When it comes to depending on defense contracts to fuel the economy, Delaware County leans pretty hard on our armed forces.
According to the Center for Security Policy, county businesses had 1,396 defense contracts in 2011 for a total of almost $2.9 billion, easily the highest amount of defense contracts for any county in the state. Next was Allegheny County at $1.6 billion and then Montgomery County at $1.2 billion.
A big part of those contracts involved the Boeing facility in Ridley Township, where the V-22 Osprey is partially assembled and the Chinook CH-47 helicopter is completely assembled. The defense contracts for Boeing in Ridley Township in 2011 totaled more than $1.2 billion.
While Boeing, which has about 6,200 employees in Ridley Township, has the biggest stake in defense contracts in the county, several other smaller businesses also depend on at least some percentage of government contracts for their businesses. According to the Center for Security Policy, there were more than 150 county businesses that had defense contracts of some kind, including 20 of $1 million or more in 2011.
The act included a stipulation that if the Congress and the president do not enact a joint committee bill by Jan. 15, 2012, to reduce the budget by $1.2 trillion between the Fiscal Year 2012 and 2021, it would trigger an automatic sequestration, or cancellation of budgetary resources by Jan. 2, 2013.
That cancellation would include a 10-year, $500 billion cut to the nation’s defense budget. That has already been bad news for one county business and could very well affect others.
“We are 100 percent dependent on the Department of Defense, so this is a really major impact for us,” said Lawrence D’Andrea, the president of Alloy Surfaces in Chester Township, which announced earlier this week it will be laying off 145 of its 400 employees. “We are looking into the commercial sector for our technology, but it will still take a few more years.”
Alloy Surfaces is the world’s only manufacturer of special material decoys and has had contracts with the Army, Navy and last year with the Royal Australian Air Force.
When it comes to military aircraft, Boeing has long been a top producer for the U.S. and is in the final portion of five-year contracts for the V-22 and the Chinook. The V-22 contract began in March 2008 and the Chinook contract began in the August 2008. Boeing has also made multi-year contract proposals to the government to continue production of the V-22 and Chinook, which have received support in Washington.
“It’s simply too early in the process for anybody to speculate about (the) impact of sequestration for any one program,” Boeing spokesperson Damien Mills said.
When the Budget Control Act of 2011 was passed, most in Washington didn’t envision the sequestration ever coming to fruition. But now that it’s growing closer, Brady at least hopes there can be an agreement before the Jan. 2 deadline.
“I’m deeply concerned about the threat of sequestration and its impact on our regional and national economies,” Brady said. “There’s no doubt that local companies that hold defense contracts are crucial to our national defense. We want that procurement to go forward. I was against the use of this tool and believed that cooler heads would prevail and the sequester would not be used.
“I remain hopeful, but not confident that the House’s majority leaders will be able to finally bring their conference to a place where they can vote on a meaningful compromise to end this disaster.”
One of the sequestrations biggest disasters is that it hinders long-term planning by the consumers and the producers.
“We usually have five years,” D’Andrea said. “But now we may only have one year. Some of them (the customers) do not know what their requirements will be. The customers have been great and we try to do some really progressive planning to let them know what I can do to help.”
For the moment, D’Andrea and other business leaders simply have to hope for the best.
“It’s a complex process,” D’Andrea said. “We’ll all get through it.”
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