Entrepreneurial Dominion

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Selling Protection

Fred Khoroushi supplies bullet-proof limos and SUVs to American contractors and government officials in some of the most dangerous corners of the planet. Sadly, business couldn’t be better.

Fred Khoroushi wishes it weren’t so, but the more the globe seems afflicted by violence and mayhem, the better business gets. A former car-fleet manager for the Washington, D.C., city government, he launched his enterprise, Herndon-based Alpine Armoring, Inc., by selling armored cars to banks in the former Soviet Union. A few years later, he found a market in Kosovo, where civilians working for foreign governments and reconstruction projects wanted armored SUVs for protection in the strife-torn land.

More recently, 9/11 sparked conflict – and demand for protection -- across the Muslim world. In Iraq and Afghanistan, the appetite for armored vehicles is insatiable. With employees of humanitarian agencies, construction contractors and the U.S. government subject to kidnapping and ambushes, buyers are snapping up all of Khoroushi’s inventory. Demand is so intense that he’s shipping the SUVs overseas by air – customers can’t wait a few weeks for maritime transit. Says Khoroushi: “We’re pretty much selling everything we can build.”

Regardless of your taste or needs, Khoroushi can deliver. For the style-conscious U.N. diplomat, he might recommend a classy-but-rugged Mercedes Benz S Class sedan with a bomb scan and remote ignition. For the discerning warlord, he might suggest a Hummer outfitted with gun ports for a carload of bodyguards. You name it, he’s got it: limos, SUVs, and riot-control trucks equipped with water cannons. Khouroushi can even equip vehicles with “James Bondish” gimmicks that can spray oil on the asphalt, spew clouds of smoke – or, in an innovation that Q would envy – flash rear blinding lights in the eyes of pursuers.

The Iranian-born, American-educated Khoroushi prides himself on the quality of the engineering and craftsmanship that goes into the retrofitting of his commercially available vehicles. By the time his shop workers are finished, a heavily armored Ford Excursion will be virtually indistinguishable from the wimpy version in your driveway at home.

Alpine Armoring is the Lexus of the armored car industry, positioning itself as a high-quality but more affordable provider. Mercedes makes the absolute top-of-the-line armored vehicles, custom-building them at its manufacturing complex in Stuttgart, Germany. Its price tags push $500,000. Khoroushi claims to offer almost the same quality – i.e. protection -- at a much lower price point. You can take home one of his near-indestructible SUVs for between $150,000 and $200,000.

In his business, says Khoroushi, only two things really matter: quality and trust. As someone who’s been building armored cars for more than a decade, he’s got a track record of building cars that save lives. One vehicle, returned from Afghanistan, had warded off 22 shots from AK-47s and other high-powered rifle rounds. The bullets hit from all angles, but not one of them penetrated. “We should have kept it as a museum piece,” he muses.

He's not looking to make a quick buck from the current “bubble” in war-generated demand. “This is one of those rare industries where trust plays a huge, huge role,” he insists. “Anyone can build an armored car. But in the end, can it protect lives? Does it have hidden weak spots? It’s like having surgery on your heart. You can’t trust just anybody.”

Khoroushi was 18 years old when he came to the United States in 1976 to pursue engineering studies, and he was living here in 1979 when fundamentalist clerics took over Iran. He decided to stay. Since then, he’s managed to get his family into the U.S., and he’s become largely Americanized: He has only the faintest trace of an accent. And he’s taken on the name of Fred.

Until the last few years, the market for armored vehicles was fairly stable and predictable. Banks use them to haul cash, police to transfer prisoners and transport SWAT squads, governments for support in riot control, powerful executives and politicians for personal protection.

The rise of terrorism across the Muslim world has altered the market for the foreseeable future, putting a premium on an ability to respond quickly to new threats and to apply the latest technology. With Osama bin Ladin calling for jihad against Americans everywhere, it’s open season on civilians as well as soldiers in much of the Arab world. While the U.S. military has scrambled to adapt to the tactics of Iraqi insurgents, such as the use of improvised explosive devices (IEDs), so have the civilians who support the U.S. presence.

SUVs were the vehicle of choice for a while, says Khoroushi. Then the insurgents figured out that anyone riding an American-made SUV had to be someone worth killing or kidnapping. Now customers are clamoring for less conspicuous cars – sedans or, better, used sedans, that blend into the traffic. The ideal vehicle these days, he says, is an old Mercedes that might have been driven by a Baathist Party boss under Saddam Hussein.

While styles are fluid, the manufacturing process is well organized. Alpine Armoring purchases commercial vehicles, and then strips them down at shops in Tennessee and Mississippi. Alpine employees aren’t grease monkeys tinkering with jalopies – one of his key employees helped outfit President Reagan’s limousine. Designers use Computer Aided Design to devise the optimal protection for the passengers – not just from bullets but from mines. The company stays up to speed on the latest offerings in bullet-resistant glass, Kevlar fiber, Spectra Shield, ceramic plates and reinforced wheels. Alpine vehicles are certified at every level from A1 to A10, federal grades for bullet protection. A10 is the rating for the U.S. presidential limousine.

Adding armor means adding weight – and a couple of extra tons can change the handling characteristics of a vehicle. Alpine routinely adjusts the brakes and suspension, but SUVs, which are top-heavy and prone to roll-overs, pose a special problem. “A lot of people think armoring is just bullet proofing,” says Khoroushi. “The whole construction of the vehicle is altered. … You don’t want a machine that flips over at 30 miles per hour.”

Alpine Armoring conducts extensive “center of gravity” testing of its vehicles: putting them on machines that tilt them one way and then the other, revving the SUVs up to higher speeds, and taking them on the road to see how they handle in real life. Alpine takes high-speed photos of its vehicles rounding curves at different speeds to see how far they tilt.

Alpine does have competitors – companies Like Armet and International Armoring – but Kharoushi doesn’t sound very disconcerted by them. “We have an impeccable reputation as a result of having been in the market a long time,” he says. “We supply a lot of high-profile government entities. We’re in the loop.” The U.S. government accounts for about 70 percent of his business overall – up to 90 percent some months. You you can’t get a better endorsement than from the top brass and super spooks who run the U.S. military and intelligence services.

Business is booming, but that doesn’t mean Khoroushi rests easy. Given the urgency of the war in Iraq, he feels incredible pressure to deliver vehicles faster to his clients. Every day, Americans are telling him they need to get out of the Green Zone, the protected area in Baghdad, but they’re worried about the dangers. “It pains you” to hear that, he says. “We’re aiming for a way to expedite the [manufacturing] process. You want to make sure they’re protected.”

-- October 6, 2004

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