Showcase for Commerce P.J. McMullen, Robert Casey Jr., Patrick Murphy

P.J. McMullen (center), principal technical manager of Concurrent Technologies Corp., shows off the company’s hydrogen fuel cell power unit, to U.S. Sen. Robert Casey Jr. (left) and Under Secretary of the Army Patrick Murphy oustide of Cambria County War Memorial Arena in Johnstown on Wednesday, June 1, 2016, during the Showcase for Commerce.

The uncertainty of the federal budgeting process has been a hurdle for local companies that rely on Department of Defense contracts.

Local defense sector leaders say they’re hopeful for growth in federal defense funds following the election of Republican President Donald Trump – even as they explore grant money now in play to help those companies affected by a reduction in defense spending to diversify their operations. 

“I see the defense community continue to make a positive impact,” said Ed Sheehan Jr., president and CEO of Concurrent Technologies Corp. “Fiscal year 2018 could show some growth.” 

Because no budget was approved at the beginning of the federal fiscal year on Oct. 1, a resolution was passed to last through April to keep funds flowing. But for companies such as CTC that rely on government contracts, “that means funding is limited to what they spent in the last fiscal year,” Sheehan said. 

This is the process that Sheehan saw for all eight years during President Barack Obama’s administration, meaning contracts not exceeding federal funding amounts from the previous fiscal year. 

In June, CTC announced the elimination of 15 jobs – most of them local – with the goal of making the Johnstown-based company leaner and more competitive. 

That reduction brought total employment across CTC and its affiliates to approximately 600, most of whom are located in the Johnstown area. 

That marked three staffing cuts the company confirmed since 2015. 

In March 2016, 20 positions were eliminated due to lack of work. In late 2015, a reduction of 30 administrative and support-service positions was announced. 

With federal legislators are expected to begin working on the 2018 fiscal year spending plan in May, Sheehan said he’s hopeful Trump will fulfill his promise to have a budget completed and passed before the Oct. 1 deadline.

Throughout his campaign, Trump also advocated for an increase in the Department of Defense budget to accelerate readiness and modernization of United States troops.

“That could benefit all the companies in this area,” Sheehan said. “The challenge will be how will you pay for it.” 

‘Taking it slow’

Although General Manager Mike Santoro said Johnstown’s Martin-Baker America operation is “taking it slow” as federal budget allocations are in flux, the company announced expansion plans in the fall. 

Richland Township’s planning commission approved a site plan for the U.K.-based ejection seat manufacturer in September, which proposed adding 25,000 square feet of production space – a 55-percent increase. 

Santoro said the expansion was part of an ongoing plan to shift additional work to the company’s Jari Drive location, while still operating out of the Walters Avenue machine shop. 

With changes in production rates and scheduling for military contracts, Santoro said the expansion is also being phased in slowly until a more solid federal defense budget is in place.

“There’s a whole lot of unknowns right now,” he said.

The trend for all sectors of the military seems to be the production of spare parts and maintenance to maintain each branch’s existing fleet of aircraft, Santoro said, which is keeping Martin-Baker America’s operations stable and growing in some cases.

There may be changes for the Department of Defense on the way with Trump in charge, but “for us, it’s not in the immediate future,” Santoro said. 

Diversifying  

A 2015 Cambria County Defense Transition Study found Cambria County was the second-most-affected county in the nation by cuts to defense contracts and funding — losing $782,445, 252 from 2010 to 2012.  

“We had become a community dependent on those defense dollars,” said John Dubnansky, grant facilitator for Cambria County, who estimated that about half of the region’s defense business evaporated within a 10-year span. 

The study, which was completed under contract through Cambria County and supported by CTC and Johnstown Area Regional Industries, launched an application for a $530,000 grant from the Department of Economic Adjustment to develop diversification strategies for local companies relying heavily on defense contracts.

Dubnansky said $200,000 of this grant is being used for the Bridge to Pittsburgh initiative – marketing the region at key events, developing the website bridgetopittsburgh.com and holding networking events with Pittsburgh business leaders. 

This fall, the funding covered the county’s cost to have its own booth at the Pittsburgh Technology Council’s annual Tech 50 event, which highlights annual industry successes and also serves as a Showcase for Commerce-style trade show.

‘Cross-collaborative’

In January, CTC hosted the Greater Johnstown/Cambria County Chamber of Commerce’s meet-and-greet session with the Pittsburgh Technology Council. 

In conjunction with that event, Dubnansky said he’s planning another event with the Pittsburgh Technology Council set for March 29, when Pittsburgh business representatives will be coming to the Johnstown area for tours of local companies such as CTC, Kongsberg Defense Corp. and DRS Laurel Technologies. 

Following the tours, Dubnansky said a networking event in one of Johnstown’s old steel mills will allow local workers and college students to speak with Pittsburgh executives about job openings and internship opportunities. 

“It’s going to be a great cross-collaborative effort,” Dubnansky said. 

Throughout his time spent implementing and exploring suggestions from the Department of Economic Adjustment study – which also included commercializing local companies’ capabilities and global marketing – Dubnansky said he’s found that Pittsburgh businesses are having a hard time filling positions. 

“They’re looking for fresh graduates, but also seasoned employees,” along with office space, Dubnansky said. 

Bringing Pittsburgh executives to Cambria County “is about showing them the inventory,” Dubnansky said.

Attractive factors might include lower real estate costs for satellite offices and a lower cost of living for prospective employees who could commute, telecommute or work at home. 

Dubnansky predicts 2017 to be “a big year” as more strategies from the county’s study are implemented and the project shifts to long-term development moving toward 2018.

“I think all that hard work is paying off, and you’re going to see some of that visualize in the community in 2017,” he said. 

Retaining skill sets

The Southern Alleghenies Planning & Development Commission also offered diversification support in the form of a $200,000 grant program implemented through the commission and JARI.

The grant will help up to 10 companies create diversification plans and provide events such as seminars for local businesses that didn’t meet the program’s criteria.

To be eligible for participation, companies had to show that at least 5 percent of their sales were with the U.S Department of Defense over a two-year period. 

Through the grant program, JARI President and CEO Linda Thomson said, the organization was able to hold round-table meetings with those affected by defense layoffs and connect them with local industries requiring a similar skill set.

“First of all, we want to keep their skills in the region,” Thomson said. “We don’t want to lose that talent. We need every single person in this work force as long as we possibly can to keep our economy going.” 

​Jocelyn Brumbaugh is a reporter for the Tribune-Democrat. Follow her on Twitter @JBrumbaughTD.

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