Small businesses near Lewis-McChord hurt by government shutdown

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TACOMA — Trena Payton watched the news constantly this week looking for signs of a breakthrough that would end the partial government shutdown. Her business in Lacey depends on it.

Her company, ABN Technologies, won't get new contracts to provide IT support for federal agencies until the government starts running again. Agencies, including federal courts and Joint Base Lewis-McChord, are among her primary clients.

"It's scary to see it go on one more day," she said. "I am very on edge."

For Payton and others whose livelihoods are tied to federal spending, the shutdown is the latest blow in a tumultuous three-year period that included a standoff over the debt ceiling in 2011 and Congress' failure to avert the forced budget cuts known as sequestration last year.

With planned Army downsizing already on the table, the shutdown exacerbates the economic uncertainty of local businesses and workers who benefited from a decade of steady wartime growth at Lewis-McChord.

They don't know what's ahead for the shutdown, or for the $470 billion in defense cuts still on the horizon under the sequester over the next nine years.

"It is very difficult to maintain your workforce when there is not any predictability in payment or spending," said Casey Ingels, chief executive of Tactical Tailor, a Lakewood business that sells tactical military and police gear. He's also a board member of the Pacific Northwest Defense Coalition.

Defense spending has increased in Washington state in recent years, rising to $9.2 billion in new contracts last year, according to data at usaspending.gov. That's up from $4.9 billion in 2010.

But most of the new money is going to Boeing's multibillion dollar contracts, not to small businesses that mushroomed around Lewis-McChord during the wars in Iraq and Afghanistan.

Representatives from smaller companies say they're hurting.

"The trickle-down for us is we've had to cut our employees' salaries by 20 percent. That's less money they're spending" in their communities, said Jordan Haines, founder of Lakewood's Coinforce.com.

He and his wife employ five people at their store and design shop, where they create the challenge coins military commanders hand to troops on special occasions.

Their employees took pay cuts earlier this year when the sequester cuts came down, compelling the Army to strike funding for the coins.

Now, Haines says he has several projects on hold. Clients put down deposits before the government closed and can't pay to finish them until the shutdown ends.

"Nobody's taking this seriously what is happening to people," said Haines, an Olympia resident and retired airman.

Recently, he has emphasized courting corporate, local government and athletic clients. He says his coins have been catching on in those communities, too.

"You can't depend on the government for business," he said.

In some ways, the Puget Sound is better positioned to ride out defense budget cuts than other military communities because of the diverse economy.

In the region stretching from Snohomish to Thurston counties, 4.8 percent of workers earn their salaries from the federal government, according to a recent Washington Post report based on a Brookings Institution analysis.

By contrast, almost 19 percent of the workforce in Colorado Springs, Colo., home of the U.S. Air Force Academy and multiple Air Force bases, draws income from the federal government.

"We're not like some communities which are solely dependent on military installations; they have a real problem there," said Gary Brackett, the business and political manager for the Tacoma-Pierce County Chamber of Commerce.

Brackett last week asked businesses to tell him if they're impacted by the shutdown. So far, he's heard from a company stalled in getting a loan through the Small Business Administration, and another that's having trouble getting court records.

He said it's difficult to quantify how the partial shutdown and last summer's sequester-mandated unpaid furlough days for civilian employees at Lewis-McChord affected the local economy.

Kevin Eaves does not know when he's going to get his next paycheck for his work as a biomedical technician at Madigan Army Medical Center. He also had unpaid furlough days during the summer because of the sequestration cuts.

"It's frustrating," said Eaves, 55, of Lakewood, a leader in his chapter of American Federation of Government Employees. "It's the second furlough in six months. The second time around is harder than the first."

Local businesses are taking stock of the federal government's stop-and-start approach to defense spending and diversifying where they can.

"All markets cycle, and what you do in a down cycle dictates your success in an up cycle," Ingels said. "We just want to make sure that our troops our taken care of and they have the best gear out there."