By Jonathan Weisman
Washington Post Staff Writer
Tuesday, May 11, 2004; Page A01

FAIRFIELD, Ohio -- Along a quiet strip of gray corrugated metal buildings, across the street from a La-Z-Boy distribution center, Gary Allen and his ever-expanding crew are running one of the most urgent operations of the Iraq war.

Around the clock, seven days a week, O'Gara Hess & Eisenhardt churns out heavily armored Humvees, designed for the guerrilla combat and roadside bombs bedeviling U.S. troops. Last August, a back-lot warehouse held excess inventory. Now, after a $1.5 million investment, 30 new workers on two shifts produce 500 sets of three-inch-thick bulletproof glass a week. As many as 10,000 sets are on back order.

In November, the company snapped up a 40,000-square-foot building down the road, moved its entire commercial armoring operation there and in three days, with an additional $1.5 million, it doubled the Humvee operation.

In six months, employment has more than tripled, to over 600, and 250 more people in this part of southwestern Ohio work as direct suppliers. Production manager Ronnie Carson figured he interviews 15 job applicants every day and hires 10 to 12 of them. Just yesterday, the company's parent corporation, Armor Holdings Inc., announced it received an additional $16.6 million from the Army to ramp up production yet again. The clocks setting the pace on the assembly line were reset, from one vehicle every hour and a half to one every hour and 15 minutes.

"For us, the economy is great," said Allen, senior vice president and general manager of Armor Holdings Inc.'s Mobile Security Division. "It's a sad situation, but . . . " His voice trailed off, then he added, "I don't think anyone here is thinking about it that way."

In this corner of a critical presidential-election battleground state, the economy is surging with the urgency of a boom. But it wasn't President Bush's tax cuts, Federal Reserve interest rate policies or even a general economic turnaround that did the trick. It was war.

The frenetic activity is repeated all over the country. New kilns in California bake ceramic body-armor plates. Apparel plants in Arkansas, Alabama, Florida and Puerto Rico struggle to keep up with uniform orders. Once-idle textile mills in South Carolina spin rugged camouflage fabric. Army depots operate 24/7 to repair and rebuild the wreckage of war in time to ship it back with the next troop deployment.

In the first three months of this year, defense work accounted for nearly 16 percent of the nation's economic growth, according to the Commerce Department. Military spending leaped 15.1 percent to an annualized rate of $537.4 billion, up from $463.3 billion in the comparable period of 2003, when Bush declared major combat operations in Iraq over.

"That's pretty good, considering it's only 3 to 4 percent of the economy," said Joseph Liro, an economist at the New Jersey-based research firm Stone & McCarthy. "For one quarter, that's a pretty big number."

It is impossible to know how many of the 708,000 jobs created in the past three months are defense-related, since the Labor Department does not track defense contractor employment. But anecdotal evidence suggests the contribution is significant.

The flagging textile and apparel industry, which lost 50,000 jobs last year, gained 2,400 in April and is up 500 through the first four months of 2004, said Charles W. McMillion, president and chief economist of MBG Information Services. That is the first net job gain for the industry in the first four months of any year since 1990, the last year for which the Labor Department maintained statistics. Since civilian textile demand is satisfied largely through imports, "Buy American" military orders must be driving the increases, McMillion said.

In pockets of the country, the effect is magnified greatly, as in picturesque St. Marys, Ohio, 90 miles north of here, where a 65-year-old red-brick Goodyear plant bustles around the clock, building the tracks for the Army's Bradley Fighting Vehicles, supplies of which have been dangerously depleted. Goodyear officials refused to open the plant for a visit or even to comment on operations and employment there. Workers also would speak about the factory only on condition of anonymity.

But over beers at the windowless Wayne Street Bar and Grill, just beyond the plant gate, a Goodyear manager confided that at around 650, employment is up, overtime is up and "it's humming pretty good, I'll tell you." After a terrible lull, traffic is picking up at the bar as well, said bartender and waitress Debra Temple.

"The economy is always helped by war. That's just a fact," said Gary Gayer, an appliance salesman in St. Marys.

There are economic downsides. In inflation-adjusted terms, the war's cost will surpass the United States' $199 billion share of World War I sometime next year. Coming on top of three major tax cuts, that spending will drive the federal budget deficit to more than $400 billion this year. That borrowing will eventually have to be repaid in higher taxes or reduced government services and benefits.

