L-3 KEO The military-industrial complex in Northampton January 2013

Transcription

1 Page1 L-3 KEO The military-industrial complex in Northampton January 2013 Emily Odgers and Jeff Napolitano A report by the

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3 Page3 The American Friends Service Committee (AFSC) is a Quaker organization that includes people of various faiths who are committed to social justice, peace, and humanitarian service. Our work is based on the principles of the Religious Society of Friends, the belief in the worth of every person, and faith in the power of love to overcome violence and injustice. AFSC was founded in 1917 by Quakers to provide conscientious objectors with an opportunity to aid civilian war victims. The Western Massachusetts program of AFSC was established in About the Authors Emily Odgers was a 2012 summer researcher and intern at the Western Massachusetts program of AFSC. She also served as the youngest-ever Northampton Human Rights Commissioner. Jeff Napolitano is the Program Coordinator for the Western Massachusetts program of AFSC. He has worked at AFSC for over four years, on work ranging from youth military counter-recruitment, immigration advocacy, anti-war organizing, and economic justice. Acknowledgments AFSC would like to thank the members of the Drone Committee that reviewed this report, including Sally Weiss, Carl Moos, Ruth Hooke, Frances Crowe, Paki Wieland, Chelsea Faria, Bill Ames, and others. Thanks are particularly due to Paki for her persistent and persistently brave activism. This report was accomplished through the work of interns like Maya Hochberger, Kinari Horton, Ian Whalen, and Lorena Nañez. AFSC would also like to acknowledge the wonderful work of all of our volunteers, committee members, and interns. Published by American Friends Service Committee Western Massachusetts Program 2 Conz Street, Suite 2B Northampton, MA (413) office@afscwm.org 2013 American Friends Service Committee Printed copies of this report are available from AFSC s Western Massachusetts program. Available online at

4 Page4 Executive Summary Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. President Dwight D. Eisenhower, 1953 Northampton, also known as Paradise City, is often remarked upon for its countless lawyers, therapists, students, non-profits, and restaurants. The city has a vibrant and thriving downtown, with art galleries, chocolate and candy shops, high fashion stores, and several bookstores. Nearby Smith College lends a young and fresh demographic to the area, as do the other 5- College populations. The website for the City of Northampton makes mention of the city s arts, entertainment, education, and surrounding scenic natural environment. The living wage resolution for workers is prominently featured, and the vibrant and diverse business community is cited. Indeed, the statement from the current mayor of the city ends with Welcome to Paradise! Although it has been a fixture in the city for decades, the Kollmorgen Electro-Optical (KEO) company is not mentioned on the city website. Nor is the work that it produces often cited as the pride of the city. It is one of the city s largest employers, and also the city s largest industrial tax payer. Until recently, it had a prominent location abutting downtown on King Street, now moved to a 13-acre modern facility on a scenic hill ten minutes away from the original site. KEO is a longstanding defense contractor, and not a small one: in the first decade of the 21 st century, it was the recipient of more than $700 million in military contracts in Northampton. It has and continued to make optical devices, control and firing systems, and other products for powerful military weaponry. Last year, KEO was acquired by L-3 Communications, which describes itself as the sixth-largest defense contractor in the United States, and one of the top ten military contractors in the world. L-3 makes a variety of aircraft, communications equipment, sensors, weapons and weapon systems, not the least of which are unmanned aircraft systems, commonly known as drones. This report is meant to popularize the history, role, and products of KEO and L-3 Communications. Northampton residents and residents of Western Massachusetts should be aware of the presence, production, and impact of such a large and longstanding institution in the region. KEO had political and economic influence in the city before the acquisition by L-3, and now that it has become part of a much larger and more profitable corporation, we should expect that influence to grow.

