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Op-Ed: Unions Help Foreign Company Land US Army Contract
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Published: Saturday, 2 Mar 2013 | 4:56 PM ET
By: Carol Roth, CNBC Contributor and Business Strategist

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Staff Sgt. Suzanne M. Day | D.O.D | Wikipedia
The M4A1 has the capability to fire fully automatic instead of three-round burst.
The sequester may be affecting some of the United States' defense budget, but not the part of that is the U.S. Army's Product Improvement Program, which is set to upgrade the Army's old issue M4 rifles to newer M4A1 models.

According to Military.com, after a dramatic bidding and re-bidding process, the M4A1 contract, with an estimated value of approximately $77 million, is going not to incumbent manufacturer Colt Defense nor Remington Arms (owned by Freedom Group), but to a foreign company, FN Herstal. The initial part of the contract award — around $9.3 million worth — was posted at the government's Federal Business Opportunities site earlier this month.

While FN Herstal has its manufacturing plant in South Carolina, the company itself is a subsidiary of the Herstal Group, which, according to its website, "… has been 100 percent owned by the Walloon Region of Belgium," or in other words, the government of Belgium. So, while net-net, manufacturing jobs are preserved in the U.S., the profits go to a foreign entity, which could also engender a loss of sales, administrative and other jobs in the U.S.

(Read More:Here's Why Layoffs From Sequester Will Be Costly)

So, how does this happen?

FN Herstal underbid both Remington and Colt — in the case of Remington, by a margin of about $7 million. They may have had the luxury to do so because their South Carolina plant is in a "right to work state," where individuals can decide whether they want to join a union or pay union dues. Contrast that with Colt Defense, who had to give UAW union workers at its Connecticut plant a 5.5-percent raise over the past two years. That translates into higher costs for Colt to manufacture its products. LINK TO ARTICLE: http://www.cnbc.com/id/100512673?__sourc...ar=xfinity

[Philadelphia Patriot]

The army also buys M240Bs, M249s, M2s, and I think mini guns too from FN. Also remember the military/government buys Sigs from Switzerland and HKs from Germany.

I also see no problem with this because now Colt has more AR parts for the civilian market.

[LifeInPa]

It's a shame really that the government lines the pockets of non-American companies while we have plenty of companies here that can make quality products equal to or greater than their foreign competition. However the US government over the past 30 years has a hard on for sending our money to Belgium, Germany and Austria for our small arms needs.

[andrewjs18]

It's a shame really that the government lines the pockets of non-American companies while we have plenty of companies here that can make quality products equal to or greater than their foreign competition. However the US government over the past 30 years has a hard on for sending our money to Belgium, Germany and Austria for our small arms needs.

apparently we don't if we're buying stuff from overseas.

foreign countries are making incredibly reliable, cheap weapons today.

[LifeInPa]

It's a shame really that the government lines the pockets of non-American companies while we have plenty of companies here that can make quality products equal to or greater than their foreign competition. However the US government over the past 30 years has a hard on for sending our money to Belgium, Germany and Austria for our small arms needs.

apparently we don't if we're buying stuff from overseas.

foreign countries are making incredibly reliable, cheap weapons today.

Proof? The government has almost gone exclusively to H&K and FNH over the last 30 years for new small arms platforms. In many cases American companies can make a better weapon system for less money but the competitions are only open to a handful of companies. Recently in the search for a new LMG the US Military has allowed an American company to develop one and it seems to be a superior weapon comapred to the M249. Hopefully this is a trend because I have an issue with my tax dollars going overseas when we can find a company in our back yard to develop weapon systems.