December 18, 2017

Portland - Right behind the Connecticut conglomerates that receive billions in U.S. military spending are the small machine shops and local manufacturers benefiting from rising demand for fighter-jet engines, helicopters and submarines.

Spread across Connecticut, companies such as Jarvis Airfoil Inc. in Portland play an outsized role bolstering the state’s defense industry. Those businesses — typically privately held and family owned — make countless parts that add to the output of the state’s three dominant Pentagon contractors.

All are gaining as a result of sharp increases in Congressional spending to upgrade and renew equipment for the Air Force, Army, Marine Corps and Navy.

“It filters down,” Jason Jarvis, president of the 61-year-old company, said of federal defense spending. “A rising tide lifts all ships. That bears out in our sector.”

Pratt & Whitney, a subsidiary of United Technologies Corp., makes engines for the F-35 joint strike fighter. Sikorsky, a unit of Lockheed Martin Corp., builds the Black Hawk helicopter, the workhorse of the Afghanistan and Iraq wars, and is set to start production of the CH-53K heavy-lift helicopter in Stratford next year.

In Groton, General Dynamics Corp.’s Electric Boat is racing to keep up with rising demand for submarines as U.S. strategy shifts to threats from China, Iran and Russia.

And Jarvis Airfoil, a five-generation family business that employs 89 workers, manufactures fan, compressor and turbine blades and vanes that are used in military and commercial jet engines made by Pratt & Whitney and General Electric.

“You think about the neighborhood you live in, you probably have someone who works in the defense industry,” said Robert Ross, executive director of the state Office of Military Affairs.

Congress and President Donald Trump have agreed to a nearly $700 billion outline for military spending in the budget year beginning Oct. 1. Separate congressional action is needed to detail how that money is spent.

Federal funding related to Connecticut-made military products includes more than $10 billion for 90 joint strike fighters for the Air Force, Marine Corps and Navy. and nearly $8 billion for Virginia and Columbia class submarines.

In addition, more than $2 billion is earmarked for Black Hawks and the CH-53K.

U.S. Sen. Chris Murphy, D-Conn., a member of the Senate Appropriations Committee, said leaders in Congress and the Defense Department are negotiating a spending agreement. The amount appropriated is often less than what is initially authorized, he said.

Murphy said military spending must compete with other priorities. He sees a need for a “dramatic increase” in defense spending, particularly for updates for longstanding military programs such as the Columbia class of submarines.

But he cited other funding priorities that are competing for federal money, such as heroin treatment, early childhood education and workforce training.

“A thousand people dying this year of a heroin overdose in Connecticut are not helped by a defense spending increase,” Murphy said.

Between $12 billion and $14 billion a year is spent on defense-related manufacturing in Connecticut, Ross said. In 2016, the most recent year reported by the Office of Military Affairs, Electric Boat, Pratt & Whitney and Sikorsky accounted for about $13.3 billion in defense contracts.

In addition to the hundreds of millions of dollars that the three military contractors earmark for suppliers — the hundreds of small manufacturers in Connecticut and elsewhere — the Office of Military Affairs said those businesses, and colleges, in Connecticut received federal contracts in “modest amounts” that accounted for nearly $1 billion in in 2016.

In the last federal budget year, Connecticut received nearly $14.6 billion in direct purchases from procurement and research, development, testing and engineering. That excludes pay to military and civilian personnel. Connecticut was fourth in the U.S., behind the much bigger states of California, Virginia and Texas.

The business relationships among Pentagon suppliers — tracking payments, countless inspections of parts and other requirements of government work — are “wildly complex,” Jarvis said.

Jarvis Airfoil, which occupies a 55,000-square-foot site, sells parts to Pratt & Whitney. The UTC jet engine subsidiary supplies Lockheed Martin, which is paid by the Defense Department, Jarvis said.

“Lockheed pays Pratt when it delivers. Pratt pays us when we deliver,” he said. “It can be a challenge to wait for Washington to get its act together.”

Jarvis Airfoil, for example, tracks the labor involved in manufacturing to determine costs and who worked on the part, where an alloy came from and the vendors’ certificates, Jarvis said.

Receiving an order to delivering a part can take a year, a “long period of investment,” he said.

“The compliance that flows down from government contracting is a huge burden,” Jarvis said. “You can spend as much time and money as you’d like complying with federal regulations. It’s extremely staggering for a small business.”

Loren B. Thompson, chief operating officer at the Lexington Institute, an Arlington, Va., think tank, said military suppliers are the “most heavily regulated sector of the economy,” contributing to higher costs.

“Not only do they have to comply with extreme specifications, but they have a raft of laws and regulations that tie them in knots,” he said.

A recent report by the Aerospace Industries Association and Center for Strategic & International Studies found that subcontractors are “less equipped to tolerate the defense marketplace’s funding uncertainty and often onerous regulatory regime.”

But small manufacturers are benefiting from a shift by large contractors to focus more on their core technologies and move some production to small and medium-sized companies.

For example, Pratt & Whitney keeps its engine technology in-house, avoiding the possibility that a competitor could match its engine’s performance and erode the UTC subsidiary’s edge, he said. A spokesman said Pratt & Whitney would not comment.

About 50,000 jobs are related to defense work in Connecticut, though Ross said numbers of workers and suppliers are inexact. Many contractors such as Jarvis Airfoil split their work between military and commercial aerospace.

For the Virginia-class submarine program, for example, about 500 suppliers operate in Connecticut.

In the state’s First Congressional District, nearly 160 companies are part of the defense supply chain, U.S. Rep. John Larson said. A Sikorsky spokeswoman said at least 80 Connecticut suppliers are involved in the production of the CH-53K.

U.S. Rep. Joe Courtney, D-Conn., said “deeper levels of the supply chain” are developing, with manufacturers contributing to other suppliers rather than directly to Pratt & Whitney and Electric Boat.

Smaller suppliers are often on the financial edge “without deep pockets to withstand a downturn,” Courtney said.

“The question of the day always boils down to, is this for keeps?” he said. “Will this be a blip, a roller coaster with demand that comes through for them?”

U.S. Sen. Richard Blumenthal, D-Conn., said manufacturers complain about losing workers to large employers such as EB, Pratt & Whitney and Sikorsky that can offer higher pay and better benefits. He called it a “tribute to the companies” that produce highly sought workers.

Blumenthal, a member of the Senate Armed Services Committee, said manufacturers also cite the time required for employee security clearances.

“There’s no reason they should take months. It should be done in weeks,” he said.

Still, there’s no shortage of work as airlines are on a buying spree for new aircraft and the Pentagon snaps up fighter jets.

“I see us growing. We’re in a growth cycle,” Jarvis said. He cautioned that a reversal is possible “if financing disappears for aircraft, if things in Washington go completely south.”

“Just because you’re in business 60 years doesn’t mean you’ll stay in business,” he said.