5 Page5 Northampton is not an anomaly as a city with a large military contractor footprint. As President Eisenhower noted, and Michael Shank recently pointed out, the military-industrial complex has built components of the war-making puzzle in every congressional district across the U.S.. i Military and war spending is a fundamental part of the U.S. economy. The question we hope to raise is, What do we get from this economy? This report is also meant to keep in the mind of its reader a question raised by the latter part of President Eisenhower s statement: Can we do better? Can we create an economy and a society that, in the words of Dr. Martin Luther King, Jr., promotes and funds programs of social uplift as vigorously as it does instruments of violence? These and others are the questions that we hope our report begins to raise, and we welcome any discussions that come from it. A request from the American Friends Service Committee to meet with a representative of L-3 KEO was denied.

6 Page6 Kollmorgen Electro-Optical Kollmorgen Electro-Optical (KEO) is a defense and security equipment manufacturer headquartered in the city of Northampton, Massachusetts. Kollmorgen opened in 1916 in Brooklyn, New York, and was prominent for manufacturing periscopes for the U.S. Navy during World War II. In 1950, KEO moved its headquarters to Northampton to a piece of land bought for $1 from the Boston & Maine Railroad ii and expanded its business to a variety of electrooptical equipment. Kollmorgen later became a subsidiary of the publically traded company Danaher Corporation (NYSQ: DHR), an S&P 500 company, which brought in $12.8 billion in revenue in KEO itself, as of 2009, was the city s largest manufacturer. iii KEO s recent products included submarine photonics systems and periscopes, fire control systems, visual landing aids, and ground electro-optic and sensor cueing systems. iv Their products have been installed on navy ships, armored vehicles, and aircraft. Some notable ones include: The MK46 MOD 1 Optical Sight System (OSS), which is installed on all U.S. Navy Arleigh Burke-class destroyers, as well as the MK20 MOD 0 system. The system is the control and firing mechanism for ship-mounted guns like the MK34 gun system, which is a 54 caliber weapon.. MK20 MOD 0 EOSS v

7 Page7 MK34 Gun System vi Lightweight Electro-Optical Sensor System (LW-EOSS), a system that is designed for targeting and surveillance. It can be used with the MK34 gun system (above), on weapons such as the MK110 gun or MK75 gun, and other weapons. MK110 57mm Gun System vii ONE (Observe Navigate Engage) 360, a real-time imaging system that provides coverage of the entire battlefield, both day and night. ONE 360 can be used for gun weapons systems, mounted on masts, among other uses. viii Attack Optronic System (AOS), a mast for submarines. AOS contains a thermal (heat-detecting) camera and other sensors.

8 Page8 KEO received approximately 2,228 Department of Defense contract transactions, between 1999 and 2011, totaling approximately $700 million. ix The contracts range from weapons to communications to naval ship systems. In 2009, KEO moved with 366 employees from its original, 5-acre site on King Street to a new, 13.6-acre site at 50 Prince Avenue in Northampton. The site on Prince Avenue covers 140,000 square feet and is on the grounds of the former city hospital. The new site cost the company $18 million. This move was predicated on increased economic development and new growth in jobs, and the Northampton City Council with the recommendation of the Committee on Economic Development Housing and Land Use (EDHLU), Community and Economic Development Director Teri Anderson, and Mayor Mary Clare Higgins - approved a 5% Tax Increment Financing (TIF) exemption in June 2009 for five years for the redevelopment of their new site. x In September 2009, when the state threatened to lower their contribution by over $700,000, the TIF was extended to 13 years. xi During the session before the adjustment was made, Marilyn A. Richards, a member of the Committee on Economic Attack Optronic System Development, Housing and Land Use, stated, People think we need to do everything we can to keep Kollmorgen here Whatever we have to do to make it work for them. xii The tax exemption from the city comes to about $10,000 a year and $138,029 in total at the end of 13 years. KEO also received an estimated $900,000 in tax breaks from the state for building their new location on Prince Avenue. xiii Many city officials pushed to grant KEO the TIF because they argued they risked losing KEO to another city, that it would generate $2.1 million in taxes over the course of the new TIF term, and that it brought much needed jobs to Northampton. However, the purpose of granting a TIF to a developer is not to retain an existing company, it is to make an undesirable plot desirable. xiv That is, a piece of land that would never be normally developed but if a TIF agreement. Yet, the site on 50 Prince Street was not given the TIF because it was blighted, but as tactic to keep KEO in Northampton. The site could have very well been developed in the future by another organization and - without the TIF - the city would be receiving the full tax revenue of the site. As of 2010, KEO was the 6 th largest employer in the city with 377 employees, with an additional 173 employees through its subsidiary Calzoni in Italy and elsewhere. Employment

