One should realize that the SCA Division is involved in a highly sensitive activity. Nine years ago, a major fire that broke out on a Friday afternoon in an ammunition store at the plant led to the explosion of tons of munitions. The firefighting services announced, back then, that it was a high-risk fire owing to the ammunition and hazardous substances stored at the plant and a firefighting helicopter was rushed to the scene, but IMI insisted that it was a "fully controlled incident".

Today, the SCA Division attempts to remain in control especially in the context of the competition against the major ammunition manufacturers abroad, such as Winchester in the USA and Vista in Europe. In addition to the basic accuracy characteristic that was required in the past, the clients' requirements became more demanding over the years and at IMI they do their best to comply. "In addition to accuracy, penetration and stopping power are highly important today. We want to stop the attacker, so armor-piercing cartridges provide an effective solution to the requirements of overseas tenders and definitely to those of IDF," explains Shmilovitz.

The raw materials required in order to manufacture ammunition are not readily available in Israel, so the various materials are purchased mainly in Europe, the USA and the Far East. The idea is to transform the disadvantage into an advantage and buy raw materials at lower prices, for example – as a result of changes in currency exchange rates. When the Euro is low, they buy in Europe and when the Dollar is low – the USA will benefit, and so forth.

As far as revenue is concerned, sales in the last quarter of the year are normally higher. During this period, the Excel sheets are opened for the benefit of upgrades. Raw materials are normally delivered around the midyear point, and sales come naturally after that. "This year, one third of our sales were to the US civilian market, but we also sold to civilian markets in Europe and elsewhere. Our sales to IDF account for about 44% of our total sales turnover and the balance consists of our sales to the rest of the world – mainly to NATO members, contracts in Europe, South America and the Far East and about 11% to Israeli special operations forces, about which I will not elaborate," Shmilovitz explains. "Last year, on the other hand, we sold one quarter of our yield to the US civilian market and about one half to IDF," he compares.

At the present time, IMI's Small Caliber Ammunition Division is heading in a more modern direction. It attempts to become as technologically-oriented as possible and to adapt itself to the reality that changes at a mind-boggling pace. In the not-too-distant future, machines may replace some of the employees. Managing Director Israel Shmilovitz hastens to relieve any concerns of massive dismissals, and concludes: "People will still operate the machines. The machines will have a better accuracy performance than, say, the human eye. We will upgrade our production lines so that they operate at a faster pace and quality will automatically be higher." 

 

Danielle Roth-Avneri was Israeli Olympic shooting champion for 8 years. She won a bronze medal at the 2006 World Championship and still holds several Israeli records

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