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September 2012: Capital of Defense

The high tech defense industry shifts into overdrive

By James Amend

Pages 8-9

For more than a century Detroit has been known as the capital of the global automotive industry, but in recent years its reputation as a high-tech hub for the defense industry has shifted into overdrive.

Armchair historians know well the role Southeast Michigan played during World War II, when car and truck factories were retooled to build tanks and planes, and the acknowledgment it received at the time from President Roosevelt when he coined it “The Arsenal of Democracy.”

But the region’s modern contribution to America’s defense and homeland security sectors no longer centers solely on nuts-and-bolts production; rather, the focus lies on delivering the latest battlefield technologies to save lives and support warfighters around the world.

“It is a multi-billion-dollar industry for Macomb County and Southeast Michigan,” said Macomb County Executive Mark Hackel. “It is incredible. We are now known as the Arsenal of Innovation.”

Known as the Michigan Defense Corridor, several dozen defense contractors occupy a stretch of six square miles along the Mound Road and Van Dyke Avenue corridors in Macomb County, anchored by the U.S. Army’s sprawling TACOM Life Cycle Management Command in Warren.

Hackel estimates at least 500 businesses surrounding the corridor now do some measure of defense business.

Consider Selfridge Air National Guard Base in Harrison Township and the corridor widens to some 58 square miles. Add in Camp Grayling in Crawford County and businesses in Grand Rapids and the state stands as a hub of defense business activity.

Companies in the Michigan Defense Corridor aren’t supplying mop handles, either.

They are involved in providing military products like the highest-security information technology solutions and construction services not only here in Michigan, but as far abroad as Iraq and Afghanistan. Perhaps most significantly, they are devising new, energy-saving ideas that trim the reliance of our armed forces’ wheeled vehi

cles on foreign oil and allow them to do more with less on the battlefield.

Brigadier General Mike Stone serves as assistant adjutant general for installations for the U.S. National Guard, tasked with bringing more military training to the 145,000-acre and nearly 100-year-old Camp Grayling in Northern Lower Michigan.

As such, he’s had a front-row seat to watching the corridor grow over the years and only expects it to accelerate, ironically, because government is undergoing the same belt-tightening the automotive industry went through three years ago.

“We’re interested in delivering more firepower with fewer people, so we have to embrace technology and the government can no longer do it by spending millions of dollars on its own,” Stone said. “We need to collaborate with industry.”

The government’s new spending habits open the doors for businesses across the nation, big and small, who are jostling for a share of the U.S. Department of Defense’s $90 billion annual research and development budget.

Defense businesses have good reason to set up shop in Michigan, given Warren-based TACOM’s mission to conduct research, development and purchasing to support the Army’s readiness. Its annual contract budget approaches $15 billion and its sister unit in Warren, the U.S. Army Tank-Automotive Research, Development and Engineering Center, spends 70 percent of its budget with Michigan companies.

The combination has led defense industry giants such as BAE Systems and General Dynamics Land Systems to locate in the region.

But Mark Signorelli, vice president and general manager of weapons systems at BAE Systems, which recently opened a new $60 million office complex in Sterling Heights housing 600 staffers, said there is more to the story.

“In that (defense) corridor, I can find any capability I need to execute a program,” Signorelli said.

Signorelli says the corridor puts services such as rapid prototyping, three-dimensional modeling and advanced simulation tools within steps of BAE’s doorstep. He also cites the availability of contract engineering houses, such as Livonia-based Roush Industries and Pratt & Miller Engineering of New Hudson.

As home to the auto industry for more than 100 years, the region also contains a wealth of mechanical, electrical and software engineering talent, he said, ranging from longtime veterans of the Detroit Three and Tier One suppliers to those newly graduated from the region’s excellent engineering schools.

“The skills we see in the auto industry complement what we need in defense,” he said.

Business friendly groups are also getting more active in wooing the defense industry to the region.

For example, the Michigan Economic Development Corporation awarded BAE Systems a tax credit valued at $22.1 million over 14 years, plus a $460,000 job training grant for new hires. The city of Sterling Heights also threw in a 12-year tax abatement worth $4.6 million.

BAE Systems didn’t start from scratch, either. The company took an industrial site formerly occupied by an automotive supplier.

In addition, the corridor sits within an MEDC Smart Zone focused exclusively on accelerating entrepreneurial talent and infrastructure in the area of defense, homeland security, alternative energy and advanced manufacturing. It’s a federal HubZone, too, which means small businesses operating there are eligible for preferential access to federal procurement opportunities.

Perry Mehta, founder, president and CEO of FutureNet Group, a Detroit-based provider of environmental, construction and technology services to the military and mainstream commercial customers, typifies the sort of business leader envisioned for the Michigan Defense Corridor.

Mehta started FutureNet Group in 1994 on a shoestring budget and today the business boasts 100 employees with four offices across the country and defense contracts around the globe. He conducts 90 percent of his business with the federal government, taking advantage of opportunities such
as HubZone qualification.

Mehta’s advice to small business owners seeking federal work is simple: Find a good mentor to help guide you through the red tape of the federal procurement certification, exercise financial discipline by reinvesting in your company and stay focused on your small business’ expertise.

“Figure out what your small business is good at and keep working at it,” says Mehta, the 2011 recipient of the Small Business Administration’s Small Minority Business Person of the Year. “I’m a great example of that.”

A good start for any small business would be to contact the local Procurement Technical Assistance Center, which helps businesses compete in the government marketplace. Two other key resources include the Small Business Innovation Research and Small Business Technology Transfer programs, which provide funding awards to engage in federal research and development projects.

The task ahead of the Michigan Defense Corridor is to get the word out about the resources the region has to offer.

“It may not be known nationally that we are a nexus of defense activity, but that is changing,” said Dan Raubinger, director of defense and manufacturing at Automation Alley, Southeast Michigan’s technology business association.

For its part, Automation Alley organizes two domestic trade missions each year, hosting between 10 and 20 local defense companies at a pair of defense industry trade shows boasting 30,000 attendees. That’s almost three times the number of industry experts attending the annual Society of Automotive Engineers’ World Congress in Detroit.

“We’re branding Michigan as a place to do defense business,” Raubinger said.

James Amend is a Metro Detroit freelance writer.