Defense contracts help save tool and die industry

When that order dried up, the business looked for and got a defense contract to do the same work. Clyde Ross had to add 10 people to his company to meet the military's order.

"It was good for Leechburg because all of them basically came right out of Leechburg," he said.

Defense contracts are becoming the salvation of the region's tool and die industry and a growing part of the region's economy.

Military and veteran spending accounted for $3.4 billion of the $26.8 billion the federal government spent in the region in 2006.

"It's a little ironic when you think about it. The only industry we have left is the defense industry," said Bud Liebert, owner of Alpha Carb Enterprises of Leechburg. "Old-fashioned tool and die work," the making of dies, molds and tools for private manufacturers, has all but disappeared for smaller companies, he said.

From 2001 to 2006, defense-related spending in Allegheny, Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Lawrence, Somerset, Washington and Westmoreland counties increased an average of 20 percent annually, according to figures from the U.S. Census Bureau's Consolidated Federal Funds report.

By comparison, federal spending on veterans in the region increased an average of 11 percent per year, and other federal spending here increased 5 percent per year.

Most of the increase in defense spending comes from research and other types of grants, which rose an average 26 percent per year, and contracts for goods and services, which increased an average 24 percent per year.

Ross said defense contracts helped him recover from losing much of the traditional tool and die work his company was founded on.

"We sort of gave that up because of the influx from China," he said.

Liebert said that in addition to foreign competition, particularly from Chinese tool and die manufacturers, companies like Alpha Carb frequently lose good workers to larger companies, which are building power plants and other facilities in China.

"We've kind of been caught in this scenario for awhile," Liebert said. "It's not been easy for a small business."

That's where two nonprofit organizations step in.

John VanKirk, president and executive director of the National Center for Defense Manufacturing and Machining in Latrobe, said Kennametal Inc. and Extrude Hone established the center to help smaller companies improve manufacturing processes on defense projects.

Customers estimate the center has helped them trim about $478 million in manufacturing costs over the past five years, VanKirk said. The center linked machine shops to bid together on contracts, winning about $123 million worth of defense work, he said.

"In the past five years, we've seen rather significant growth," VanKirk said.

Dennis Thompson, chief executive officer of the Doyle Center for Manufacturing Technology in South Oakland, said the red tape in getting companies certified as military suppliers has kept most area businesses out of the market.

"It is a very arduous process. Most manufacturers don't want to put up with it," he said.

Another stumbling block is that many don't have all the processes to produce defense parts from start to finish.

Thompson started the Doyle center using money obtained through Democratic U.S. Rep. Mike Doyle of Swissvale. The center helps area manufacturers cut through red tape and puts them in a network operating as a single bidder for defense contracts.

Thompson's pilot project assembled a group that won a contract to manufacture part of the Army's M2 machine gun, first produced in 1936 by a company that no longer exists.

Thompson said the center began with a small project to test the idea and is expanding it. Most of the 4,000 manufacturers in Western Pennsylvania could participate in one or more of these networks, he said.

Although the boom in defense contracts is driven by the wars in Afghanistan and Iraq, Thompson and VanKirk believe the region has a long-term future in defense work. They said the military estimates it will take two to five years after the wars end to repair or replace equipment.

"There's always going to be a demand for spare parts," Thompson said.

Kevin Siverd, vice president of operations for MetPlas Inc. in Natrona Heights, said defense work prospects look good for his company, which machines plastics and composites for the heavy transportation, medical and electrical industries.

"That's something we're going to pursue more heavily," he said. "I think there's a lot of good manufacturing companies right here in Allegheny County, and they have a lot to offer."

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