9 Page9 includes full-time, part-time, and per diem employees. KEO s revenue in 2010 was $169 million. xv L-3 KEO On Dec. 13, 2011, the publically traded and defense giant L-3 Communications (L-3) (NYSE: LLL) announced it entered into an agreement with the Danaher Corporation to acquire Kollmorgen for $210 million. xvi, xvii In February 2012, the deal was finalized and Kollmorgen became L-3-KEO, a new subset of L-3 s Integrated Sensor Systems organization. L-3 stated that in its first year as its subsidiary, KEO is expected to generate earnings of $26-$30 million after $160 to $170 million in sales in L-3 Communications said that KEO will enhance current L-3 products, including ISR [Intelligence, Surveillance, Reconnaissance] and targeting sensors, infrared imagers, laser range finders and optical assemblies. KEO expands and broadens our base in the EO/IR [Electro Optic Infrared] market, a key strategic growth area for L-3, and strengthens our position as a mission-critical sensor systems provider, stated Wes Motooka, a president of the Integrated Systems Sector at L-3, whose focus is on aerospace and aviation development. EO/IR technology is part of the Unmanned Aircraft Systems (i.e. drones) division of L-3. In March 2012, L-3 KEO was awarded an $11,120,335 by the US Navy to manufacture two photonics mast systems for submarines. Sixty percent of the work will be performed in Northampton, MA and is expected to be completed by January In a 2012 financial report to the city, L-3 stated their job growth was down which they attributed to the struggling economy. xviii L-3 L-3 Communications was the 12 th largest contractor of the federal government in xix It is one of the most significant defense and security corporations with a total revenue of $15 billion in 2010 and $15.8 billion in 2011, most of this coming from military-related sales. xx In the fourth quarter of 2012, L-3 announced quarterly sales of $3.6 billion and annual net sales of $13.1 billion. xxi L-3 Communications manufactures and maintains aircrafts (including unmanned drones), and develops surveillance, data analysis and cybersecurity technologies. Most Americans who have flown at an airport in the past few years have encountered L-3 products. The full body

10 Page10 scanners used by the Transportation and Security Administration (TSA) as a security measurement in airports is one of their most controversial products. Despite having been repeatedly accused of violating individuals right to privacy, the TSA awarded L-3 a $44.8 billion contract in 2011 to manufacture and provide more of these scanners at additional airports across the US. xxii Drones L-3 is also a manufacturer of unmanned aircrafts, also known as drones. There are four classes of drones produced by L3, which are described by L3 as unmanned aircraft systems, or UAS. Types of L3 drones include: Viking Series Viking 400 The Viking 400 is the largest of the Viking series, with a pounds payload capacity. It has around a 138 kilometer range, and can fly for 8-12 hours, depending on the weight of the payload. xxiii It is 14.7 feet long, with a width of 20 feet and a height of 5 feet. Its maximum take-off weight, fully loaded with fuel and payload, is 531 pounds, while the aircraft by itself weighs 320 pounds. None of the Viking series are armed. Viking 300 The Viking 300 is an unmanned drone on the smaller end, closer to the Viking 100 than the 400. It only has a 30 pounds payload capacity, and a kilometer range, and can stay in the air for 8-10 hours. It seems to be primarily intended for surveillance purposes. xxiv Viking 100 The Viking 100 is the smallest of the Viking series, and is eight feet long, with a fifteen foot wingspan. When empty, it weighs 105 pounds, with a maximum take-off weight of 150 pounds. Its maximum payload capacity with a full tank of fuel is 20 pounds. It can stay in the air for hours, and has a kilometer range. Like the other unmanned drones in the Viking Series, the Viking 100 seems to be primarily intended for surveillance purposes. xxv Mobius The Mobius is unusual as it can either be manned or unmanned. The aircraft itself weighs 1,200 pounds and has a 1000 pounds payload, with a maximum take off weight of 3,200 pounds. It is 18.5 feet long, 7.5 feet high, with a wingspan of 26.7 feet. xxvi Cutlass

