DOD grant offers $8M to assist companies affected by defense cuts
Based on a successful pilot project, the U.S. Department of Defense's Office of Economic Adjustment has awarded $8 million to the University of Michigan's Institute for Research on Labor, Employment and the Economy and The Ohio State University and Purdue University to assist communities and companies in the three states that have been impacted by these job losses.
The three-state region of Michigan, Ohio and Indiana has lost more than 6,800 defense supply-chain positions in recent years—cuts spurred largely by the ending of two foreign wars and the current federal fiscal environment.
"When communities are faced with the type of sudden and severe economic dislocation that can result from a defense plant closure or a mass layoff, it is necessary, but often difficult to create an effective community response," said Lawrence Molnar, IRLEE associate director and the project's principal investigator. "Our community-based scope of work combines assistance from both the public and private sectors in communities and regions experiencing or anticipating adverse impacts of defense downsizing."
In the first phase, partner institutions designed and implemented strategic programs tailored to more than 40 companies and seven communities.
The new funds will support a two-year project that will target 72 communities and companies across Michigan, Ohio and Indiana. The goal is to generate diversification plans for these communities and companies so they are more resilient and can attract new business, while retaining and growing existing enterprises.
The new funding, of which Ohio Manufacturing Institute at Ohio State will receive $2.24M, will allow DMAP to increase collaborations with regional defense industry research institutions in order to ensure the defense supply chain is ready to handle matters of national security. Ohio State's Office of Research and the Ohio Manufacturing Institute are operating the program.
"The DMAP program helps fulfill our land grant mission with many companies and communities positively impacted," said Caroline Whitacre, Ohio State senior vice president for research. "We are helping 30 companies and 6 communities in this phase of the project and will support more than 4,500 employees and help retain $2.4 billion in sales statewide through the DMAP grant."
With each company and community, DMAP assesses many factors, including their financial health and market placement. DMAP then works with each company and community to implement diversification plans, which are jointly fund by all parties.
One such company that the DMAP team from Ohio State worked with UES, a small Dayton, Ohio-based manufacturing company, to diversify its technical product. With DMAP assistance, UES conducted primary market research, which helped the company identify a source of new customers beyond the defense industry.
"DMAP provided the impetus to go back and engage with our customers," said Veeraraghavan Sundar of UES.
The Purdue DMAP team helped Wirth Machine secure special certification, which created new market opportunities for the Evansville, Ind.-based custom machining company. With assistance from DMAP, Wirth Machine recovered from an unexpected 30 percent loss in revenue and they are on pace for 50 percent growth this year.
The U-M DMAP team worked with Assem-Tech, a Michigan-based contractor that provides engineering, manufacturing and integrated assembly services. Assem-Tech lost defense contracts and consequently experienced job loss.The U-M team conducted market research, managed a website redesign and helped Assem-Tech secure aerospace quality certification.
"The co-funding that is offered in the DMAP program is great, but the real benefit comes from our opportunity to leverage professionals on the DMAP team and their contact lists," said Assem-Tech President Mike Wilson. "The human resources that can be applied to a company's diversification efforts are far more valuable than the co-funding."
Today, Assem-Tech is growing and they expect their custom enclosure, wire harness and circuit board sales to more than double from 2014 to 2017. DMAP teams from Purdue and Ohio State have generated similar diversification plans for communities and companies that have yielded positive results across Indiana and Ohio.
The Department of Defense's Office of Economic Adjustment, under the Defense Industry Adjustment Program, funds DMAP.