Potential fiscal cliff fallout for Burlington County manufacturer, Philadelphia AIDS program

Workers at Princeton Tec in Bordentown assemble the firm's signature flashlights.
Workers at Princeton Tec in Bordentown assemble the firm's signature flashlights. (RON TARVER / Staff Photogapher)
Posted: November 20, 2012

The company in the low-slung building on Route 130 in Burlington County is the kind politicians brag about. It's a homegrown business, hiring blue-collar workers who make helmet lights for American soldiers. Some of the jobs here were brought back from overseas.

But now, uncertainty lies ahead for Princeton Tec, thanks to the fiscal cliff.

"It will affect us," said David Cozzone, the company's vice president and general manager. "But I don't know how it will affect us."

From manufacturing plants to city halls to schools to nonprofits across the region and the nation, those who rely on federal contracts and funding are anxiously watching as talks on taxes and government spending enter a critical phase in Washington.

As they wait, their plans and economic futures are blurred.

Looming at year's end is the fiscal cliff: a combination of tax hikes and automatic spending cuts that could yank $500 billion out of the national economy. This one-two punch would likely spark another recession and unemployment would spike, according to the nonpartisan Congressional Budget Office.

That's why Mayor Nutter led a clutch of other mayors to the White House on Thursday, and why Kevin Burns, executive director of Philadelphia's Action AIDS, is drawing up contingency plans. They're waiting to see whether their budgets will lose funding even as taxpayers are forced to pay more.

President Obama and congressional leaders are working toward a compromise to avert the worst of the fiscal storm; they met Friday at the White house for an hour. But even the prospect of a deal raises questions. Which taxes would rise? On whom? What spending would fall?

It adds up to an environment in which decision-makers are left struggling to plan.

The automatic cuts would slice $55 billion each from domestic programs and defense. That would mean pain for military behemoths such as Boeing and Lockheed-Martin, which employ thousands in the Philadelphia area. The ripples would also reach smaller firms, such as Princeton Tec.

The Bordentown company has been in New Jersey for nearly 40 years, a family-owned venture that started making small lights for scuba divers, bicyclists, and outdoorsmen. It eventually got requests from the military for similar gear, and now Princeton Tec makes lights that snap onto the front of helmets, along with smaller "task lights" that attach to the side for illuminating maps or equipment.

Military sales account for about 20 percent of the company's business, and the assembly line has 10 to 12 spots devoted to those products, Cozzone said.

That's why, along with the gray, pink, and aqua lights soldered and snapped together on the 36,000-square-foot manufacturing floor, there are some in desert tan, black, and olive drab.

Overall, 160 people work at Princeton Tec, roughly double the payroll when some of the firm's top-selling products were made in China.

Pamela Robinson of Willingboro was hired after the company brought its work home in recent years. She oversees 18 men and women piecing together the company's most popular product, a small light in plastic casing attached to an elastic headband.

Robinson, whose children are grown, landed here after losing two manufacturing jobs: one went overseas and the other vanished in a company bankruptcy that put many out of work. "We didn't want to leave," she said.

If the budget cuts come to pass, retail sales might cushion the blow, Cozzone said. But he can't know for sure.

"There's always an uncertainty," he said last week. "That's always going to be there."

About 30 miles away, in the loft-style office of Action AIDS in Philadelphia's bustling Chinatown section, Kevin Burns has a different mission, but the same kind of worry.

In Philadelphia, cuts triggered by the fiscal cliff could hit funding for preschool programs, breast- and cervical-cancer screening efforts, and more. HIV prevention would get a $648,000 trim, according to city officials, who anticipate an 8 percent cut across various federal programs.

Could the city help cover the loss? Burns isn't sure, so he's mapping out the service cuts he'd have to make even as he hopes a deal in Washington makes those plans unnecessary.

"I'm feeling more hopeful post-election that they'll do the work they need to do," Burns said.

At stake is a slice of support for an organization that helps up to 5,000 people with HIV and AIDS each year, 98 percent of them poor. In a city where the infection rate is five times the national average, according to Burns, his organization tests for the illnesses, connects clients with social workers and gets them medicine, helps HIV-positive women give birth without passing the disease to their children, and sends "buddies" to check on clients, make sure they are sticking to their drug regimens, and perhaps take them out for a meal and a movie.

One Action AIDS client, who asked that his name be withheld, told of having spent his savings and shuttered himself in his apartment, dropping from 160 pounds to 110 as the disease ravaged him before he sent a desperate e-mail for help in 2010.

Action AIDS connected him with a psychiatrist and got him medicine covered by Medicare. A case worker drew him out of his home, and he now holds a part-time job and is involved in the organization.

About 19 percent of the group's $6 million budget is funding from Washington, arriving via the city and state. A portion of that could be lost.

Obama and lawmakers on both sides say they want to avoid the worst of the cliff. They have voiced agreement on extending tax cuts for the vast majority of Americans. They want to reduce spending, but in a more targeted way than the bludgeoning of across-the-board cuts that the cliff will impose at year's end if they can't reach a deal.

As lawmakers negotiate how to reset the country's finances, taxpayers, businesses, and service organizations wait.

"What we are dealing with is the psychology of the American public and the American marketplace, and certainly the business environment as well. Everyone is looking at this, from the average everyday consumer to the rating agencies, to frankly the rest of the world," Nutter said Thursday evening outside the West Wing. "Not dealing with these issues, unfortunately, will have a negative psychological impact on the marketplace and on consumer confidence."

Economist Joel Naroff said the murky outlook had already slowed hiring and investment as businesses await clarity.

If the two sides push past the Dec. 31 deadline, there will be a new uncertainty: the "worst of all worlds," as Naroff, who is based in Holland, Bucks County, put it.

"We don't know on a day-to-day basis how long it'll go, and that's when businesses really are at risk of making the wrong decision," he said.

If employers respond to the tax hikes and cuts by paring back too soon, they risk overreacting to a crisis that might last just weeks if Washington strikes a deal early in the new year.

But if they fail to adjust, companies will be vulnerable if the fight drags deep into the new year and the worst long-term effects set in.

Burns feels some optimism, but it's mixed with anxiety.

"It would be really unfortunate if they don't get their act together after the election," he said.

That's a certainty.


Contact Jonathan Tamari at jtamari@phillynews.com or follow on Twitter @JonathanTamari. Read his blog, "CapitolInq," at www.philly.com/CapitolInq.

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