The Tribune Democrat, Johnstown, PA

April 16, 2011

Without Murtha: ‘Willingness to band together’

JARI: New programs will guide companies into future

Shawn Piatek
For The Tribune-Democrat

— Dire predictions of what life for many businesses in the Johnstown region would be like after former U.S. Rep. John P. Murtha no longer served the state’s 12th Congressional District have never been uncommon.

In certain circles, there seemed to be a popular belief that Murtha was the lynchpin holding the entire Johnstown economy together, especially when it came to the region’s defense-related businesses.

“The most consistent rumor I heard was that as soon as Mr. Murtha was gone, we were going to move to Florida,” said Ed Sheehan, president and CEO at Concurrent Technologies Corp., based in Richland Township. “I’m not sure why Florida, but that’s the one I heard the most.

“The simple fact is we put our roots here. We have always wanted to grow here, and we plan to be here for a very long time.”

At Johnstown-based JWF Industries, CEO Bill Polacek said he had heard of similarly strange accusations of how his company, and its subsidiary JWF Defense, would fare without Murtha’s support.

“I heard a lot, but the most bizarre thing I ever heard was that the congressman was my sugar daddy and without earmarks we would surely go out of business,” Polacek said. “Ironically, we’ve never received an earmark.

“We need to make sure the people in this community are getting the facts instead of being subjected to the rumor mill.”

When Murtha died in office on   Feb. 8, 2010, every prediction – good and bad – would start to be put to the test. And those making the dire predictions may have seemed to be validated by some events that played out at a pair of local companies.

Twice last year DRS Laurel Technologies went through rounds of layoffs, cutting back a work force that peaked at nearly 1,000 in 2007 to only 550 last fall.

In July, KDH Defense closed its facility on Broad Street in Johnstown’s Cambria City neighborhood, moving the work and about 100 jobs to a new facility in North Carolina.

DRS has had additional layoffs in 2011, most recently the cutting of about 100 jobs early this month.

Reader comments posted alongside the stories delivering the news of these events on The Tribune-Democrat’s website are indicative of how influential at least some believed Murtha was in bringing defense business to Johns­town and keeping it here.

As one reader posted to the KDH story, “So it starts. Rep. Murtha has died, now the defense companies will start moving to the other high-ranking representatives’ states and leave the Greater Johnstown area.”

Linda Thomson, president of Johns­town Area Regional Industries, said Murtha’s death had no impact on either the DRS or KDH events. DRS has been impacted by projects ending or being delayed and KDH’s move to North Carolina had long been in the works.

Additionally, Murtha’s death came during the worst economic downturn the country has seen since the Great Depression. Every facet of the nation’s economy, including government contracting, has been affected by the poor conditions, Thomson said.

Defense Secretary Robert Gates is seeking to cut $178 billion from the nation’s defense budget over five years beginning in fiscal year 2012.

“One of the things that happened coincidentally with Mr. Murtha’s passing was the recession and the subsequent mood in Congress to cut defense spending,” Thomson said.  “All the big defense companies are holding the line on expenses and have made cuts across the board.

“These things have nothing to do with Mr. Murtha being gone. But everyone is missing him nationwide because he was such an advocate for the war fighter and having the best equipped military in the world.”

That’s not to say that area defense companies don’t miss having a friend like Murtha, who at the time of his death was the chairman of House Appropriations Subcommittee on Defense. As Murtha regularly said, his position on the subcommittee gave him the ability to have the Department of Defense and its major contractors take a look at Johnstown and the companies located here.

“The competitive advantage we had here was if you were looking to do business directly with the Department of Defense, you had his ear,” said Polacek, whose company is one of Lockheed Martin’s main partners in the pursuit of the military’s Join Light Tactical Vehicle contract, a multi-billion-dollar program aimed at replacing the Humvee.

“Some companies did get earmarks, and that was where their marketing efforts were,” Polacek said. “I always felt that if your marketing efforts went through D.C., when we lost him you were going to be in trouble. But it was the introductions that he gave us that were so valuable.”

Sheehan said it was one thing to get the introductions – a competitive advantage, for sure – but the companies still had to produce. He said Murtha left winning the contracts in the hands of the companies themselves.

“As Mr. Murtha always said, he could bring them in, but we had to prove that we could do quality work on time and at cost,” Sheehan said.

Where Murtha drew the most criticism from political foes was through the practice of appropriating funds for certain projects, commonly referred to as earmarks.

CTC was often hailed as a poster child for this practice by Murtha as the company was founded on funds directed by Murtha to the University of Pittsburgh. CTC later spun off from the university.

According to Sheehan, the company’s chief financial officer until 2009, CTC hit its pinnacle of earmark revenues in 2004. It was about that same time that Murtha began to work with local businesses to encourage them to wean their budgets away from any support from directed funds.

By fiscal year 2009, CTC was no longer receiving directed funding.

“A lot of us, at his encouragement, have been working toward the day when he would no longer be here,” Sheehan said. “I think he would be proud of what we accomplished.”

In the aftermath of Murtha’s death, local business leaders came together through JARI to look for ways to keep Johnstown strong, on the whole, as a player in the defense industry. The solution, they believe, is increased cooperation among local businesses.

Many of the defense-related companies in the region have long associated with one another through the Defense Business Council, a part of the Procurement Technical Assistance Center  operated by JARI.

In response to the loss of Murtha, the PTAC has launched two programs – a localized mentor-protégé program and business development networking – that got off the ground during the past year.

Mike Hruska, president and CEO of Problem Solutions, a small Richland Township-based defense contractor, said it’s too soon to measure the results of these new efforts. But while he said his company’s ability to work in the defense arena was never impacted by Murtha, he has noticed an appreciable change in interest of other area companies to find ways to work with his firm since the congressman’s passing.

“People are more motivated to look for innovative approaches to growing or attracting new opportunities to the region,” Hruska said. “The willingness to band together is increasing.”

Thomson said the mentor-protégé program – which pairs larger, more established companies with smaller companies possessing complementary capabilities – has created 10 matches so far.

These relationships will not only benefit both companies, but the region as a whole, Thomson believes.

“The idea is to give smaller companies someone they can talk to on a regular basis to help them learn the basics of government contracting,” she said.

“Ultimately, it will lead to joint marketing opportunities, especially if the smaller company can fill some specific purpose that would allow them to go after business that would be new for both companies.”

The business development networking program brings together the business development professionals from area companies rather than their top executives. The idea is that increased communications between the region’s business development professionals will allow them a better understanding of the capabilities possessed by other area companies. This will help them to identify opportunities that, while not right for their own company, could benefit another in the region.

 “The key is that it’s the business development people and not the CEOs who are coming together through this program,” Thomson said. “These are the people who are out there every day talking to contractors all over the country.

“Providing them with a whole knowledge of our region’s capabilities will help them to find opportunities that can benefit one another.”