by Roland McShane

Created on: April 27, 2009   Last Updated: May 08, 2009

The world is transitioning from the Cold War era when the arms race created a surplus of conventional, chemical and biological, as well as nuclear weapons. The global move towards demilitarization and weapon disposal not only reflect a new reality of how wars will be fought in the future, it also represents an opportunity for well-positioned companies and investors gainfully to participate in the beating of last century's swords into plowshares.

The Cold War was fueled by a race to master nuclear weaponry and delivery systems. Aircraft, ships, and missiles are scrapped at the end of their usefulness. Though the Navy is finding it cheaper to sink obsolete vessels than it is to pay to have them scrapped. The major wastes from the Cold War include chemical or biological weapons and nuclear waste along with its byproducts.

The U.S. Government oversees the destruction of the chemical or biological weapons at facilities around the country. Once these facilities have completed their mission, private companies may be contracted to decontaminate and demolish them if they are not suitable for conversion for other use.

Bechtel is perhaps the best connected company with significant governmental contracts benefiting from the end of the Cold War. Unfortunately Bechtel is privately owned. Publicly traded companies which should benefit from the global weapons transition include many names which are also familiar as defense-related stocks. There's no clearer definition of a peace dividend' than this: the very companies who create a toxic mess filling a government contract are then hired to clean up their own mess!

Many sites around the country have already begun to clean up the toxic wastes at their facilities. Thanks to funding from the American Recovery and Reinvestment Act of 2009 many other sites will begin or accelerate their clean up.

Fluor Corporation's (FLR) governmental services segment which is involved in decontamination and demolition of nuclear-related sites as well as waste-disposal sites which include former military facilities. Fluor is the main contractor at the Savannah River Site in South Carolina which produced nuclear weapons materials throughout the Cold War era.

Northrop Grumman (NOC) and Honeywell (HON) are subcontractors at the Savannah River Site.

KBR, Inc's (KBR) government services operations offer an opportunity to gain from the decommissioning of military bases and weapons facilities made redundant by the end of the Cold War.

URS Corporation (URS) is one of the main contractors at the Hanford Site in addition to having other governmental contracts. The Hanford Site in southeastern Washington state is where the plutonium which first powered the Manhattan project was done. Plutonium production continued at the Hanford Site for decades.

VSE Corporation (VSEC) has extensive work on a broad range of demilitarization activities including reclamation of former military sites. VSE also converts obsolete United States military hardware for sale to foreign governments.

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