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Officials await debt deal impact at Pax River

Published: 12 Aug 2011

From The Enterprise

Congress has struck a debt deal. The United States will not default on its debts, and government employees and contractors will continue to get paid for the immediate future.

But uncertainty remains in St. Mary’s County’s business community as local political and business leaders wait to learn what the deal and its attendant cuts to national security spending will hold for the employees and contractors stationed at Patuxent River Naval Air Station.

The Defense and Homeland Security departments face an initial $350 billion to $400 billion in cuts over the next decade under the deal passed last week, and, if a new congressional super-committee on debt reduction cannot create a plan, another $500 billion in cuts could automatically kick in.

Secretary of Defense Leon Panetta warned last week that cutting DoD’s budget beyond $350 billion over the next decade would be dangerous to national security. The current request for the Defense Department’s 2012 budget is $703 billion.

“I couldn’t even guess right now,” said St. Mary’s County Commissioner Todd Morgan (R) when asked what he thinks the cuts will mean for Pax River. Morgan, the former president of the Southern Maryland Navy Alliance, a military contractor and community lobbying group, said the practical effect for the region is still up in the air.

Glen Ives, former Pax River commander and now vice president of the alliance, agreed. “I don’t think anybody can tell you,” Ives said. “They’re talking in such huge numbers. They really haven’t defined where those cuts are going to impact. … We all know it’s coming, but we don’t know how it will translate.”

Ives said the uncertainty is creating a challenge for local contractors who are trying to plan out their future strategies. But he noted that the big numbers are already having a definite psychological impact.

“These are pretty staggering sums,” Ives said. “Just talking about them sets a certain business climate. … With the economy the way it is, there are very few sectors that are healthy … Uncertainty is worse than knowing.”

Bob Schaller, St. Mary’s County’s economic and community development director, said, “We’re in the same boat as anybody trying to understand” the cuts.

Schaller noted that the county left the last decade on an economic high note, but it has become more dependent on Pax River as the largest employer. “The future of federal work is cloudy,” Schaller said, arguing that it’s time for businesses to work toward developing their rapid prototyping, unmanned systems and software development expertise toward other markets. “It’s leveraging existing things we already know how to do.”

While the county is not in a good geographic location for manufacturing the technologies it designs, Schaller said its concentration of 2,000 software developers could apply their modeling and testing abilities to other markets through the Internet. “That’s a tremendous concentration of talent” in St. Mary’s, Schaller said. “It doesn’t have to be aircraft. It can be anything.”

Ives said many contractors are now turning their attention overseas, hoping to sell their technologies to rising economies like Brazil and India.

Morgan said the county’s political leadership needs to work toward bringing more capacity and business to the base in order to offset coming cuts. He said, “We have to continue to be aggressive.”


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