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Security, defense work helps boost Tri-State economy after 9/11

September 07, 2011|By JULIE E. GREENE | julieg@herald-mail.com
  • Ken Blakesslee puts a aviation ground-power unit through a pretest at Letterkenny Army Depot near Chambersburg, Pa.
By Yvette May, Staff Photographer

TRI-STATE — HMS Technologies, near Martinsburg, W.Va., has a contract with the federal government to scan Facebook and Twitter posts to tip off agencies such as the FBI about people who brag they are going to do harmful things, HMS founder and President Harry M. Siegel said.

AgustaWestland crews at Hagerstown Regional Airport repair military helicopters, said Timothy R. Troxell, executive director for the Hagerstown-Washington County Economic Development Commission.

Workers at Letterkenny Army Depot north of Chambersburg, Pa., retool Mine Resistant Ambush Protected vehicles, or MRAPs, so they can find and detonate improvised explosive devices, or IEDs, in Iraq and Afghanistan, said Mark Sheffield, deputy to the depot commander.

Those are just a few examples of how the Sept. 11, 2001, terrorist attacks influenced the Tri-State economy during the past decade.

According to the Associated Press, 2,977 people died as a result of the attacks at the World Trade Center and the Pentagon, and in the crash of United Airlines Flight 93 in Shanksville, Pa. The figures do not include the 19 hijackers aboard the four airplanes involved.

The attacks created the need for a variety of new services and goods as the nation looked to strengthen its internal defenses and went to war in Iraq and Afghanistan.

“I think what we saw post-9/11 in the Tri-State area from literally ... 2001 up until 2007, was maybe one of the best times for economic development that the Tri-State has ever experienced, both for residential growth as well as commercial and industrial expansions,” said L. Michael Ross, president of the Franklin County (Pa.) Area Development Corp.

After the recession hit in late 2007, the area saw a drop in construction, particularly residential construction, followed by a decline in manufacturing and in 2009, the bottom fell out, Ross said.

But defense spending continued to benefit Franklin County “and in some ways, had a ripple effect across the Tri-State,” Ross said.

Defense-related businesses and government agencies generated jobs, which in many cases brought in new people who were buying homes, Tri-State economic development officials said. The work provided business for numerous companies that did work for the bigger firms or federal agencies.

Retailers, restaurants and hotels also benefited from spending by the firms’ and agencies’ employees and customers.

Franklin County
As tragic as 9/11 was for the nation and the world, the resulting business at Letterkenny helped Franklin County “survive the recession in better condition than a lot of areas both regionally and nationally,” Ross said.

Oshkosh Corp., which owns the lift equipment firm JLG, has offices in Washington, Franklin and Fulton counties and Manitowoc, which produces Grove Cranes in Shady Grove, Pa., both benefited from increased defense department spending after 9/11, Ross said.

But Letterkenny is Franklin County’s largest employer, he said.

Letterkenny’s direct labor hours were at about 990,000 in fiscal 2002 and are projected to be 3.3 million in the fiscal year that starts Oct. 1, said Mark Sheffield, deputy to the commander there.

The number of government employees at Letterkenny increased from about 1,000 before 9/11 to about 1,700 today, Sheffield said. The depot has almost 1,100 contractors and around 70 National Guard members and reservists on active duty.

“We estimated about $315 million went directly into the local economy in (2010),” Sheffield said.

That estimate consists of $201 million in payroll for the government workers and $114 million through government purchases that didn’t require a contract, such as a tire for a forklift, he said.

Those figures don’t include the impact of the depot’s contracting office, which pumped $58.52 million into the Pennsylvania economy in 2010, he said.

Since 9/11, the depot has added new missions, including modifying MRAPs to clear routes for military convoys in Iraq and Afghanistan, Sheffield said. MRAPs are traditionally used to transport soldiers, but these were retooled to find and detonate roadside bombs or IEDs.

The depot also helps provide and restore generators and Force Provider systems, which are transportable shelters for housing, recreation and operations purposes for the military.

