Trump win buoys de­fense con­trac­tors’ op­ti­mism

They hope for more spend­ing, or­derly bud­gets

Baltimore Sun - - FRONT PAGE - By Ian Dun­can

De­fense con­trac­tors in Maryland are op­ti­mistic that a long spell of tight­ened fed­eral bud­gets that win­nowed their bot­tom lines is near­ing an end — a hope that some ex­ec­u­tives say has been boosted by the elec­tion of Don­ald Trump.

Trump promised dur­ing the cam­paign to in­crease de­fense spend­ing, in­crease the num­ber of sol­diers in the Army, build new ships for the Navy and buy new jets for the Air Force.

If he fol­lows through, that’s likely to mean more money for con­trac­tors.

Of­fi­cials and busi­ness own­ers also hope that hav­ing a sin­gle party — in this case, the Repub­li­cans — in con­trol of both the White House and Congress will put an end to the fis­cal brinkman­ship of the last six years, re­store or­derly fed­eral bud­get­ing and al­low the mil­i­tary to plan for the long term, rather than re­ly­ing on a suc­ces­sion of short-term spend­ing bills.

“It’s been a chal­leng­ing cou­ple of years,” said Robert Carullo, ex­ec­u­tive di­rec­tor of the Mid-At­lantic busi­ness group SMART. “We’re look­ing for that to turn around.”

The mar­kets have re­acted pos­i­tively to the elec­tion re­sults. The stock prices of Lock­heed Martin and

Northrop Grum­man, ma­jor con­trac­tors with large pres­ences in Maryland, each jumped about 5 per­cent.

Tim O’Fer­rall of the Fort Meade Al­liance, a group that rep­re­sents con­trac­tors around the Army in­stal­la­tion in Anne Arun­del County, said the mood among de­fense busi­nesses in Maryland was im­prov­ing even be­fore the elec­tion. Mil­i­tary bases in the state have key roles in the emerg­ing field of cy­ber­war­fare, which is at­tract­ing new in­vest­ment and at­ten­tion.

“This mar­ket has al­ways had a grow­ing mis­sion,” he said. “Cy­ber is con­stantly in the news. ... Our busi­nesses have been op­ti­mistic be­cause of that.”

An­drew Bren­ner, an ex­ec­u­tive at the data com­pany Ac­u­men An­a­lyt­ics, said De­fense Department agen­cies have been hold­ing back on spend­ing amid un­cer­tainty over their bud­gets.

“They’re afraid to spend be­cause the spigot’s go­ing to close,” he said. “You can’t plan on a 90-day sched­ule.”

Congress sched­uled the strict spend­ing lim­its known as the se­quester in 2011to prod law­mak­ers to strike a bet­ter deal be­fore the deep cuts took ef­fect. But they proved un­able to reach an agree­ment.

It’s not clear when Congress will re­turn to reg­u­lar bud­get­ing. Law­mak­ers now are ex­pected to seek an­other short-term spend­ing mea­sure that would keep the gov­ern­ment open into the spring.

Re­tired Marine Brig. Gen. J. Michael Hayes, man­ag­ing di­rec­tor of the state Of­fice of Mil­i­tary and Fed­eral Af­fairs, said peo­ple are gen­er­ally op­ti­mistic, but whether a bud­get deal can be reached re­mains an im­por­tant ques­tion.

“It’s too early to be de­fin­i­tive,” he said.

Carullo’s group, whose name stands for Strength­en­ing the Mid-At­lantic Re­gion for To­mor­row, ad­vo­cates for small com­pa­nies.

“The Boe­ings, the Lock­heeds,” he said, “they don’t need us.”

Rep­re­sen­ta­tives of those smaller com­pa­nies, dozens of which are clus­tered around the mil­i­tary bases in Maryland, packed the ball­room of a Hol­i­day Inn in Fred­er­ick last week to learn about op­por­tu­ni­ties in the com­ing year and to pick up tips on do­ing busi­ness with the mil­i­tary and in­tel­li­gence community.

The con­fer­ence has been run­ning for years, but most of the peo­ple at the first ses­sion Fri­day in­di­cated it was their first time at­tend­ing.

Steve Koster, pres­i­dent of the elec­tron­ics test­ing firm Wash­ing­ton Lab­o­ra­to­ries, said mil­i­tary con­tracts were al­most a third of the com­pany’s busi­ness be­fore the se­quester. Af­ter, they dropped to about 5 per­cent.

“It was cer­tainly a fi­nan­cial hard­ship,” he said. Al­though the com­pany avoided lay­offs, he said, “It re­ally hurts peo­ple.”

Wash­ing­ton Lab­o­ra­to­ries em­ploys 16 work­ers in Gaithers­burg and Fred­er­ick. Koster said busi­ness has picked up­a­gain, but he still isn’t sure what the fu­ture will bring.

“Usu­ally when Repub­li­cans get into of­fice they pay more at­ten­tion to the mil­i­tary,” he said. “It’s a crap­shoot.”

Quentin Ellis, an ex­ec­u­tive with United States Tower Ser­vices, said he was ex­pect­ing de­fense spend­ing to grow whether Hil­lary Clin­ton or Trump was head­ing to the White House in Jan­uary.

“We know we were com­ing out from what we con­sider a lit­tle bit of a low pe­riod,” he said.

SPENCER PLATT/GETTY IMAGES

Pres­i­dent-elect Don­ald Trump leaves the lobby of The New York Times build­ing.

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