Defense firm set to invest millions

Thursday, Oct 23, 2008

In the short run, defense contractor L-3 Communications is investing $3 million in its Muskegon Township plant in order to maintain current production and employment. But longer term, the investment could prepare the plant for major new military contracts that are already in the prototype phase.

The potential payoff for the Muskegon area: the prospect of a significant boost in jobs in the next one to two years.

The Muskegon Township board Monday night approved a 12-year, 50 percent abatement on property taxes from $3.055 million in new investment at L-3's Combat Propulsion Systems plant at 76 N. Getty. Most of that will go for new machinery and equipment, while $100,000 will go to expand a garage.

Company officials said the investment will enable it to keep making its current products and retain its current level of 561 jobs. That's up from 525 last year, and far above the total of around 375 when L-3 bought the sprawling plant from General Dynamics Land Systems in 2005.

""We have grown pretty significantly,"" said Paul Scholten, L-3's vice president and chief financial officer.

That may continue. If all goes well, the new equipment could do double duty by also manufacturing a variety of new military products now in the prototype phase, Scholten said.

""We are working on a number of new products dealing with new technology for our facility,"" Scholten told a Chronicle reporter. ""What this equipment does, it gives us the flexibility to continue the existing production we have, but (to be) flexible enough to enable us to manufacture these new products.

""Increased employment is likely,"" Scholten said, if the eventual production contracts come through.

L-3, in competition with other defense contractors, is in the running for a variety of eventual production contracts in the field of ""electric drive technology"" for military vehicles, Scholten said -- electrical power to run electronics in the vehicles, to power their wheels, and to provide portable electrical power to soldiers in the field.

""It increases our competitive position,"" he said of the $3 million investment. He said the timeline for potentially winning the new production contracts is over the next 12 to 24 months.

L-3 is the current owner of the plant that once housed the mighty Continental Motors Corp., a powerhouse of U.S. military production during World War II and the postwar years. It's best known for making diesel engines for tanks and other military vehicles.

Source: Muskegon Chronicle