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Defense Economies Test Their Defenses

Sharp cuts in government budgets may eventually put some nicks in defense funding, but each of Alabama’s military-centric cities seem sure its home base is well armored.

In 2005, when BRAC recommended moving a portion of Maxwell-Gunter's mission to Massachusetts, local leaders, including Joe Greene of the Chamber of Commerce in Montgomery (shown above), fought back and won, convincing BRAC to leave the unit intact, along with 3,200 jobs that would have been impacted.

In 2005, when BRAC recommended moving a portion of Maxwell-Gunter's mission to Massachusetts, local leaders, including Joe Greene of the Chamber of Commerce in Montgomery (shown above), fought back and won, convincing BRAC to leave the unit intact, along with 3,200 jobs that would have been impacted.

Photos by Dennis Keim and Steve Gates

With the federal government facing deficits that threaten even the sacred cow of military spending, Alabama’s defense industry cities might be quaking in their boots. Instead, commerce leaders contend that cuts probably won’t affect their cities because their contributions to the military effort are unique and necessary over the long haul.

“We know already, with two wars winding down, that military spending is going down anyway, without any pre-designated budget cuts,” says Nathan Hill, military liaison for the Chamber of Commerce in Calhoun County, where Anniston Army Depot is located.

“That’s just a fact of life,” he says, adding, “When you get deficit budget cuts, it’s going to affect every part of the military. It will affect the active duty, and, when you affect the active duty, you affect the use of the equipment, you affect the requirements for the Anniston Army Depot to maintain that equipment, and in the end you affect jobs and the economy. But, we feel good about the Depot’s future, because it’s a vital part of the Army.”

Anniston is one of four major military sites in Alabama. The state is also home to Maxwell-Gunter Air Force Base, in Montgomery; Redstone Arsenal, in Huntsville, and Fort Rucker, near Enterprise. Each of those major military installations attracts a coterie of defense contractors. And other parts of the state have their own military connections — Austal USA shipyard in Mobile, for example, which is building trend-setting ships for the U.S. Navy, and GKN Aerospace Services Alabama in Tallassee, which makes parts for the Black Hawk helicopter.

But area officials say Alabama’s military installations should be safe from the budget axe.

First, Alabama has a protective and tenacious Congressional delegation that likes federal spending—if it’s coming to Alabama.

Second, the state’s military programs focus on support — logistics, education, research and development — and on fixing things like tanks that extend the value of military dollars already spent.

“We’ve got a lot of operational pieces that are fairly stable and some that are acquisition programs that do combat support, and those functions are fairly stable, and we’ll probably see those continue to be protected or grow,” says Joe Greene, vice president for military and governmental affairs at the Chamber of Commerce in Montgomery, where Maxwell-Gunter is located.

BRAC-effect jobs

The Base Realignment and Closure commission makes even mature military bases tremble with its power to shut down a base or ship its programs elsewhere.

But over the past decade, Alabama has come out ahead through BRAC actions. Huntsville scored huge when the commission decided to move the U.S. Army Materiel Command headquarters from Virginia to Redstone Arsenal. Even areas of the state such as Phenix City, near Georgia’s Fort Benning, which got a BRAC-related boost, are seeing great growth since.

Anniston Army Depot, on the other hand, expects to lose some 1,000 jobs, now that it has completed one of its missions — the disposal of chemical weapons that had been stored there.

Even so, Anniston sees a bright side, says Hill. The U.S. Army isn’t the only potential customer for the base’s services. “There’s a lot of work out there in foreign military sales that could come in, regardless of how much defense budget cuts take place.”

The Depot’s economic impact in that area is well over $1 billion, Hill says. “And, we’ve got the Center for Domestic Preparedness, which is part of the Department of Homeland Security, specifically the FEMA segment, which is a valuable component of our national security.”

Add a large National Guard unit and private defense contractors and the total economic impact from defense-related jobs is probably $1.5 billion a year, Hill says.
Areas with more tech-heavy jobs are expecting growth, or at least stability, for the time being.

Maxwell-Gunter Air Force Base is in a good position, says Greene, because it has the Air University, which is dubbed “the Intellectual and Leadership Center of the Air Force.” The base also has a huge Defense Information Systems Agency contract. “They store all the electronic medical records for the entire Department of Defense here in Montgomery,” he says. “That’s a major, major piece,” and area leaders hope that will expand to win a similar Veterans Administration contract. “We’re pretty comfortable we should be able to weather this (budget) storm.”

The economic impact of military spending in the Montgomery area is significant—$1.6 billion a year, Greene says. When, in 2005, BRAC suggested consolidating part of Maxwell-Gunter’s operations with Hanscom Air Force Base in Boston, Mass. the community fought back. They argued that Maxwell-Gunter’s Operations Sustainment and Systems Group had a support mission rather than the I/T mission housed at Hanscom. The Montgomery leaders won and kept the OSSG unit intact and in Montgomery, along with 3,200 jobs.

