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SPAWAR-driven defense contractors spying growth
By Dennis Quick
Senior Staff Writer
Centurum Inc., an information technology company serving the U.S. Defense Department, is enjoying a boon period.
Since 2000, the North Charleston-based company has increased its revenues by a total of 70% while its employee roster has risen by a total of 54%. Centurum, which refurbishes, creates and tests communications equipment primarily for U.S. Navy vessels around the globe, has 100 employees and plans to hire another 20 this year.
Centurum is part of the Lowcountry’s $3.3 billion defense industry, which directly accounts for 27,209 jobs and whose size is second only to the area’s tourism industry. Local defense contractors plan to increase their collective workforce by 22% over the next three years, according to the Charleston Metro Chamber of Commerce. About 2,000 employees work in the Lowcountry’s defense contracting community, the Charleston Defense Contractors Association reports.
The association’s membership, which includes Centurum, has grown from about a dozen in 2002 to more than 65 corporate members, says Carl Lundquist, the association’s treasurer.
The bread and butter of the Lowcountry’s defense contractors is the Space and Naval Warfare Systems Center in North Charleston, which boasts some 1,500 employees. In 2002, SPAWAR awarded 3,655 contracts totaling more than $687.3 million to the area’s defense firms, says spokeswoman Marsha Hassell. In 2004, those figures jumped to 7,682 contracts totaling more than $984.3 million. So far in 2005, SPAWAR has issued to local firms 1,355 contracts amounting to more than $150.3 million.
A major source of business growth for many local defense contractors is the Navy’s Sea Power 21 program, a 21st-century logistical support network enabling U.S. warships to strike enemies, create a defensive shield and serve as mobile sea bases supporting missions on land.
SPAWAR feeds not only defense contractors but firms offering services to defense contractors. Amalgamated Worldwide Corp., a Summerville business development consultancy that helps firms create proposals for submission to SPAWAR and other federal government agencies, has doubled its business base over the past year, according to AWC President Mike Resler. Resler attributes AWC’s success in part to the increased business opportunities smaller firms have with SPAWAR.
Eagan, McAllister Associates Inc., a Lexington, Md.-based defense contractor, has expanded its Lowcountry presence during the past five years from one office to two, and from 200 employees to about 500, EMA spokeswoman Carrie McMillan says.
“We certainly hope to continue to grow as we have in the past by focusing on the expanding needs of our customers and then providing the skills and capabilities they need to be successful in today’s environment,” McMillan adds.
SPAWAR is EMA’s primary customer in the Lowcountry.
“SPAWAR is at the center of a growing cluster that has attracted major national defense contractors to open offices here,” says retired Vice Adm. Albert J. Baciocco, chairman of the Charleston Metro Chamber of Commerce’s Military Relations Policy Council. “There’s a good synergy here between national (contractors) and our home-grown defense contractors.
“The U.S. military clearly sees advantages in Charleston’s location, shared resources and models of efficiency for a modern military,” Baciocco adds.
About eight defense contractors, some from out of state, are eyeing available space in North Charleston’s Aviation Business Park, according to commercial real estate broker Bob Caldwell, who markets the complex. The business park already houses a small cluster of defense contractors including Raytheon, Ware On Earth Communications, Titan Corp., Anteon Corp. and Centurum.
“Defense contractors don’t mind being neighbors because they partner on some contracts,” Caldwell points out.
However, defense contractors interested in opening offices in the Charleston area are acting cautiously because of the forthcoming recommendations from the Defense Department’s Base Realignment and Closure commission, says Caldwell. The commission will present its list of recommended base closings to Congress this year. The confidential list could potentially include SPAWAR and other key installations like the Charleston Air Force Base and the Naval Weapons Station.
With that in mind, defense contractors seeking to expand into the Lowcountry are “continuing on a modest growth plan and negotiating contingencies if BRAC lands,” says Caldwell.
“It’s impossible to say what will happen with the base realignment decisions and what part of EMA’s business might be affected,” says McMillan. “Should base realignment decisions shift program requirements, EMA will strive to help its customers meet their program needs wherever that may be. Remember, base realignment could bring additional work to the region, which could add to our growth in Charleston.”
Despite the BRAC commission looming in the background, defense contractors remain optimistic about the Lowcountry’s growth potential in the defense industry.
“The Charleston area is becoming a hotter market for defense contractors because SPAWAR Charleston is becoming recognized as an armed forces leader in joint command, control, communications, computers, intelligence, surveillance and reconnaissance,” says AWC’s Resler.
“The more attractive this area becomes to the little guys, the more attractive it becomes to the big guys,” notes Steve Golle, Centurum’s operations director. “That can be tough for the small guys.” He adds that Centurum’s Washington, D.C., office is looking to expand the company’s activities in Charleston “where it makes sense.”
Dennis Quick is senior staff writer for the Business Journal. E-mail him at dquick@crbj.com.
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