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Defense Spending Aids Elkhart Area Economy

May 27, 2009 by · Leave a Comment 

Unlucky in so many ways in this recession, the Elkhart, Ind., area is fortunate in being able to rely on a continued flow of Pentagon money to build Humvees at AM General’s plant in nearby Mishawaka, 10 minutes down the road from Elkhart.

Workers at the Mishawaka facility, which employs more than 1,500 workers, know they have it good – especially compared to their friends and family members who have lost jobs at recreational vehicle plants nearby, according to msnbc.com, which is doing an extended study of the Elkhart area economy .

Guadalupe Gonzalez, an Elkhart native and Iraq war veteran who rode in Humvees during his two tours of duty, said his job at AM General feels relatively secure.

“I feel pretty stable working here,” he said. “Obama’s been keeping the military contracts.”

Still, the question of what vehicle Defense Secretary Robert Gates will pick to replace the Humvee looms over workers at the plant. AM General, in partnership with General Dynamics, is one of three teams competing for the contract to build the Humvee’s successor – the Joint Light Tactical Vehicle. The winner is expected to be announced in 2011 or 2012.

Humvee-making and other defense manufacturing have held up pretty well despite the recession. According to the Bureau of Labor Statistics, the number of defense-related manufacturing jobs declined by only 4% from March 2008 to March 2009, compared to a 10% decline in U.S. manufacturing jobs overall.

Gonzalez’s immediate family knows about that decline firsthand. His two sisters, his mother and his in-laws all worked at RV plants, the area’s major industry. All have been laid off.

“They’re having to extend their unemployment benefits,” he said. “I feel I have a good future here. With the war going on in Iraq and Afghanistan, the military’s going to need these vehicles.”

Congress is set to approve nearly $1 billion for purchases of new Humvees and to refit Humvees worn down by heavy use. The Mishawaka plant helps lift the hard-hit local economy, contributing $200 million in goods and services.

Several smaller firms in Elkhart such as Elkhart Brass, Transhield and Acousticom also count on Defense Department contracts.

At a plant in Elkhart, 50 workers at Acousticom make headsets for Apache and Blackhawk helicopter pilots. “We do nothing overseas or in Mexico – all of our assembly work is done right here,” said Acousticom executive Doug Cochran. The firm has annual revenues of about $2.5 million, 80%of which come from direct sales to the Defense Department.

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