The entire Wiregrass region of Alabama is protective of the Army’s Fort Rucker and the spin-off private defense related jobs, says Matt Parker, president of the Dothan Area Chamber of Commerce.

Fort Rucker is the primary flight training base for Army aviation and is home to the United States Army Aviation Center of Excellence, which trains military, civilian, and international personnel in aviation and leadership skills and trains U.S. Air Force and ally helicopter pilots. Fort Rucker is also home to the U.S. Army Aviation Technical Test Center, which conducts developmental aircraft testing for Army Aviation.

Those programs are vital enough to provide some confidence in relative job security, Parker says. “We feel like we’re in a pretty good situation down here,” Parker says. “It’s hard to tell as a whole for all the branches right now from a national perspective. With the budget deficit being what it is, there’s going to be some impact on everybody to some certain degree.”

Any change could have a major impact on the surrounding area, says Parker, citing Troy University studies that say Fort Rucker is responsible for 17 percent of total Wiregrass wages and salaries.

So far, the area’s defense related private businesses look strong, too, says Marsha Gaylore, president of the Pike County Economic Development Board in Troy. Local industries like Lockheed Martin and Sikorsky have long-term contracts, she says, so no layoffs are expected and the firms have been hiring.

“We feel like ours is as stable as it can be right now. But, you don’t ever know. Things can change in a minute,” Gaylord says.

Huntsville and Redstone Arsenal sort of hit the lottery with the 2005 BRAC decisions included consolidating the U.S. Army Materiel Command there. It’s a major element of the military mission, making sure soldiers have what they need. “If a soldier shoots it, drives it, flies it, wears it, eats it or communicates with it, AMC provides it,” the group’s website declares.

Mike Ward, vice president of government affairs for the Huntsville/Madison County Chamber of Commerce, says, “Right now we’ve got about 5,000 open positions in Huntsville. That’s an all-time high. That’s all across the board.” Those numbers were from a monthly jobs report in August, and Ward says there are thousands of spinoff jobs expected, as well.

The AMC jobs are different than the R&D jobs that have been common there, says Huntsville Mayor Tommy Battle.

“It’s more contracts, logistics, legal professionals than we’ve had before. We’ve had a lot of science and technical workforce, but this kind of broadens the field of what we have as a federal employee,” Battle says.

Even outside of the safe zone the AMC provides, Ward says, the proposed DOD cuts he’s seen are unlikely to affect much of the R&D and other support work done at Redstone and private research facilities, at least for now. And any cuts that do occur should be offset by incoming jobs, so net employment will still rise, he says.

Even the not-so great NASA news turned around for Huntsville recently: NASA announced it is in the first steps toward creating a heavy-lift rocket Space Launch System that will be designed and developed at the Marshall Space Flight Center.

“They are not going to be losing as many positions” as thought, Ward says. Some might be rehires, and some will be new people moving in.

Even with thousands of jobs still to be filled, the city isn’t taking anything for granted, Battle says. “Your success of yesterday was yesterday’s success, and you’ve got to have a future success,” Battle says. So the area is working on a three-stage initiative that plays to its strengths—a support personnel initiative, a cyber security initiative (see related story) and an energy initiative.

Each area of Alabama has to play to its strengths and find projects that are logical to work on together, Battle says.

“Our strengths are we have more engineers and degreed professionals per capita than anywhere else in the U.S.,” Battle says. “It’s a highly technical community, that’s why we push out in the energy field, it’s why we push out in the cyber field—it’s a field our community is already used to. I think as a community leader you have to realize what the strengths of your community are and work into those strengths.”

Looking for Synergy

Until recently, Alabama’s efforts to win and keep military projects was focused very locally. Mobile might promote a new military contract for a local industry while Montgomery produced reams of facts and figures to show irreparable harm if its air base closed.

Now, following the example of other states, Alabama has created a new Alabama Job Creation and Military Stability Commission to speak on behalf of all regions. Lt. Gov. Kay Ivey chairs the commission and Chuck Carver, a retired Air Force officer, directs its economic and community affairs programs.

The commission’s main focus will not be new business recruitment, Carver says. “Retention is the issue and addressing like kinds of missions that we would advocate to DOD,” he says.

The word “synergy” gets used a lot to describe how the different areas could work together to develop new programs or pitches to get or maintain contracts.

Every place wants to prove what is done there is indispensable, but it’s also important to show how trimming or removing existing programs in various parts of the state could hurt the military’s mission as much as the towns that rely on those jobs, Carver says. Of course the bottom line is to show how moving or keeping a program here also saves the government money.

Cooperation makes especially good sense in Alabama, says Montgomery’s Greene, because the various areas of the state are working on very different programs. “Really, we’re not competitive with each other in any way with what we have: It’s all different. But, we do have some synergies that we have that we may be able to leverage with our contractor base. That’s what we’re looking at: How can we do things smartly?”

Tara Hulen is a freelance writer for Business Alabama. She lives in Birmingham.

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