War Incorporated

War may be hell, but for some North Carolina firms, it can also be mighty profitable.

Welcome to the (sewing) machine: Workers at Asheville’s Mills Manufacturing have been serving the military since 1952. photos by Jonathan Welch

Consider Buncombe County, which boasts the largest concentration of defense contractors in the western part of the state. Between 2000 and 2006, 78 defense contractors based here won contracts collectively valued at more than $130 million, according to an analysis of records on governmentcontractswon.com, an online database. The actual figure is probably higher, since those records don’t include local subcontractors or the various service providers and parts suppliers that cater to, but aren’t listed on, those contracts. (To put that number in perspective, Buncombe’s dominant tourism industry produces some $600 million in annual revenues.)

All told, Western North Carolina’s 23 mostly rural counties are home to some 220 full- or part-time defense contractors providing a wide array of products and services to the military, according to the database. After Buncombe, WNC’s highest concentrations of defense contractors are in Henderson (27 contractors), Burke (20) and Watauga (10) counties. Madison County is the only one in the region that has no defense contractors listed.

“Right now, the sky’s the limit for individuals and companies who can supply what the defense industry needs,” said one local contractor who requested anonymity for fear of harassment by “a few high-strung, local antiwar activists. … The fact is, the country after 9/11 is on pretty much a permanent war footing,” added the contractor, a part-time WNC resident who’s provided engineering services for various weapons systems. But that kind of work is the exception rather than the rule, he maintains, saying, “Few of the companies I know of in this part of the state deal with weapons systems or anything that takes lives. The real opportunity is in things like textiles, equipment, supplies—materiel that, ethically, I would doubt all but a very few would ever think is even remotely bad.”

In WNC, the consultant noted, “There’s mainly just a bunch of relatively small or midsize companies and a tiny handful of consultants like me trying to make an honest living without ever drawing a single drop of blood. For me and probably most of those other companies, I’d suspect, it’s strictly a business decision. I’d seriously doubt any of us would ever say we were gung-ho for war. I’m certainly not.”

Geronimo! Mills Manufacturing is a leading provider of parachutes for all branches of the military.

Waynesville native Jimmy Massey sees things differently, however. A former Marine staff sergeant, he co-founded Iraq Veterans Against the War following his honorable discharge in 2003 (see “Local Veteran Talks About Iraq” and “An American Abroad,” June 30, 2004 Xpress). Quoted in a recent report by the Institute for Southern Studies titled North Carolina at War, Massey said: “I think it’s something to be ashamed about to say that we have to rely on a system that kills other people in order for us to live in the state of North Carolina. If money is coming from these industries, from the military-industrial complex, then it’s blood money, and the people of North Carolina have blood on their hands.”

The business of war

Whether or not North Carolina is gung-ho about war, it’s definitely gung-ho about landing more military contracts. A 2004 East Carolina University study pegged the military’s direct economic impact on the state that year at $18 billion—7 percent of the gross state product. But many Tar Heel business and political leaders of both major parties say that’s not a big enough piece of the pie, considering the substantial military presence in the state.

Billboards along many highways tout North Carolina as “the most military-friendly state in America.” And indeed, North Carolina ranks third in the nation in the number of military personnel, behind Texas and California. Yet the state has lagged behind in the share of Defense Department dollars it collects, ranking 38th in Defense Department contracts measured as a percentage of gross state product. North Carolina ranks 25th in total number of prime Defense Department contracts, according to the N.C. Military Business Center in Fayetteville.

Statewide, governmentcontractswon.com shows 4,309 defense contractors, most of them in central and eastern North Carolina. Cumberland County, home to Fort Bragg and the military town of Fayetteville, leads the pack with 541. Close behind are Wake (498) and Mecklenburg (482) counties, the state’s main population and industrial centers. Wake County is also home to Raleigh, the state capital, and Mecklenburg’s county seat is Charlotte, the state’s biggest city.

