Defense cuts spawn grants

November 15, 2015 1:03 AM

Defense cuts spawn grants
But region's leaders unsure whether to apply for them
Sherry Slater | The Journal Gazette

Northeast Indiana officials could apply for federal grant money available to communities struggling to rebound from defense spending cuts. But first, they must decide whether they want to.

Federal defense spending has declined by more than $130 billion – or 15 percent – in the past four years. Meanwhile, defense industry suppliers have eliminated hundreds of highly skilled, highly paid jobs in this region.

More than 500 communities have already participated in the Defense Industry Adjustment program, which helps diversify workforces. Alan Tio last month proposed to the Northeast Indiana Regional Development Authority that board members join those communities by submitting their own grant application.

“With this program, we have an opportunity to think about what comes next,” said Tio, senior vice president of the Northeast Indiana Regional Partnership.

If the Regional Development Authority applies for a grant through the program, it will be the first time the entity, which was created in July, has ventured beyond its original mission of administering state grant money from the Regional Cities Initiative. Local officials said it could be the first of many opportunities to broaden the authority’s scope.

Northeast Indiana is one of three finalists for what was originally expected to be two grants from the Regional Cities’ $84 million fund. Some state officials have indicated a willingness to consider splitting the money three ways rather than leave one of the finalists empty-handed.

But if the region’s bid falls short this year, a grant from the Defense Industry Adjustment program could be the first money to pass through Regional Development Authority hands.

Nuts and bolts

Lima and Dayton, Ohio, are among the cities that have received grants through the Defense Industry Adjustment program, Tio said. City, state and regional government entities are allowed to apply. The Regional Partnership doesn’t qualify.

The Northeast Indiana Regional Partnership is an economic development organization that represents the 11-county region in dealings with employers that are considering investing here. The counties that combined to create the Regional Partnership – and the Northeast Indiana Regional Development Authority – are: Adams, Allen, DeKalb, Huntington, Kosciusko, LaGrange, Noble, Steuben, Wabash, Wells and Whitley.

Defense Industry Adjustment grants can be used to study the region and its workforce, looking at strengths, weaknesses, opportunities and threats. Officials can hire consultants to study the cluster of companies supplying the defense industry and determine what skills workers have that could transfer to other industries.

“It’s up to us to analyze what we might do going forward,” Tio said.

Possibilities include creating business incubators and lending programs to nurture startups. Other options are helping manufacturers that are launching export operations and retraining skilled workers who have lost jobs, according to a government website.

The program isn’t competitive, so northeast Indiana wouldn’t be turned away because another community has presented a better case for the money.

Another perk is that it requires only a 10 percent local match, much less than some other programs. The state’s Regional Cities grant program, for example, suggests an 80 percent match from local government and private sources.

Federal officials have two motives for offering the assistance. In addition to helping distressed economies find firmer footing, the Defense Department wants to keep workers with specialized skills from scattering to other cities in case defense spending and demand suddenly ramp up again.

But not everyone is eager for a government handout.

Tom Lewandowski, president of the Northeast Indiana Central Labor Council, AFL-CIO, questioned how a potential new business incubator, lending program or worker training would differ from what’s already available here.

“I hope that this program isn’t redundant,” he said. “Is this going to make difference” in the lives of people not now being served?

If the region does receive a grant, Lewandowski hopes the public will be allowed to offer input on any programs being created to help improve the local economy.

Pulling the trigger

Bill Andrews, a consultant experienced in government contracting, is volunteering his time to advise Tio on how to apply for the money. Andrews hopes he will be hired to work on the project, if northeast Indiana receives a grant.

But first, the Regional Development Authority has to give the green light, a decision that could come as early as Tuesday, the board’s next scheduled meeting.

Competing defense contractors would need to cooperate if the region hopes to submit a grant application, Tio said.

Retired Col. David Augustine, chairman of the Northeast Indiana Defense Industry Association, said any federal help for association members to create new jobs or displaced workers to get retraining is worth looking into. The former commander of the Air National Guard 122nd Fighter Wing represents more than 130 members in the association, although not all of them are defense contractors.

Jeff Turner, the development authority board’s chairman, described the federal grant program as an opportunity. But that doesn’t mean his mind is made up. Turner believes he needs to understand the program and its requirements before making a final decision.

Andrews, who has lived in various cities across the country, said people in northeast Indiana seem more reluctant to seek federal grants than residents of some other areas.

His experience includes starting new research entities in Las Vegas, an effort funded with a $20 million Energy Department grant after the Nevada Test Site was closed in 1994. Employment there fell to 2,500 from 12,000.

In Lima, one of the applicants that received a Defense Industry Adjustment grant, thousands of jobs were lost when a government-owned tank factory closed.

Job losses here haven’t been as dramatic. Northeast Indiana’s defense industry suppliers are spread across several communities in several counties. Many of those companies have cut dozens or even hundreds of jobs over the past several years.

As a result, the scope of the losses has stayed below the radar, Andrews said.

“It’s death through a thousand cuts rather than a knife through the heart,” he said. “I think we need a strategy in this area.”