NC leaders angle for place in military-industrial complex

by Jordan Green

The US Defense Department announced a $22.7 million contract to Fox Apparel, an Asheboro company, on Feb. 7 to make trousers for Army combat uniforms. A week earlier, Raleigh-based Whiting-Turner Contracting Co. landed an $11.6 million contract to build a dining hall at the Marine Corps base Camp Lejeune near Jacksonville. And days earlier, Saft America received a contract of up to $30.9 million to make batteries for the Army, Navy, Air Force and Marines at its factory in Burke County.

Though millions of dollars in contracts have been steered to North Carolina since the beginning of January, apparel, batteries and construction are hardly the big-ticket items on the Defense Department’s shopping list – a budget that has reportedly ballooned by 44 percent in the past five years. For instance, Michelin North America of Greenville, SC received a contract valued at $852.0 on Jan. 25 to supply, store and distribute tires for the four major branches of the military.

And much of the contract money for construction at North Carolina’s sprawling military bases actually goes to companies located outside of the state, local boosters note. A $17.6 million dollar contract awarded on Jan. 22 to build an elementary school at Fort Bragg, home of the Army’s 82nd Airborne Division and Special Operations Command, went to RC Construction Co. of Greenwood, Miss.

Those are disparities the NC Military Foundation hopes to redress. Launched last December by Lt. Gov. Bev Perdue, the foundation’s stated goal is to identify “new and existing avenues to bolster a military economy in North Carolina.”

“In North Carolina the emphasis has never been on high-tech industries,” said John Suttle, spokesman for General Dynamics Armament and Technical Products in Charlotte and a member of the new foundation’s board. “It’s economically tied to legacy industries such as textiles, furniture and agriculture. 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 North Carolina Military Foundation is trying to make.”

General Dynamics is one of five companies that have committed $200,000 over the next two years to get the foundation off the ground. The company relocated its armament and technical products division to Charlotte in 2003, receiving $7.8 million in corporate incentives from state and local governments in the process.

Other founding corporate partners include Duke Energy, Progress Energy, Wachovia Bank and Parsons Corp. represented on the foundation board by retired Gen. Earnest Robbins.

The new foundation marks a new collaboration among leadership in political, business and military circles – representing an interlocking web of interests – intent on bringing more defense contract dollars to North Carolina. The state ranks third in active military personnel but 25th for Defense Department prime contracts, according to department statistics. Capitalizing on the state’s large military base presence, the foundation has recruited more than half a dozen retired military leaders to serve on its board of directors.

“We have an extraordinary amount of talent here in the civilian community and the military community transitioning into retirement that we can take advantage of,” said Gen. James J. Lindsay, a board member from Moore County who commanded the 82nd Airborne Division and Special Operations before retiring in 1990. Lindsay, like other retired military leaders, acknowledged that he has worked as a private consultant since his retirement.

Board members who have parlayed their military experience into lucrative second careers in the private sector include retired Gen. Buck Kernan, chairman of the board, who serves as vice president for Virginia-based MPRI; and retired Gen. Hugh Shelton, a consultant for shipbuilding giant Northrop Grumman.

The state’s two major utilities, Duke Energy and Progress Energy, also have a vested interest in bringing more military contracting to the state, as well as an altruistic motive in spurring economic development, their representatives point out. Ellen Ruff, president of Duke Energy Carolinas, serves on the foundation’s board.

“We try to attract and retain industries to the Carolinas that have the best growth potential for the future or are already here,” Duke Energy spokeswoman Paige Sheehan said. “Clearly when you’ve already got a military infrastructure in the Southeast we see there is benefit in supporting economic development that supports that infrastructure. That’s why we’re involved at such a high level with Ellen serving on the board.

“Duke Energy cannot be successful unless its customers are successful,” Sheehan added. “When industry is in the region, that fuels the economy. They’re certainly large energy users, so it is all interconnected as far as we’re concerned.”

The foundation cites research commissioned by the NC Military Business Center, a Fayetteville organization that operates under the NC Community College System, to make the case that North Carolina businesses should position themselves to compete in a gold rush of new federal contracting. A document entitled “Defense Industry Demand Analysis” that AngelouEconomics delivered to the Military Business Center in June 2005 pulls no punches about the enormous profits that federal contractors stand to realize as a result of the Bush administration’s radical transformation of US foreign policy.