Things are somewhat different in WNC, according to the anonymous defense consultant. “Unlike other parts of the state, there is no big bad Blackwater [USA] or General Dynamics here,” he notes, though there are a few “pretty big companies with defense contracts, like Volvo [Construction Equipment, headquartered in Asheville].” And while “the business opportunities for companies and people like me have always been there,” he says, “they’ve really ramped up over the past few years because of the wars in Iraq and Afghanistan and the need to combat terrorism here and overseas.”

Safer crossings: AvL Technologies’ satellite antennas reduce the need for deadly drives along Iraq’s roads, officials say.

Not every contractor paints such a rosy picture of the local business climate, however. CEO John Oswald of Mills Manufacturing, which makes military parachutes, said his company is actually going through a temporary business downturn. “The sky’s the limit? That couldn’t be farther from the truth,” said Oswald. “The way that the Department of Defense funds and purchases—especially during this time—is a real strain on manufacturers and suppliers. There [are] a lot of big boom-and-bust cycles, which really makes it difficult to plan for staffing and to maintain production lines.” The Asheville-based company has been a full-time military contractor for more than 50 years.

In fact, says Oswald, wartime is often worse for business than peacetime. “During wartime, our parachutes aren’t generally in high demand. I probably find more use for my chutes when we’re in peace and the units are training at Fort Bragg on a regular basis.” In wartime, he notes, “our resources get strained, because … we’re asked to produce well beyond our capacity and then the very next day, [the military] shifts its priorities, and then we’re barely able to produce enough to keep our lines going. So it’s a real struggle and a real challenge.”

Keeping up with the competition

Last December, Lt. Gov. Beverly Perdue announced the launch of the North Carolina Military Foundation, which aims to boost the state’s share of both defense dollars and jobs. The foundation’s board boasts several retired generals, including former Supreme Allied Commander William F. Kernan, as well as high-powered business executives. Among the latter are the leaders of several of the state’s corporate heavyweights, such as Duke Energy Carolinas, Progress Energy Carolinas and Wachovia Bank. Some out-of-state firms with a strong local presence are also represented, including General Dynamics (a Virginia-based defense contractor with a handful of offices and plants in North Carolina) and Parsons Corp. (a California-based management, engineering and construction company with offices in Charlotte and Cary, N.C.).

Leveraging North Carolina’s assets to grow its military economy will promote economic development and create new jobs, the foundation maintains. If North Carolina increased its share of total U.S. defense procurement from the current 1 percent to 1.5 percent by 2010, for example, that would mean an additional $1.7 billion worth of defense contracts each year. Those new contracts would support some 30,000 new jobs and generate $150 million in new annual state and local tax revenues, the foundation estimates.

“The North Carolina Military Foundation will help North Carolina become a national player in the defense-industry business,” Perdue said last year in a statement announcing the group’s formation. “This is the most military-friendly state in America, and we can do better.”

Historically, North Carolina’s economy has been “tied to legacy industries such as textiles, furniture and agriculture,” notes foundation board member John Suttle, a spokesman for General Dynamics Armament and Technical Products in Charlotte. The company, which relocated there in 2003 thanks to $7.8 million in corporate incentives from the state and local governments, has committed $200,000 to help get the foundation off the ground. “Only now is North Carolina able to present itself to defense contractors as an environment favorable to competitive operation in the globalized economy, and that is the case that the … foundation is trying to make,” says Suttle.

Saving soldiers’ lives

But while money and jobs sound appealing, antiwar activists like Massey fear the state may be selling its soul by aggressively pursuing defense dollars.

“Throughout history, every society that has based their economy solely on war profits, and building war revenue has ultimately failed,” Massey is quoted as saying in North Carolina at War, released in March by the Durham-based Institute for Southern Studies. “And my concern is that the state of North Carolina is building that kind of business and revenue, rather than building business and revenue that is in support of humanity. … When I see these billboards around North Carolina, I don’t think it’s something to be very proud of.”

