Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, October 21, 1994 TAG: 9410220055
SECTION: BUSINESS PAGE: A11 EDITION: METRO
SOURCE: STEPHEN FOSTER STAFF WRITER
DATELINE: FAIRLAWN LENGTH: Medium
"There is hope now," said Doug Borgeson, a contracting officer at the U.S. Army Armament, Munitions and Chemical Command in Rock Island, Ill.
But officials warned Thursday it will take time for the contract to produce results, and with the defense industry still shrinking, there probably will be more layoffs to come.
"You're probably going to see some downsizing," said Emil Maslanka, the Army contracting officer who worked with the Radford plant on its contract.
In 1992, Congress set up a three-year, $200 million fund for converting ammunition plants to commercial use as defense budgets shrank drastically with the end of the Cold War.
For the Army, a facilities contract, effective Jan. 1, allows it to trim overhead costs by having other companies maintain parts of the plant's buildings, roads and equipment that normally would sit idle and deteriorate.
For Hercules, it is a chance to make money by bringing in subcontractors and charging them a fee. With the 4,000-acre plant operating at 15 percent of capacity, there's plenty of room for new companies, said Richard Best, the plant's manager.
Ken Thompson, president of Local 3-495 of the Oil, Chemical and Atomic Workers International Union, said the contract could help stabilize the work force, and he hopes employment eventually will rise. "That's the bottom line: jobs," he said.
"It doesn't happen overnight," Borgeson said.
Chip Batton, marketing manager for Hercules under the conversion program, said he envisions Hercules asking for at least $25 million in government funds to use for incentives and improvements. As for companies, "we're looking at all the different possibilities," he said. "I'd like to see at least one new business in by the first quarter [of 1995].''
It may not be easy to lure companies, and officials admit that some opportunities already have been lost.
Last year, DeNovo Corp., a Toronto-based company, said it wanted to build a $20 million recycled-paper pulp plant at the arsenal that would have employed 120 workers. But when the facilities contract signing process stretched out for months, the company decided to pull out in May, said Brecc Avellar, a Floyd County consultant who works with DeNovo.
"There's quite a lot of disincentives of locating with a government facility," Avellar said. Security issues and time-consuming red tape, among other problems, cost money, and "the Army does not seem to realize that."
He said the program sounded a lot better when it was put forth during the Bush administration, but its benefits have been scaled back. "It's not such a hot program," he said. "It really has fallen on its face."
Hercules and Army officials said much of the delay in signing the contract came because of all the safety, environmental, utilities and security issues that had to be considered when working with an active plant.
When they began working on the contract, "it became apparent that the Army and Hercules hadn't really thought about those issues," said Holly Lesko, regional planner with the New River Valley Planning District Commission, which is assisting Hercules with a strategic plan to decide what kinds of companies it wants to woo. "Hercules and the Army have never been economic developers."
by CNB