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Armor plant has record profit despite federal probe

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By James MacPherson -- Associated Press

BISMARCK, N.D. (AP) - A Fort Totten-based American Indian-owned armor plant that is mired in a federal investigation involving questionable business practices expects record revenue this year because of the war in Iraq.

Sioux Manufacturing Corp. will post about $32 million in revenue for the fiscal year that ended Sept. 30, said Carl McKay, the company's president and CEO. The company had a record $30.2 million in revenue during the last fiscal year and $28.3 million in 2005, he said.

The plant is owned by the Spirit Lake Sioux tribe, on the Spirit Lake Reservation in northeastern North Dakota.

Federal agents raided the armor plant in June 2006, confiscating boxes of company records under a search warrant. The Justice Department and the U.S. Attorney's office said at the time that the raid centered on ''alleged contract irregularities'' but would not elaborate.

North Dakota U.S. Attorney Drew Wrigley said the investigation is ongoing. ''There is really no way for me to comment on this matter at all,'' Wrigley said.

He refused to say whether it was a criminal matter.

''We're still trying to reach a determination on which path this case is going to take,'' Wrigley said.

Sioux Manufacturing uses a loom to weave Kevlar fibers that are used in helmet construction and armor for vehicles. The company also makes breastplates for ballistic vests, or flak jackets. Composite tiles made at the factory are pieced together to line interiors of military vehicles, ships and aircraft.

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McKay said the federal investigation centers on the strength and density of Kevlar weave used in military helmets.

He said the company has produced about 750,000 helmets and thousands more parts for the helmets since the 1980s. Neither government inspectors at the plant nor the company's own workers had ever found problems with the helmets or their components manufactured at the plant, he said.

The helmets were tested by the government and at the factory by firing projectiles into them.

''There have been no ballistic failures,'' McKay said. ''That should mean the helmets are safe, and the soldiers using them are safe.''

The plant currently employs about 175 workers, nearly all of whom are American Indians. The plant has been running nearly nonstop since the war in Iraq began, McKay said.

The tribe, which numbers about 5,000, also owns a casino and other manufacturing businesses on the reservation.

McKay said the plant works with more than 20 companies that are awarded military contracts for protective armor. He said none of the companies has canceled orders from Sioux Manufacturing because of the federal investigation.

''It hasn't hurt us with our existing customer base, but we are somewhat reluctant to develop relationships with new customers because they may think they would be inheriting a lawsuit,'' McKay said.

The plant, which opened in 1974, was run by Chicago-based boat manufacturer Brunswick Corp. until 1989, when Sioux Manufacturing gained full ownership of the company.

McKay said profits during the Brunswick years were as high as $60 million, due largely from a Small Business Administration program that gave preference to minority-owned businesses.