“President Bush’s new strategic doctrine for the US, first revealed in June 2002 and formalized in a National Security Strategy document published three months later, signaled an end to the Cold War doctrine of deterrence because it failed to prevent terrorist attacks,” the AngelouEconomics report states. “Instead, the administration outlined a doctrine based on preemptive action against rogue states believed to be harboring terrorists, most notably Al-Qaeda, or developing weapons of mass destruction…. These changes place the US on a permanent war footing.”

The defense budget for fiscal year 2006 came to $419 billion, not including $100 billion for the wars in Iraq and Afghanistan. Putting aside the outlay for United States’ two ongoing wars, the current defense budget has increased by $128 billion, or 44 percent, since 2001 – a change AngelouEconomics characterizes as “staggering.” The consulting group estimates that the defense budget will reach $502 billion by 2011, which would make the military industry’s growth rate nearly double that of the overall economy.

By the Military Foundation’s estimation, if North Carolina were to increase its share of defense contract dollars from less than 1 percent of the national total to 1.5 percent by 2010, the state would receive an additional $1.7 billion in contract dollars and create 30,000 jobs.

“This is the most military-friendly state in America and we can do better,” said Lt. Gov. Perdue in a statement last December. “The North Carolina Military Foundation will help North Carolina become a national player in the defense industry business.” Perdue declined to comment for this story.

Executive Director Will Austin offered few details on how the foundation plans to bring more defense contracts to North Carolina, but acknowledged that marketing and lobbying would likely play a role.

“I think it’s fair to say that we can help provide visibility to emerging opportunities to businesses,” he said, adding, “Our North Carolina delegation has an interest in base realignment. They support the bases. We would certainly build relationships with those representatives.”

Scott Dorney, executive director of the Military Business Center, said construction companies should be encouraged to bid on base support contracts – an opportunity heretofore overlooked.

“It’s primarily because they’re fully engaged in other sectors,” he said. “We have a booming commercial market and a booming public market with universities and community colleges. We’re trying to change that based on the huge projection of new [military] spending.”

Those who have studied the historical development of the South’s military economy since World War II suggest that state boosters’ efforts to shift more contracting to North Carolina might be easier said than done.

“What stood the Southern states so well in getting defense contracts and facilities was the power of their congressional representatives, which was in great measure a function of their seniority and where they were positioned in the Democratic Party,” said Gavin Wright, a professor of American economic history at Stanford University. “Most of these things are a product of the Cold War, how they were positioned in relation to [President] Lyndon B. Johnson.”

James C. Cobb, a history professor at the University of Georgia and author of the classic text The Selling of the South: The Southern Crusade for Industrial Development, 1936-1990 said the concentration of military bases in the South has spurred a demand for goods and services to support those bases, but contracts for weapons development and other activities that would stimulate capital investment and create high-paying jobs have typically gone elsewhere.

“It’s likely to follow the pattern of states outside of the South getting the most lucrative contracts,” he said. “Most of the systems are pretty specialized and tend to be something coming off the research board. That’s going to benefit states with a research and development infrastructure.”

Cobb expressed skepticism about whether the state’s congressional delegation could develop the clout to steer high-end weapons development and research contracts to North Carolina.

“It’s just a question of how much pork barrel can be tolerated in these contracts,” he said. “If it’s a case of something where there’s urgent need, it’s going to be harder to conceal the fat or the pork barrel. You can conceal a certain amount of inefficiency or illogic, but if you are looking at it without the political coloration, it makes sense to go with a place that has more of a track record in dealing with cutting-edge technology.”

Others point to a moral cost should North Carolina become more successful at steering defense contracts to local businesses.

“Making money off the machinery of taking life is not something we believe is in our best interest for economic development,” said Barbara Zelter, a program associate at the Raleigh-based NC Council of Churches, which represents 15 mostly mainline Christian denominations in the state. “We understand that people believe that the military-economic complex is normal and fine. We agree with [President] Dwight D. Eisenhower that it’s dangerous. Just because it can be an economic engine doesn’t mean it’s the best vision of a sustainable economy here or anywhere.

“I’m not knocking Bev Perdue,” Zelter added. “She’s going by a certain kind of logic of ‘if there’s a pie, get a piece of the pie.’ But the church has to speak with a different voice.”

The Military Foundation’s Austin suggested that North Carolina’s proud military tradition overwhelms any consideration of the morality of building an economy based of preparation for war.

“Our military installations have been in North Carolina for many years and this latest round of [Base Realignment And Closure] is bringing even more troops to North Carolina,” he said. “This is an important part of the fabric of our state, an important part of our economy. These bases require services. That’s just routine business for our nation’s military installations.”

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