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Defense contractors in Maryland see optimism return, buoyed by Trump win

By IAN DUNCAN | The Baltimore Sun | Published: November 22, 2016

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 Republican control of the White House and Congress will put an end to the fiscal brinksmanship of the last six years, restoring orderly federal budgeting and allowing 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."

Carullo's group, whose name stands for Strengthening the Mid-Atlantic Region for Tomorrow, advocates for small companies — "the Boeings, the Lockheeds, 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.

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 2011 to prod lawmakers to strike a better deal before it took effect. But they proved unable to reach an agreement that would held off the deep cuts.

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 five percent.

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

Washington Laboratoties employs 16 workers in Gaithersburg and Frederick. Koster said business has picked up again, 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."

The markets reacted positively to news of Trump's election. 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 cyber warfare, 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."

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

"It's too early to be definitive," he said.

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.

iduncan@baltsun.com

©2016 The Baltimore Sun
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U.S. President Barack Obama meets with President-elect Donald Trump on Thursday, Nov. 10, 2016 in the Oval Office of the White House in Washington, D.C. in their first public step toward a transition of power.
OLIVIER DOULIERY, ABACA PRESS/TNS

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