Washington County
After 9/11, there were many conversations about the possible use of the former Fort Ritchie U.S. Army base in Cascade as a possible site for the Department of Homeland Security, but that didn’t happen, said Timothy R. Troxell, who works with economic development in Washington County.

But several businesses based at Hagerstown Regional Airport have gotten defense department-related contracts, Troxell said.

AgustaWestland, which repairs military helicopters, and Sierra Nevada have benefited from defense spending, Troxell said.

Known as California Microwave when the company started in Washington County in 1993, Sierra Nevada takes empty planes and equips them for government operations such as border patrol and reconnaissance or upgrades older planes, Senior Director Hal Lucas said.
“We were fortunate enough to win some government contracts to build airplanes in support of the government and (the response to) 9/11, and the war on terrorism,” Lucas said.

Since then, the company has put more than $100 million into the local economy, including payroll and subcontracts with other businesses, Lucas said. Sierra Nevada employs more than 400 people at its Hagerstown-area operation.

About two years ago, Sierra Nevada had a period during which it worked on two major programs simultaneously, and that resulted in occupancy of more than 100 hotel rooms a night for more than six months, Lucas said.

That included a contract to equip Customs and Border Protection enforcement aircraft, but most of the work was for medium-altitude reconnaissance surveillance planes for an Army task force, Lucas said.

Lucas said it’s tough to say how much of the defense business the company has received since 2001 is directly tied to 9/11, but a good percentage of it can be.

While businesses at the airport have benefited from defense contracts, the extra security procedures for air travel after 9/11 made it more difficult for airlines to operate, Troxell said. People also became more fearful of flying.

For the local economy, however, more positive effects resulted from the war efforts after 9/11 than negative ones, Troxell said.

One of those was an increased demand for cybersecurity.

Two local businesses in that field are NETCONN Solutions on Western Maryland Parkway and B&D Consulting at Hagerstown Community College’s Technical Innovation Center, Troxell said.

HCC began a cybersecurity program in 2006 that is continually refined and has packed classes in recent years, said Margaret Spivey, director of technology and computer studies.

Washington County also became home to a backup data-recovery center, off Downsville Pike, for T. Rowe Price, Troxell said.

After 9/11, federal agencies and financial institutions decided to locate backup centers outside the “blast zone” so if a major disaster should occur, they could send their employees to backup centers to continue operations, Troxell said.

Eastern Panhandle
HMS Technologies also has benefited from the drive to create backup centers.

HMS won a $75 million, seven-year contract to develop continuity-of-operations plans for the U.S. Department of Health and Human Services, Seigel said.

“We’re responsible not only for doing the planning, but eventually building the backup data centers across the nation that will back up disaster recovery centers, and staff them for HHS,” Siegel said.

The need for such centers escalated after 9/11, Siegel said.

“They’re a lot like insurance policies. People can never afford them until they need them,” Siegel said.
One of the fastest-growing companies in the nation, HMS has 70 full-time employees near Martinsburg, another 150 part-time workers and consultants nationwide, and has gone from a one-man operation — Siegel in his basement in December 2003 — to generating $50 million a year in revenue, he said.

The Eastern Panhandle also has several federal agencies that either came to the area after 9/11 or enhanced their presence here since the attacks, said William Stubblefield, a Berkeley County Council member who is on the Berkeley County Development Authority’s board of directors.

U.S. Customs and Border Protection, part of the U.S. Department of Homeland Security — an agency formed after 9/11 — opened an Advanced Training Center in Harpers Ferry, W.Va., in August 2005.

The 224-acre site includes mock ports of entry, airports and motels, and a firing range, where agents are trained, customs officials said.

The center has 181 federal employees and 62 contractor positions, the latter of whom were hired mostly from the local community, customs officials said.

What really stimulates the local economy is the students, said Donald Wilkinson, the center’s acting deputy director.

A student’s stay ranges from three days to six weeks, during which they stay at local hotels, eat at local restaurants and rent cars, Wilkinson said.

The training center hires local businesses to provide services such as maintenance, security, information technology, medical care and administrative support, he said.

“We’re a (global) enterprise. We train domestically. ... (We’re) also helping other countries with training,” Wilkinson said.

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