COLORADO SPRINGS, Colo., Feb 11, 2005 (The Gazette - Knight Ridder/Tribune News Service via COMTEX)

Gobs of U.S. Department of Homeland Security money spent to equip state and local agencies have caused manufacturing delays and price increases and may have led agencies to stock goods they'll never use. A sudden run on everything from biochemical protective suits to firetrucks also raises questions about whether the United States relies too heavily on foreign interests in protecting home soil. Most protective clothing, for example, is made in Europe, and foreign investment in steel - an essential ingredient in firetrucks - has caused the price to rise sharply.

The demand was fueled by $8 billion doled out by the U.S. Department of Homeland Security, an amalgam of 22 agencies ranging from the Coast Guard to the immigration service. The money was to be used to improve local and state emergency response agencies' ability to react to attacks or natural disasters. Formed in early 2003 in response to the Sept. 11 attacks, DHS will hand out an additional $4 billion this year. After bureaucratic mix-ups made spending erratic early on, the process was streamlined so a steady flow of money is going toward gas masks, de-contamination and protective equipment and vehicles.

"People from all over the country are ordering the same kinds of equipment," said a program administrator for Colorado's Division of Emergency Management. "We have an international crisis with the war, and a lot of the equipment our first-responders need is the same as the military. Many of our grantees are ordering and are waiting for equipment to come in."

Oshkosh Truck Corp., owner of Pierce Manufacturing, Inc., a leading firetruck maker, has posted a 56 percent increase in net sales to $2.26 billion from 2001 through 2004. Sales went up another 58 percent from September to December, the first quarter of the company's 2005 fiscal year. The boom also created a backlog. Oshkosh reported in a Security and Exchange Commission filing that its fire and emergency division backlog increased by 5.2 percent last year over the previous year because of a surge in orders in the last six months of the year. Oshkosh predicts fire and emergency sales this year will rise by 38 percent, outperforming other subsidiaries. "Obviously, it (Sept. 11) changed the impact in terms of funding that has become available for departments in order for them to purchase different kinds of equipment," said marketing communications manager.

Even small companies like Alexis, Ill.-based Alexis Fire Equipment Co. have benefited. Alexis has nearly tripled its work force from 25 to 70 employees in response to demand. The company has kept up, largely because its customers are small rural departments that haven't seen as large a windfall of federal money like larger departments have, said Alexis President. Alexis, like many companies that make vehicles in demand by local emergency departments, has raised prices in response to steel prices, which have vaulted by 120 percent in the last year with further increases expected because of heavy demand.

One firetruck maker reported that a truck which cost $238,000 three years ago now commands $280,000 and that rising steel costs to blame for at least 25 percent of the spike. Other factors are inflation, labor and product liability insurance premiums. Some emergency response agencies, especially on the East Coast, reacted to Sept. 11 immediately, buying goods without careful planning. "There were departments who jumped the gun and bought what they thought was the best product on the market," said a sales manager for ARAMSCO Inc., of Thorofare, N.J., one of the largest homeland security protective equipment dealers. "But now we have all these regulations in place," he said. "You'll see some departments that bought products that are not approved. Now they have to go back and buy some new stuff."

For example, gas masks that don't meet newly adopted standards for when weapons of mass destruction are used might still be sufficient for riot control, the sales manager for ARAMSCO Inc. said. "Because there are no standards, there is equipment out there that may or may not work, may or may not work per the understanding of the emergency responders using it, or it may not be as effective as other equipment out there," said the research director of the Memorial Institute for the Prevention of Terrorism in Oklahoma City. To help departments know what's what, the institute created a "Responders Knowledge Base" Web site that lists equipment OK'd for purchase with federal money. Yet most equipment, including various emergency vehicles, have no standards attached, although DHS is working on them.

ARAMSCO doesn't have problems with shortages, delivery delays and standards. It deals in gas masks, protective clothing and other items for which standards exist. A supplier of decontamination equipment for thousands of emergency workers nationwide, ARAMSCO has had a 48 percent increase in sales since 2001 and projects 30 percent per year growth "indefinitely." "As the market developed, instead of us air shipping in 2,000 suits, we were giving blanket orders for 20,000 to arrive every other week," said ARAMSCO's national sales manager. Much of what the company sells is manufactured overseas, which can be a good thing, the national sales manager said. He noted the demand - ARAMSCO sells a couple of million chemical protective suits a year - has cut prices by half for some products. He also said it's foolish to try to top the Europeans, who developed high-quality protective gear during the 40-year Cold War. "We look to countries like England, Germany, Finland for the more high-tech detection and protection equipment," he said. "It's a good thing, because they're happy to share their knowledge with us."

ARAMSCO's national sales manager said the United States should wean itself of dependency on others for protection against or survival of a new terrorist attack. "The more economic and industrial capacity you have, the more successfully you will deal with it, whatever it is," he said. A representative with the conservative-leaning Heritage Foundation in Washington, D.C., said backlogs and foreign spending are immaterial because the real problem is frivolous spending. "It's just stupid. Terrorists can't be everywhere. If you try to be strong everywhere, you're strong nowhere," he said. "You have people buying stuff and training with stuff they may never use, rather than doing something that may be useful. "Let's take away the federal dollars and then ask where the priority is," he suggested. "If they really need the bomb robot, then they'll buy one" without federal help.