11 Page11 The Cutlass is a tiny drone that when unloaded, weights only twelve pounds, and unfolds upon launch. xxvii It has a three pound payload capacity, bringing its total weight to fifteen pounds. xxviii It can be launched from both the ground and the air. It has a low-light camera that allows it to be used on both day and night missions. It is 32.5 inches long, 4.5 inches high, with a 55.2 inch wingspan. It can stay in the air for up to an hour. The Cutlass may possibly be armed, as L-3 website states that it has payload options for ISR, targeting, and lethal missions... [and] terminal engagement capability but the details of this armament are unclear. xxix TigerShark The TigerShark was referred to by Wired magazine as a Robotic Russian Doll of Death due to its unique strike capabilities. xxx The TigerShark includes a miniature drone warhead designed to separate from the larger TigerShark surveillance and reconnaissance drone. xxxi The purpose of this smaller drone is to allow for smaller, more precise explosions, which are supposed to reduce collateral damage. Additionally, this allows for the TigerShark to serve the twin functions of remote sensing and precision dispensing. It flies for 8-10 hours, has a 30 pound payload, and km range. The precision dispensing of a TigerShark is well documented: In a series of three tests using a TigerShark drone a 200-pound drone with a 17-foot wingspan capable of taking off and landing on its own the Air Drop Mortar (ADM) dropped the 10-pound test shells from about 7,000 feet. They fell within seven meters of the designated target in every test. The blast radius of a high-explosive 81-millimeter mortar shell is about 35 meters. xxxii The TigerShark uses mortar shells rather than missiles, because mortar is cheaper and due to the use of non-lethal contents, such as smoke and gas, so the potential applications of mortararmed drones could easily extend into law enforcement and homeland security. xxxiii During the next 10 years, the global market for unmanned aircraft is estimated to be upward of $37 billion, including $17 billion on research and development and $20 billion on production. There is a stress in the market for drones, however the U.S. government bought so many drones in the last decade that lessening demand will make the competition among manufacturers more fierce. According to Larry Dickerson of Forecast International, [L-3] is trying to participate in this market. They don t want to be locked out... They re not what I d call one of the premiere players right now. They don t have long-term production contracts. xxxiv Lobbying and Political Influence

