Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, June 25, 1995 TAG: 9506300111
SECTION: BUSINESS PAGE: G1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: RADFORD LENGTH: Long
That would be welcome news for the New River Valley, where employment at the arsenal has dropped from 4,728 in 1988 to 1,247 today. Or it could sound like a familiar line, considering that since 1992 , officials at the ammunition plant have talked of creating new jobs by allowing private companies to set up shop in dormant government buildings at the 4,480-acre complex.
Thanks to government bureaucracy, however, the program has been slow in getting started.
Currently, only about 10 percent of the manufacturing capacity at the plant - which makes rocket propellant and explosives for the military - is being used.
That leaves much of the remaining 90 percent available for use by private industry to make other use of the facility, said Harold L. "Chip" Batton, the facility re-use manager for Alliant Techsystems Inc., which operates the plant for the Army. In March, Alliant, based in Minneapolis, Minn., bought Hercules Aerospace Co., the plant's previous operator, from Hercules Inc. of Wilmington, Del.
The Radford arsenal is Western Virginia's most visible example of the attempt to convert operations fired by military spending to civilian uses.
The end of the Cold War with the former Soviet Union and its allies plus budget pressures have brought reductions in the size of the U.S. military. Federal and state governments recognizing the potential impacts of cutbacks on local economies where military bases and defense plants are located, have provided programs intended to soften the blow.
Through the ARMS Act of 1992, Congress provided $200 million - later reduced to $115 million - to help ammunition plants like the one at Radford adjust to closings or lower levels of operation. The money can be used for such things as planning, marketing and renovation of manufacturing space to prepare it for commercial tenants. The three-year program expires this Sept. 30, but there is a push to extend the funding.
The program was slow getting started. It took the Army a year to decide how it would work and another year to get the contract approved giving Alliant authority to rent out portions of the plant. Patton said a lobbying effort is underway in Congress to try to secure another year's funding for the ARMS Act assistance.
Proposed loan guarantees for businesses locating on ammunition plants, mentioned as one of the incentives that would be available to tenants, still haven't been approved. The lack of those guarantees discouraged a $20 million paper-recycling operation proposed by a Canadian company for the Radford plant.
Alliant just recently began a concerted effort to market the arsenal property and to sublet portions of the plant to prospective tenants.
The complex includes nearly 30 buildings, of 10,000-square-feet each. Discussions are underway with some potential industrial tenants but Batton declined to mention names or provide details. One tenant that he could discuss was Carilion Health System, the Roanoke-based hospital operator which plans to open a fitness center in the plant's gymnasium. The plant's cafeteria also may be leased to a private business, Batton said.
However, the fitness center is "peanuts" compared with some of the businesses with whom negotiations are underway, said Doug Borgeson, a spokesman and contracting officer for the U.S. Army's Armanent, Munitions and Chemical Command in Rock Island, Ill.
"What I'd like to see at the plant is several hundred jobs in a single deal," Borgeson said. Negotiations with some big employers are in the works and major announcements could be made within two months, he said.
Nationwide, the operators of 10 ammunition plants, some closed and others still operating, have signed contracts with the Army that allow portions of those facilities to be used by business tenants. So far, well over 1,000 jobs in such businesses have been created with a potential for 1,700 more under existing contracts, Borgeson said. The new operations include an airbag parts maker, a computer company, a laundry and a machine shop.
One potential type of tenant that has been identified for the for the Radford plant is a professional fireworks manufacturer, Batton said. Although Virginia doesn't allow the sale of fireworks, it does permit it to be manufactured in the state. What would be made is the kind used in professional displays such as those at Disney World, he said.
Alliant, itself, is doing some outside commercial work at the plant such as pump repair and gauge calibration for area companies needing precise work done to maintain their ISO 9000 certifications, an international quality assurance program.
Alliant has contracted with the New River Valley Planning District Commission to develop a strategy to market the arsenal to prospective tenants. Development of the plan, which will require public meetings later this summer, should be complete by September, Batton said.
The planning district commission recently completed another study related to defense cutbacks. That study, called New River Valley Vision 2020, is funded by the federal Office of Economic Adjustment, an agency charged with helping communities affected by military downsizing. It provides a blueprint for economic development in the New River Valley.
While some ammunition plants have closed, the Army has promised Alliant that Radford will stay open, Batton said. The Army needs to keep the plant operational and keep skilled workers there so it can easily be started up in case of war, he said.
And while the 50-year-old arsenal has a current market value of $50 million to $75 million, it would cost $2 billion to build a new facility with the Radford plant's capacity, Batton said.
Although only 10 percent of the plant is operating, Alliant is still responsible for maintenance and upkeep on the remainder. Locating commercial tenants in the plant would help the company offset those maintenance costs, Batton said.
"We need a couple of successes in here to show this is a viable program and people will start looking at us," he said.
The Radford plant is only one among many Virginia employers affected by military budget cuts.
Defense spending accounts for 10 percent of Virginia's economy measured in terms of the gross value of all goods and services produced in the state. It also accounts for 14 percent of its total employment. Among defense contractors in Western Virginia besides the ammunition plant are ITT Electro-Optical Products, a primary manufacturer of night-vision devices, and Hayes Seay Mattern & Mattern, and architectural and engineering firm that frequently wins contracts from defense agencies, including a major renovation of the Pentagon.
Also, Brunswick Corp. makes radar domes in the nose cones of military aircraft at its Marion plant and Raytheon Co. makes missile components in Bristol.
Among the states, Virginia ranked second in total spending by the Department of Defense in 1993, when the state's share of defense spending was 8.1 percent, or $18.6 billion. Defense is the number one employer in Virginia, according to Robert Stolle, executive director of the Governor's Commission on Base Retention and Defense Adjustment.
The biggest impact - about 92 percent - of that defense spending is felt in two metropolitan areas - Northern Virginia's $9.6 billion and Tidewater's $7.6 billion -but it also has an impact in Southside and Southwest Virginia. While Virginia ranks third nationally among contracts for defense material and supplies, the Northern Virginia area accounts for two-thirds of the state's total.
Given the contribution of defense to Virginia's economy, the significance of cutting the federal military spending by nearly 25 percent between 1990 and 1994 becomes apparent. The Washington-based Defense Budget Project, according to Stolle, estimates defense spending will drop another 10.9 percent by 1999.
A study by the Department of Defense last year estimated Virginia could lose 30,000 military jobs, including civilians working for defense agencies, and another 30,000 jobs at defense contractors as a result of the cutbacks, Stolle said. An estimate is that three civilian jobs are put at risk when each defense-related job is lost, he said.
Besides trying to save Virginia's military bases, the 38-member commission that Stolle serves is intended to help Virginia communities and businesses that have been hurt by defense reductions. Virginia Gov. George Allen intends for the commission to act as a single source of contact for communities and businesses seeking help from state agencies, Stolle said.
By September, the commission should have completed planning its strategy for competing with other states for the shrinking defense dollars, Stolle said.
"There's a war out there between the different states to try to attract defense industries as they consolidate," Stolle said. Virginia needs to make sure that those companies want to consolidate here, he said.
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