U.S. defense cuts hit home at Ohio tank plant
LIMA, Ohio (Reuters) - Jeff Bingman began studying psychology in college, but soon ran out of money. He was tending bar when a welding job came open at the plant in this Ohio city of about 38,000 where his father, uncle and brother-in-law all worked building Abrams M1A2 tanks.
Seven years later, Bingman, 33, has worked his way up to a coveted job running the 70-ton General Dynamics (GD.N) tanks through 100 hours of testing before they are loaded on rail cars and begin their journey to U.S. soldiers on the frontlines.
He loves his job and it pays well, with a base salary of around $63,000 a year. But it is one of hundreds of jobs that likely would disappear at the plant if the U.S. Army follows through on its plans to halt work on tanks from 2014 to 2017.
Lima prides itself on producing well-known American products: Tide detergent, Ford engines, and tanks that have symbolized American might in wars in Iraq and Afghanistan. TV viewers know Lima as the setting of the popular show "Glee."
The city, midway between Toledo and Dayton, weathered the recession fairly well. But Pentagon budget cutting could hurt Lima and Ohio, a state that promises to play a pivotal role in determining the outcome of the November 6 election in which President Barack Obama in seeking a second term in office.
Bingman's plant, which employs 920 people, is the last U.S. tank production site following the 1996 closure of a similar facility outside Detroit. The Army now is planning to halt U.S. tank production for the first time since World War Two.
Planned deep reductions in defense spending could jeopardize the fragile economic recovery in Ohio, where the aerospace and defense sector generates $9.6 billion in annual revenues and employs more than 28,000 workers.
Lima is one of hundreds of U.S. communities whose workforce depends on the billions of dollars flowing every year from the Pentagon to defense contractors to make tanks, fighter jets, warships and related equipment. But the money flow is slowing.
With U.S. deficits soaring, the Iraq war over and the one in Afghanistan winding down, the Pentagon has agreed to cut spending by $487 billion over the next decade. There would be $500 billion more in defense cuts in the next decade if Congress fails to make tough deficit reduction decisions by year's end and allows automatic spending cuts to go into effect in January.
At the Lima plant, hundreds of jobs already have been cut, 200 more are slated for elimination within six months and more may come next year. Thousands of jobs at hundreds of smaller firms providing tank components are in peril, too.
The job losses put a drag on Lima's economy, with less money flowing to retailers, realtors and many other businesses. That could be bad news for Obama, who won Ohio in the 2008 election but now faces a tough fight against Mitt Romney, the presumptive Republican nominee who touts his job creation expertise.
'ANXIOUS AND NERVOUS'
"I'm extremely anxious and nervous," says Bingman, who is married and has a 3-month-old baby boy.
His seniority should keep him working through the end of this year, but Bingman said he and his wife already have talked about moving away and looking for work at another U.S. weapons plant. He might be able to find a welding job closer to home, but it would pay far less than the $31 an hour he earns now.
Others with similar high levels of welding expertise also could leave Lima for jobs at plants in Texas or elsewhere where those skills are in greater demand.
The Lima plant, the Joint Systems Manufacturing Center managed by General Dynamics, sprawls over a 396-acre (160-hectare) U.S. government-owned site that opened in the 1940s.
Plant manager Keith Deters, who has done nearly every job there since 1982, calls it the only place in America where you can bring in four-inch plates of steel, aluminum and titanium and drive out a finished tank.
At the peak of the Iraq and Afghanistan wars, the plant worked three shifts to churn out 2.5 tanks a day as well as Stryker combat vehicles and Mine Resistant Ambush Protected (MRAP) vehicles. Now workers build less than a tank a day. The rate is due to drop until ending completely in 2014.
"We're sitting in a difficult economy right now. ... We understand that," Deters says. "We just want to make sure everybody understands the value of what we provide here."
The defense industry faces a new reality. In what may have kicked off a wave of U.S. layoffs and plant closures, Boeing in January said it would shut its Wichita, Kansas plant, erasing 2,100 jobs. Some smaller suppliers have closed.
Industry employment already is dropping. More than 2,300 workers in the aerospace and defense sector lost their jobs in April, pushing the total for the year to 10,102, according to Chicago-based consulting firm Challenger, Christmas & Gray.
Bruce Barron, president of Barron Industries, said revenues at his small, Michigan-based company that supplies components to the Lima plant will drop 35 percent this year, forcing him to lay off 35 of his 115 workers.
Referring to Obama's promise of a U.S. manufacturing renaissance, Barron said, "I just don't see where this renaissance is going to come from. If we're going to bolster the manufacturing base in America, then we have to make budget cuts somewhere else - not manufacturing."
'TANKS ARE A LUXURY ITEM'
Some experts say the Pentagon already has enough tanks and heavy vehicles. "At a time when every federal agency is scrambling to find ways to deal with the current austerity, tanks are a luxury item," said Chris Hellman of the nonpartisan National Priorities Project budget watchdog group.
Hellman said it would be "staggeringly expensive" for the Pentagon to stay prepared for every possible contingency and protect every supplier in the vast defense industrial base.
Brett Lambert, the Pentagon's top official for industrial policy, said his office is working with the Army to preserve the most critical and fragile industrial capabilities in the armored vehicle sector. Lambert said the answer is not to keep buying more tanks that the country does not need and cannot afford.
"We are operating in a budgetary environment that ... is a zero sum game. For every dollar that we invest in technologies that are no longer needed ... those are real dollars that we can't invest in new technology and new factories," he said.
In Lima, General Dynamics, local politicians, unions and business leaders have banded together to lobby in Washington against the Army's plans for a second year after staving off proposed cuts in tank building last year. They argue that halting U.S. tank production would eliminate thousands of well-paying jobs, and drive up the price of future armored vehicles.
Bingman, the tank tester, has participated in the campaign, taking a number of lawmakers, Army officials and other guests for rides around the 1.9-mile test track at the plant, often at speeds of more than 40 miles per hour.
General Dynamics says halting tank production for four years would cost the U.S. government $1.6 billion, far more than it would cost to keep making a small number of tanks.
That's because of the expense of storing machines and the likely loss of highly skilled workers, many of whom may retire or move elsewhere to find work, the company says. It also includes the high cost of certifying parts from suppliers, as required by government regulations.
Lima lost about 10,000 jobs in the "Rust Belt" decline of the 1970s and 1980s, followed by the end of the Cold War. The tank plant alone lost more than 3,000 jobs during that period before bottoming out at 350 in 1995.
These days, Lima and surrounding Allen County - with a population of around 110,000 - are home to a huge Procter & Gamble (PG.N) plant and distribution center; an oil refinery and several chemical plants; and a Ford (F.N) engine plant.
The Army says foreign orders, primarily from Saudi Arabia, Israel, Egypt, will keep the Lima tank plant running at a minimal level until it resumes production on the next version of the Abrams tanks in 2017.
David Berger, Lima's mayor since 1989, worries that the plant might never reopen if it shuts temporarily. "The investment required will overwhelm a restart," Berger said.
"Those are very good-paying jobs," Berger added. "They have a multiplier effect in the community. It really does affect everything from how well our hospitals do, to how well the retail economy functions, schools and all that sort of thing."
At the local United Auto Workers headquarters in Lima, Russ Clewley, president of UAW Local 2075 and a 32-year plant veteran, has his hands full with 180 union members who have been laid off, and 200 more due to lose their jobs in coming months.
"The hardest part for me is watching people you've worked with for so long go out the door and not know if they're coming back or not," Clewley said. "It's very, very stressful."
(Reporting By Andrea Shalal-Esa; Editing by Karey Wutkowski and Will Dunham)
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