Economists have long argued that war is an inefficient use of government revenue. A dollar spent on a highway not only employs workers but also creates a lasting, broadly shared benefit for the economy. A dollar spent on military equipment is soon lost to enemy attack or the rapid wear of war. If it bought a bomb or bullet, it simply explodes.

The families of thousands of National Guard members and reservists have been dealt severe financial blows by the extended deployments of breadwinners.

"They've taken husbands and wives and sons and daughters over there, and we're working and struggling to make up for it," said Temple, noting that a new contingent of reservists from the St. Marys area will soon ship out. "Somebody's got to help these people."

Then there's the constant worry that all this work will disappear as quickly as it materialized. A machinist at the Goodyear plant, whose son drives an Army truck in the volatile area west of Baghdad known as the Sunni Triangle, fretted that Goodyear has put too many eggs in the military basket.

"We're only a pawn. You know that. Everybody in this community hopes like hell that Goodyear keeps this plant here. If the military drops out, we could be done. It's a bad deal," he said.

Columbia Sewing Co., in nearby Magnolia, Ark., lost its main customer in 2001, when Bass Pro Shops took its business to China, said Brian Smith, the company's vice president. Columbia nearly closed. Then came the war, and the firm's first military contract, to sew battle-dress trousers and woodland camouflage coats. Employment is up 30 percent over last year.

"We needed business, they needed small businesses and it fell in just right," Smith said. "If it wasn't for [Defense Department] contracting, we would not be here, and 200 people would be out of a job."

American Apparel Inc. of Selma, Ala., the largest military uniform supplier, is sewing 50,000 uniforms a week, said Jim Hodo, the company's chief operating officer. To keep up with demand, the firm invested more than $1 million to open two new plants in the impoverished Alabama towns of Opp and Roanoke, and hired 300 workers; 150 more could be added soon.

"We had so many minorities out of work," said Roanoke Mayor Betty Slay Ziglar. "These people have grown up sewing in textile plants, and there are so few now. They were desperate to have jobs, and it's going to expand again. I am just so grateful."

For the South Carolina textile mills supplying the fabric, the impact may have been even more dramatic, Hodo said.

"They were sitting down there, staring at the empty walls, wondering what was next," he said of his suppliers, Delta Mills Marketing Co. and Milliken & Co. "It's been a godsend to them."

At Goodwill Industries of South Florida, which trains and employs severely disabled people, orders for camouflage trousers have jumped 70 percent in the past year, said Dennis Pastrana, the organization's president and chief executive. Within a three-mile radius of the plant, per-capita income averages a mere $10,590 a year, but nearly 600 workers now have sewing jobs, more than double Goodwill's prewar level.

There's no sign that it will end soon. Hodo said military officials assured him the buildup will last at least another year, and Allen at O'Gara Hess said the same. The Humvee plant turned out 600 vehicles in 2002, 860 last year, and on Thursday the last Humvee on the assembly line sported a tag identifying it as the 890th vehicle so far this year. To get to one vehicle every 51 minutes, as the Army wants, O'Gara Hess will have to hire an additional 100 workers by July.

"At the rate I'm at, all these people will be here through 2006," Allen said.

As his shift neared its end, Don Meier, a 24-year-old still sporting an Army-issue crew cut and an Operation Iraqi Freedom T-shirt, took a break from installing heating and air-conditioning equipment into battle-ready vehicles he would have loved to have had a year ago.

Back then, he was a mechanic with the Army Reserve's 478th Engineering Battalion, ducking mortar rounds and pulling up the rear as troops pushed toward Baghdad. He recalled watching Pvt. Jessica Lynch and her crew set off on their ill-fated supply mission last spring. He and his comrades were driving basic Humvees that his plant now loads with 3,000 pounds of glass, steel and ceramics to protect the soldiers who followed him to Iraq.

When Meier returned home -- on July 26, 2003, he said with relish -- he first found work stocking shelves at an AutoZone store. Then a friend told him that O'Gara Hess was hiring at $11 an hour, with full benefits. He might get to meet acting Army secretary Les Brownlee or Gen. Paul J. Kern, commander of the Army Materiel Command, on their frequent plant visits.

"It's a regular job to pay my bills with," Meier said, "but at the same time, I know if you get one of these vehicles, you're well off."

Bo Gilmore, another former military man, said: "To be able to do something like this, protecting our troops, that's invaluable."