Fledgling technology park is development bright spot

November 21, 2009

Since World War II, engineers at Crane Naval Surface Warfare Center have dreamed up electronic wizardry that helped the United States win wars and reach the pinnacle of military power.

The secretive base in southwestern Indiana developed night vision and radar advancements, and the Prowler aircraft used to block enemy communication in Iraq.

But Crane created few jobs outside the sprawling base—an area that has struggled economically. No defense contractors flocking to its outskirts. No tweaking of military technology for civilian uses.

That’s beginning to change, thanks to a fledgling industrial park just outside one corner of the installation.

WestGate@Crane Technology Park, launched just three years ago, already has landed $12.5 million of buildings, and state and local government has kicked in another $5 million.

So far, the 100,000 square feet of office space houses only defense contractor outposts. But Indianapolis-based developer Dale Ankrom also hopes to attract businesses that might thrive on turning declassified technology into products for businesses and consumers.

“In a short two-year period, WestGate has been transformed from something that was nonexistent to something that’s thriving,” said Ankrom, managing partner of WestGate@Crane Development Co. LLC. “In the face of what we are looking at economically, we have a situation that is completely unique.”

WestGate’s status as a state-certified technology park allows the development to capture $5 million in state and local tax revenue over the lifetime of the park; it already has used about $3 million.

All the office space is occupied by defense contractors that support the base with engineering, software design and technical support. The park has 400 workers with salaries averaging $55,000 and some reaching into six figures.

Crane has sustained the area since 1941, and currently employs 3,100 people, including 1,900 scientists, engineers and technicians.

But in 2005, the base was nearly closed by the latest in a series of shutdowns guided by the Pentagon’s Defense Base Realignment and Closure Commission. While Crane was spared, it was forced to reduce its staff and outsource some work to contractors.

Jason Lovell, director of the Indiana Office of Defense Development, said the creation of his office and the necessity for a tech park near Crane both grew from the near-closure.

“They have had to push the work out of the base and into contracting,” Lovell said. “That’s why something like WestGate becomes very important.”

Indianapolis roots

Ankrom started WestGate@Crane Development in 2006 with investors Steve Henke, a Hamilton County attorney, and HHGregg Inc. co-founder Gerald Throgmartin. Henke and Throgmartin sold their interests to Ankrom in order to pursue other projects.

Ankrom in 2008 brought in Max Kendall and J.R. Kendall, a father-son team from Indianapolis that runs a construction company, as partners. Kendall Construction Group is building roads and one building in the park.

Eleven defense contractors occupy the complex. San Diego-based Science Applications International Corp., the seventh-largest domestic defense contractor, leases a 38,000-square-foot technology facility in WestGate. EG&G, another California-based defense contractor, takes up 26,000 square feet.

Although WestGate doesn’t have commercial tenants, dual technologies could spur even further expansion. Crane Technology Inc., a not-for-profit made up of former Crane employees promoting Crane and WestGate, is pushing to turn some of the military advancements into civilian products.

“What we expect to happen eventually is, other technology-based companies will come into that area,” Executive Director Mike Gentile said. “Like lithium ion batteries, for example. The Navy has many uses for them, but the same technology can be used in vehicles and medical equipment.”

San Diego-based Science Applications International Corp. is one defense contractor establishing a presence in the technology park. (Courtesy WestGate@Crane Technology Park)

WestGate is the only state-certified tech park lapping into three counties—Daviess, Martin and Greene. So, property and income taxes generated by the park flow to all three. A board with two representatives from each county and one at-large regulates the park.

Most current development lies in Daviess and Martin counties because infrastructure was in place, but there are plans for the Greene County section, as well.

“The cooperation between the three counties, when you look at a project of this scope and complexity, has been phenomenal,” said Ron Arnold, executive director of WestGate and the Daviess County representative for the park.

The naval base and now the tech park have driven the unemployment rate in Daviess County to some of the lowest levels in the state.

“Crane creates a leveling effect so that we don’t get some of the wide swings in unemployment that other counties are seeing,” Arnold said. Crane and WestGate employ 800 to 1,000 Daviess County residents, he said—about 30 percent of the county’s population.

Crane is more than an hour’s drive from Evansville, but the city reaps benefits of Crane inventions through a technology transfer agreement with the Growth Alliance for Greater Evansville. Declassified technologies originating at Crane are passed on to engineers at Evansville companies who help develop them for commercial use.

Greg Wathen, president and CEO of Economic Development Commission of Southwest Indiana, said Crane’s influence has changed the strategy for economic development in his region.

“With the tech agreement in place, the defense industry should be one of our target areas,” he said. “We are looking into how that changes what we try to target in the future.”

Because of WestGate, Crane and other defense contractors in the state, the defense industry as a whole contributes $4.6 billion annually to the state’s economy, according to the Indiana Economic Development Corp.

WestGate’s square footage has ramped up in the past year, occupying about three acres, but it has authority to expand on a total of approximately 300 acres. That could translate to 3 million square feet of buildings.

“The potential is almost unlimited with the WestGate just now in its infancy,” Ankrom said. “We could easily develop $33 [million] to $35 million worth of buildings in the next three to five years.”

Ongoing negotiations

Ankrom said he is discussing leases in the park with Indianapolis-based firms and an Arizona company with offices already in Indianapolis. WestGate works with three Indianapolis real estate firms to fill vacancies.

A 64,000-square-foot, $8 million conference and training center called The WestGate Academy is in design stages. WestGate and the Indiana Office of Defense Development are still working on the funding, including federal stimulus-related money from the Economic Development Administration.

“Defense contractors, including Crane employees, have continuing education that they need to undergo on a large mass format,” Lovell said. “This facility could help fulfill that shortfall in the region.”

Ankrom plans to start construction soon on a 30,000-square-foot office and warehouse. The $1.5 million project will be built by Kendall, and likely house a defense contractor currently operating at Crane, he said.

WestGate also has begun negotiations with an Indianapolis-based distribution company on a 50,000-square-foot, build-to-suit warehouse and multiuse building. Because the discussions are preliminary, Ankrom declined to name the company.

In the next two to three years, an 80-room hotel might be built in the area, as well. Ankrom said a hotel isn’t an immediate priority, with WestGate now focusing on defense contracting. He hopes to add tenants specializing in night vision and electro optics technology in the next year.

Another major growth opportunity for Westgate lies in the distant promise of Interstate 69’s extension from Evansville to Indianapolis, passing directly by the park. Ankrom said I-69 will exponentially increase traffic to WestGate, but that he isn’t counting on the road for the development’s success.

“Since it is a government project, the deadline of three to five years could turn into anywhere from five to seven years,” he said.•



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