N.D. Armor Maker Branches Out After Lawsuit

FORT TOTTEN, N.D. (AP) -- Eighteen months after settling a contentious legal battle that challenged the quality of its products, an American Indian-owned company that makes protective gear for soldiers says it's done playing defense.

Sioux Manufacturing Corp. says it has successfully completed an independent audit and bought $2 million worth of new equipment, steps aimed at repairing the damage to its image caused by the lawsuit and expanding its nonmilitary business.

"The sky is the limit now," said Jeff Cooper, Sioux Manufacturing's quality manager, "as long as we drum up some business."

The audit of the company's compliance with a set of international standards was a response to a lawsuit brought by a pair of former employees and whistleblowers who claimed the company failed to follow specifications in making Kevlar cloth, a protective synthetic fiber used in helmets and armor.

Sioux Manufacturing paid $1.9 million in December 2007 to settle the case, but admitted no wrongdoing. Federal prosecutors said the company's cloth underwent ballistics safety during their investigation tests and passed all of them.

Cooper said the company asked for the audit even though business remained steady during the investigation, which included a raid conducted by shotguns toting federal agents. The audit found no major issues, he said.

"I don't know if it's accurate to say we needed to be certified," Cooper said. "We thought it would help reinstate some of the confidence that people have in our company as a quality supplier."

Sioux Manufacturing President and Chief Executive Carl McKay, 60, a University of North Dakota Law School graduate and former Spirit Lake Tribal chairman, said he has tried to put the lawsuit behind him. But he said it still bothers others on the reservation, many of whom have relatives in the military.

"We have friends and relatives who need this stuff," he said. "It is really a slap in the face for the Department of Justice to do what they did. A lot of our people here just really resented it."

Sen. Byron Dorgan, D-N.D., has also questioned the legitimacy of the lawsuit's allegations. He asked the Pentagon in February 2008 to explain why the government investigated the company, but said he was told it was a Justice Department issue. Dorgan said he remains baffled by the case.

"There's something that seems out of kilter here," he said. "The government continued to do business with this company during that time because the Defense Department thought it was a good company making good products."

Drew Wrigley, the outgoing U.S. attorney in North Dakota, did not return a phone call seeking comment. In the past, he has said the lawsuit and federal investigation were based on witness statements and inspection reports, and that it wasn't debatable that the company was underweaving its Kevlar products.

The plant, covering 250,000 square feet, was founded in 1973 and run by Chicago-based Brunswick Corp. until 1989, when the Spirit Lake Tribe assumed full ownership. It has annual sales of between $25 to $40 million and employs between 190 to 210 people, 85 percent of whom are American Indian. The company has more than 200 job applications on file.

McKay said the company is well positioned for the future. Sioux Manufacturing hopes to use its expertise in composite materials to expand its reach into the private sector, where it might compete for business making frame parts for automobiles.

"Everything here is bought and paid for. We have no long term debt. We have cash reserves," he said. "I see this company continuing. I just can't see this place closing. It's been here too long."