In Western North Carolina, however, things are not so clear-cut. Although a smattering of local contractors—including CII Technologies in Fairview, Kearfott Guidance and Navigation in Black Mountain and Toolcraft in Marion—do supply components for guns and weapons systems, most provide more routine goods and services. Mills Manufacturing, for example, has made parachutes and related equipment for all branches of the military for more than 50 years. In Waynesville, Wellco Enterprises has made millions over the years producing footwear for the military. A local maid service cleans the Naval Reserve Center in Asheville, and the Asheville YMCA provides recreational opportunities for military personnel.

In many cases, local contractors say, their products and services are actually helping save or improve people’s lives. In 2004, for example, Volvo Construction Equipment was awarded $30 million worth of contracts to supply heavy machinery needed to reconstruct war-ravaged Iraq. And in the town of Andrews in Cherokee County, Industrial Opportunities has secured multimillion-dollar contracts to manufacture duffel bags, cold-weather socks, radio pouches, shotgun-shell holders and an IV cooler bag for the U.S. Medical Corps in Iraq. These contracts have helped sustain the nonprofit organization, which hires people with physical and mental disabilities who might not otherwise be able to find work.

And Oswald of Mills Manufacturing notes, “A majority of our chutes, especially when we went into Afghanistan, were used for humanitarian relief and to resupply the troops and the citizens of Afghanistan in remote villages.”

Another Asheville-based firm, AvL Technologies, has provided thousands of two-way satellite antennas for use in Iraq and Afghanistan, according to Vice President of Marketing Mary Lynne Woro. And by enabling troops in the field to communicate with supply centers, she notes, those antennas have greatly reduced the need to travel back and forth—helping U.S. soldiers avoid deadly roadside bombs.

“It’s unfortunate that a byproduct of war is something that’s actually really good for our company,” says Woro. “For us, it really catapulted a small company into the forefront, and we’re happy that we’re able to provide assistance to war fighters. That journey between the front line and the requisition site was one of the most dangerous jobs in Iraq: The guys you hear about getting blown up are mostly supply people. They’re just people doing an everyday job, but this particular technology eliminated the need for one group of people to have to make that trip. From that perspective, we’re happy to be providing that service.

“We’re not particularly happy that there is a war. But as long as there is a war, we’re happy to be supplying something positive in terms of equipment that improves a soldier’s chance of coming home and not being maimed or killed.”


The million-dollar club

Most of Western North Carolina’s 220 military contractors land contracts valued in the thousands of dollars. And some may go years between contracts.

But a handful of local companies belong to the million-dollar club, making either big-ticket items such as heavy machinery or high-volume items such as parachutes or military boots. Many of these contractors are located in the Asheville metro area, defined as Buncombe, Haywood, Henderson and Madison counties.

In 2006, there were nine such companies in the metro area, according to governmentcontractswon.com. Here’s who they are, what they make or sell, and the value of their 2006 military contracts, as reported on the database.
Wellco Enterprises: Military-footwear; Waynesville; 2006 contracts: $21 million.
Volvo Construction Equipment N.A.: Heavy machinery; Asheville; 2006 contracts: $11.5 million.
WC&R Interests Inc.: Tents and tarpaulins; Fletcher/Naples; 2006 contracts: $8.5 million.
Mills Manufacturing: Personnel and supply parachutes; Asheville; 2006 contracts: $6.4 million.
Kearfott Guidance & Navigation: Guidance and navigation systems, motors, position sensors, generators/velocity sensors, electronic assemblies, relays and solenoids used in submarines, missiles, military aircraft, tanks, satellites and the space shuttle. Black Mountain; 2006 contracts: $2.6 million.
B and A Hyder Trucking Co.: Fruit-and-vegetable haulers; Hendersonville; 2006 contracts: $2.1 million.
Conrad Industries: Badges and insignia; Weaverville; 2006 contracts: $1.9 million.
Q-Matic Corp.: Hospital furniture, utensils, medical equipment and surgical instruments; Fletcher; 2006 contracts: $1.14 million.
Kendro Laboratory Products: Laboratory, medical and surgical equipment; Asheville; 2006 contracts: $1.06 million

 

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