While the war on terror has been a boon for Indiana, officials from state defense companies are confident the state will weather the cuts.
Indiana has received $43 billion in contracts since 2001. Yet from 2008 to 2010, Indiana’s defense contract business was hit with a 50 percent drop in military contracts, primarily due to the Army’s cancellation of Humvee armored vehicles from the state’s top-funded military contractor, AM General. Employment at the company is now down significantly.
"Money’s headed south. Everybody’s scared of what the future holds. They’re talking about layoffs," said Carlos Gaitani, COO of Tri Star Engineering, a defense contractor in Bedford, Indiana who earns $50 million a years in military sales.
Indiana defense companies can withstand defense cuts better than most states since they are more diverse, said Ryan Metzing, project director of Aerospace and Defense Initiatives, an arm of Conexus, in the Indy Star. Plus, many of them specialize in service and maintenance work and established weapons systems.
"We can hopefully withstand some of these budget cuts," Metzing said. "We have a lot of different types of defense contractors, with different functions and in different parts of the state." Metzing’s defense promotion group intends to produce a strategic plan next year to help Indiana defense contractors adjust to ongoing defense cuts. He would like to see more technical training for skills related to defense contracting.
Officials at Rolls-Royce, a global defense firm with its largest engine production operations in Indianapolis, believe its engine projects and ancillary services will sustain the company through lean times. Rolls-Royce will soon open a 50-person operations center in Indianapolis that will help customers monitor engine performance in the field and troubleshoot problems almost as soon as they occur.
"With half of our business being on the service side, we are pretty confident about the future,” said Tom Hartmann, senior vice president of government business for Rolls Royce.
From 2001 to 2008, military spending in Indiana was twice the national average according to Indiana University’s Indiana Business Research Center. Defense spending in the state employs 18,200 people and subcontractors and suppliers support another 20,000 jobs.
Top defense contractors in Indiana
In fiscal 2010, the top 10 Indiana defense contractors collected 75 percent of military contracts in the state. The following are the top 10 companies, the products they supply and their contract values:
» AM General (South Bend); Humvee trucks; $1 billion.
» Rolls-Royce (Indianapolis); engines; $733 million.
» Raytheon (Indianapolis/Ft. Wayne); missile and communications systems, electronics; $665 million.
» ITT Corp. (Fort Wayne); electronic communications; $392 million.
» Calumet Specialty Products (Indianapolis); petroleum products; $132 million.
» Ameriqual Group (Evansville); shelf-stable foods; $121 million.
» Petroleum Traders (Fort Wayne); fuel wholesaler; $120 million.
» ERAPSCO (Columbia City); sonobuoys and sonar systems; $87 million.
» Tri Star Engineering (Bedford); engineering support for weapons systems; $51 million.
» Kimball International (Jasper); infrared technology, electronics services; $27.7 million.
Source: Indiana Business Research Center, Indiana University
