U.S. Army Saying "Ciao" to Italy's M9 Beretta -- but What Will Replace It?


Beretta's M9. Source: Beretta.

"Beretta has set an unprecedented record for reliability with the M9 pistol... The average reliability of all M9 pistols tested at Beretta U.S.A. is 17,500 rounds without a stoppage. During one test of twelve pistols, fired at Beretta U.S.A. under Army supervision, Beretta-made M9 pistols shot 168,000 rounds without a single malfunction."
-- Gabriele de Plano, Vice President of Military Marketing & Sales for Beretta U.S.A. (as quoted by AmmmoLand.com)

And yet, the U.S. Army is preparing to holster its Berettas and switch to a new standard-issue handgun. Why?

Dumping Beretta
Last month, the Army announced plans for an "industry day" at which gun manufacturers such as Smith & Wesson (NASDAQ: SWHC  ) , Sturm, Ruger (NYSE: RGR  ) , Colt, and Glock would be invited to show their wares and compete for a new contract. Its objective: to replace the M9 Beretta semiautomatic pistol.

The U.S. Army holds more than 200,000 M9 Berettas in its inventory. If it proceeds with plans to use a new handgun, tentatively monikered the "Modular Handgun System," all of these M9s could soon be replaced. In fact, Military.com reported that if other armed services follow the Army's lead, one lucky gun company could soon receive an order for as many as 400,000 handguns -- a significant contract in an era of declining civilian handgun sales.

According to Military.com, the Army's main concerns with the M9 are that it's insufficiently accurate, lethal, and reliable for the service's purposes. That's not entirely Beretta's fault. Project officer Daryl Easlick at the Army's Maneuver Center of Excellence at Fort Benning, Georgia, was quoted in the Military.com article as saying that many of the Berettas it has in inventory today are "old," adding that "it's costing us more to replace and repair M9s than it would cost to go get a new handgun." 

Finding a replacement
Some critics cite a lack of killing power in the M9. Simply put, the 9mm full-metal jacket round fired from a Beretta M9 isn't big enough to stop and drop every opponent a soldier encounters. This raises the odds of the Army's next standard-issue handgun being a .45 caliber weapon such as the M1911, which Beretta's M9 replaced in Army service in 1985. Lots of companies make .45 caliber weapons that the military could consider and companies might be submitting news designs for the Modular Handgun System.

Lots of gun companies make updated versions of the WWI-era 1911 .45 ACP handgun. Smith & Wesson is one of them. Photo source: Smith & Wesson.

A lot up for grabs
The Army's official position on the Beretta is that it simply doesn't want the gun anymore. Saying there are a "a multitude of reasons" why he doesn't think the M9 will be in the running this year, Easlick complained to Military.com: "It's got reliability issues; the open slide design allows [contaminants] in. The slide-mounted safety doesn't do well when you are trying to clear a stoppage -- you inadvertently de-cock and safe the weapon system."

Meanwhile, competition to win this contract will be tough among the companies that have a chance of winning, because the stakes are so high. 

Take Smith & Wesson's SW1911 as an example: The company advertises these handguns on its website at prices roughly ranging between $1,000 and $1,500 a pop (so to speak). Times potential sales of 400,000 handguns, that works out to a $400 million to $600 million sales opportunity -- nearly as much revenue as Smith & Wesson or Ruger collect in a year across all their military, police, and civilian sales channels.

In fact, handgun sales account for the majority of annual sales at both Ruger and Smith & Wesson. So a successful Pentagon contract bid could easily account for more revenues than these companies ordinarily book from handgun sales in a year.

 

Total sales

Handgun sales

Handgun sales as a % of total revenue

Smith & Wesson

$626.6 million

$423.0 million

67.5%

Sturm, Ruger

$688.3 million

$401.7 million

58.4%

Source: Most recent SEC 10-K filings.

Who will win the contract? As soon as we know, we'll fill you in. "Like" the defense news page today to make sure you don't miss the announcement.


Psst! Beretta! You're holding it wrong. Photo source: Beretta.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3052309, ~/Articles/ArticleHandler.aspx, 9/18/2014 3:42:25 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement