Hoosier Defense Contractors Trying To Adapt To Changing Demands

The amount of money the U.S. Dept. of Defense is spending in Indiana is a quarter of what it was in 2008.

Six years ago, the Defense Department spent $8 billion on contracts in Indiana. Last year, that number was just more than $2 billion.

That’s in part because the defense department has been cutting back nationally. Since 2008, spending on defense contracts has dropped by about $90 billion.

It’s also because of a shift from on-the-ground forces to more remote technology such as drones. WFIU’s Gretchen Frazee reports on how Indiana defense contractors are trying to adapt to those changing demands and keep defense dollars flowing into the state.

At Garrity Tool Company in Indianapolis, a dozen or so employees are using large, complicated-looking machines to make highly specific metal parts for military radars, helicopters and airplanes.

After the parts are manufactured, the workers inspect them to make sure they fit the exact qualifications. Then, they’re shipped to larger companies where they’re assembled with other parts and sold to the Dept. of Defense.

But Garrity Tool business manager Carl Boss says these kinds of contracts are becoming more rare.

"Right now we are trying to maintain. It is tough," Boss says. "At any given time, we maintain anywhere between 20 and 30 contracts in here, that’s how we weather the tough times. If we were solely DoD I’d be worried. If we were solely biomedical, I’d be worried, but we’re not because we have that broad base that we work in. It helps protect us from the ups and downs"

Garrity Tool has done well compared to many other companies.

South Bend-based AM General touts its history as the manufacturer of the Humvee. But in recent years as troops have started coming back from Iraq and Afghanistan and military needs have changed. The Humvee isn’t really used anymore. And that’s caused AM General’s contracts to drop $4 billion since 2008.

But the head of the state’s newly created Office of Defense Development, Duane Embree, says Indiana isn’t getting out of the defense business. Instead, he says companies here will have to adapt to changing needs if they want to continue winning contracts.

"We need to be agile and flexible and focused on meeting the current needs," he says. "If we can do that, then I think we will be as healthy and competitive as any other state and any other sector."

And the Defense Dept.’s needs are vast. Last year, they contracted Indiana companies to produce radio and television equipment, jet engines and underwater sound equipment just to name a few.

Embree says Indiana’s manufacturing base makes it a top contender for those contracts because it can often meet the Defense Dept.’s needs through every stage of the process -- from making individual parts to assembling entire vehicles or weapons.

"Strengthening those supply chains will enable us to serve not only Indiana major defense contractors but nationally, and we think we can leverage that to sustain and maybe increase the number of employees we have on defense work," Embree says.

At Army Ammunition Activity Crane in Southern Indiana, the four-star general in charge of the Army’s equipment tours the facility where workers handle military-grade flares that are contained in what looks like shiny, copper metal canisters.

Gen. Dennis Via says contractors should keep in mind that even with the drawdown overseas, the military still has operations on every continent.

"We’ll continue to have requirements," Via says. "We’re heavily involved in training, so the weapons that are manufactured here are being utilized for our training missions, so we continue to see where we can maintain and stabilize the workload.

But Via also says Indiana contractors looking to earn the Army’s business need to go beyond the status quo. He emphasizes they need to create quality products, but also be creative -- even going so far as to invent new products the military could use but might not know they need.