12 Page12 L-3 KEO spent $10,000 in Q1 of 2012, and less than $5,000 in Q4 on lobbying the US House of Representatives and Senate for funding for advance optic sensors. xxxv L-3 Communications spent $1,880,000 on lobbying firms in The L-3 Communications Federal Political Action Committee contributed $395,000 (64% Democrats, 36% Republicans) in 2008, $451,300 (65% Democrats, 35% Republican) in 2010, $242,900 (44% Democrats, 56% Republicans) in Top recipients have included Jim Matheson (D-UT) who received $15,000 and Chuck Schumer (D-NY) who received $10,000 in In 2012, top recipients in the House of Representaties were Bill Young (R-FL), Robert Andrews (D-NJ), Loretta Sanchez (D-CA), Steve Israel (D-NY), Buck McKeon (R-CA) and Hal Rogers (R-KY) each having received $10,000. In the Senate, Barbara Mikulski (D-MD) received $8,000, Dianne Feinstein (D-CA) received $5,000, and Bill Nelson (D-FL) received $4,000. James Inhofe (R-OK), Harry Reid (D-NV) and, Jay Rockefeller (D-WV) each received $2,500 in Daniel Inouye (D-HI) and Roger Wicker (R-MS) received $2,000. John Cornyn (R-TX), Mark Kirk (R-IL), Mary Landrieu (D-LA), Marco Rubio (R-FL), Richard Shelby (R- AL), and Sheldon Whitehouse (D-RI) each received $1,000 in At least the contributions to Rep. Bill Young did not appear to go without benefits: he submitted an earmark request of $5,000,000 for Advanced Development of CBRN [Chemical, Biological, Radiological, Nuclear] Detection Payload for Unmanned Rotary Wing Aircraft. xxxvi It is an interesting coincidence that L3 manufactured at least two unmanned rotary wing aircraft with support for CBRN detection payload when Rep. Young submitted that earmark. A number of policymakers also own stock in L-3 Communications and therefore benefit both from its and KEO s profitability. Northampton s own Senator John Kerry is one of these people; his wife Teresa Heinz Kerry owns $500,000 to $1 million in stock in L-3, according to his 2009 financial disclosure forms. xxxvii Other beneficiaries include Rep. Michael Castle (R-DE) and Rep. Michael McCaul (R-Texas) who each own $16,002 to $65,000, Rep. Judy Biggert (R-IL) at $15,001 to $50,000, Rep. Ron Klein (D-FL) and Rep. Robert Scott (D-VA) each at $1,001 to $15,000, Jon Kyl (R-AZ.)at $2,173, and Rep. Kenny Marchant (R-Texas) at $2,086. Local Congressional representatives have lobbied on behalf of KEO in the past. In 2009, Richard Neal (D-MA), John Kerry (D-MA), John Olver (D-MA), and Patrick Leahy (D-VT) successfully requested a $1.2 million dollar earmark for HALO-360 Degree Imaging for submarines awarded to Kollmorgen. xxxviii

13 Page13 The HALO 360 system earmarked by Reps. Neal and Olver, and Sens. Kerry and Leahy. From l-3.com: L-3 KEO s HALO system is designed for military use with solid-state, fully digital motion compensation. Designed by the same company that created the first optronic periscope system for submarines, HALO provides complete visual situational awareness in harsh environments. The former president of Kollmorgen, Michael Wall, has also donated to local political campaigns. In 2008, he gave the maximum gift of $500 to David Narkewicz for his mayoral bid. Wall also gave $100 to David Sullivan s campaign for Hampshire County District Attorney. With KEO being part of a much larger company, it can be anticipated that the political and economic influence it wields, particularly in a small city such as Northampton, will expand. i Shank, Michael. "Pentagon Resists Budget Cuts without Even Knowing How Much It Spends." The Guardian. Guardian News and Media, 23 Jan Web. 31 Jan ii "Kollmorgen's King Street Site on Sale for $4 Million." The Republican. N.p., 7 Jan Web. 31 Jan iii Boss, Owen. "Kollmorgen HQ Project at Village Hill Approved." MassDevelopment. MassDevelopment, 12 July Web. iv L-3 Completes $210M Kollmorgen Acquisition." L-3 Completes $210M Kollmorgen Acquisition. SPIE Events Europe Ltd, 08 Feb Web. 29 Jan v Image source: vi Image source: vii Image source: viii L-3 KEO. Advertisement. Lightweight Electro-Optical Sensor System (LW-EOSS). L-3 KEO, n.d. Web June-July ix USASpending.gov. United States Government, n.d. Web. 31 Jan x Midura, Mary. "Meeting Minutes of November 30, 2009." City Council 2010 City Council Meeting Agendas and Minutes. City of Northampton.Committee on Economic Development, Housing and Land Use, 30 Nov Web. June-July xi City of Northampton City Council. Resolution to Amend Kollmorgen Tax Increment Financing Agreement. Resolution. City of Northampton City Council, Dec Web. xii "Massachusetts." The Republican. The Republican, 24 Nov Web. 31 Jan xiii Midura, Mary. "Meeting Minutes of November 30, 2009." City Council 2010 City Council Meeting Agendas and Minutes. City of Northampton.Committee on Economic Development, Housing and Land Use, 30 Nov Web. June-July

14 Page14 xiv "Smart Growth / Smart Energy Toolkit - District Improvement Financing (DIF)/Tax Increment Financing (TIF)." Smart Growth / Smart Energy Toolkit - District Improvement Financing (DIF)/Tax Increment Financing (TIF). Massachusetts State Government, n.d. Web. 31 Jan xv Thomson Reuters ONE. Danaher Corporation Announces Definitive Agreement to Sell Kollmorgen Electro-Optical Business for $210 Million. Reuters. Thomson Reuters, 12 Dec Web. xvi Thomson Reuters ONE. Danaher Corporation Announces Definitive Agreement to Sell Kollmorgen Electro-Optical Business for $210 Million. Reuters. Thomson Reuters, 12 Dec Web. xvii L-3 Agrees to Acquire Kollmorgen Electro-Optical." L3. L-3 Communications Holdings, Inc, Web. 29 Jan xviii Pioneer Valley Planning Commission. The Region s Comprehensive Economic Development Strategy (CEDS). Rep. The Pioneer Valley Planning Commission, Aug Web. xix "2012 Top 100 Contractors - L-3 Communications Corp. -- Washington Technology." 2012 Top 100 Contractors - L-3 Communications Corp. -- Washington Technology. N.p., n.d. Web. 29 Jan xx "2011 Top 100 Contractors - L-3 Communications -- Washington Technology." 2011 Top 100 Contractors - L-3 Communications -- Washington Technology. N.p., n.d. Web. 29 Jan xxi L-3 Announces Fourth Quarter 2012 Results, January 30, xxii Hubler, David. "L-3 Captures No. 12 Spot on Top Washington Technology." L-3 Captures No. 12 Spot on Top Washington Technology. N.p., 25 June Web. July xxiii "Viking 400." Viking 400. N.p., n.d. Web. 29 Jan xxiv "Viking 300." Viking 300. N.p., n.d. Web. 29 Jan xxv "Viking 100." Viking 100. N.p., n.d. Web. 29 Jan xxvi "L-3's 'Optionally-Piloted Aircraft' Mobius." Defense Tech RSS. N.p., n.d. Web. 30 Jan xxvii "SEA CORP Successfully Launches Ground-Based Compressed Carriage UAV." SUAS News. N.p., n.d. Web. 30 Jan xxviii "Cutlass." Cutlass. N.p., n.d. Web. 29 Jan xxix "Cutlass Tube-Launched Small UAS." Cutlass Tube-Launched Small UAS. N.p., n.d. Web. 29 Jan xxx Drummond, Katie. "Special Ops Latest Drone: A Russian Doll of Death." Wired.com. Conde Nast Digital, 25 Oct Web. 29 Jan xxxi "New Tigershark UAV Hides Second, Smaller Warhead Drone inside -- Defense Systems." New Tigershark UAV Hides Second, Smaller Warhead Drone inside -- Defense Systems. Defense Systems, 27 Oct Web. 29 Jan xxxii Gallagher, Sean. "ArsTechnica." Ars Technica. N.p., 1 Nov Web. 29 Jan xxxiii Ibid. xxxiv "L-3 Subsidiary Lands $250M Drone Contract." Dallas Business Journal. N.p., 1 Nov Web. xxxv Lobbying Report." Clerk of the House of Representatives Legislative Resource Center, Secretary of the Senate Office of Public Records, n.d. Web. June xxxvi Earmark Disclosure 43125, Advanced Development of CBRN Detection Payload for Unmanned Rotary Wing Aircraft. Advanced Development of CBRN Detection Payload for Unmanned Rotary Wing Aircraft, n.d. Web. 31 Jan xxxvii Beckel, Michael. "Several Lawmakers Invested in L-3 Communications, Maker of Airport Body-Scanning Machines." Several Lawmakers Invested in L-3 Communications, Maker of Airport Body-Scanning Machines. The Center for Responsive Politics, 23 Nov Web. May-June xxxviii "View Earmark Details Earmark Description: High Awareness Littoral Observing (HALO) Sensor-360 Degree Imaging for Submarines." Legistorm. LegiStorm LLC, June-July Web. June-July 2012