High costs taxing DHS Systems

As an international company and a major defense contractor, DHS Technologies L.L.C. with its subsidiary DHS Systems L.L.C. is always looking to stay ahead of the curve.

“You can”™t stand still,” said DHS Technologies chief executive A. Jon Prusmack.

Unfortunately for the company, it is becoming increasingly difficult ”“ and costly ”“ to do so at its Orangeburg headquarters.

“We started in New York and I live in New York and I want to stay in New York, but it isn”™t getting any easier,” Prusmack said.

Founded in 1984, DHS Systems makes high-tech, highly portable shelter systems and their components for the U.S. military, called Deployable Rapid Assembly Shelter (DRASH) systems.

To date, more than 17,000 DRASH units and other components designed and built by DHS Systems are in use as a part of U.S. military and NATO operations worldwide. The company also makes similar shelter systems and products for first responders and medical companies

Just this month, DHS Systems announced the invention of a new anti-microbial fabric, called XYTEX 500, which is being integrated into its line of DRASH shelters in order to allow users to set up mobile medical operations without having to worry about the spread of infections or disease.

“No other shelter company has such a product,” Prusmack said. “It”™ll be a standard on all of our equipment. ”¦ No one makes this product, this is a proprietary product.” He said that shelters with XYTEX 500 will provide a more sterile environment for both the armed forces and civilian medical providers, allowing them to perform surgeries and other complex procedures in the field.

The shelters are manufactured at DHS Systems”™ 110,000-square-foot manufacturing facility and headquarters, while the technological components, trailers and communications equipment are manufactured by the company at its 130,000-square-foot facility in Huntsville, Ala.

Prusmack said he has no intentions of moving all of the company”™s operations to its Alabama facility due to the roots that he has established for it in Orangeburg, but admitted that it is becoming increasingly expensive to do business in New York.

He said state and local government officials need to do more to address the escalating costs of living in New York ”“ where roughly 130 of the company”™s 300 employees reside ”“ and that the state would do well to offer businesses tax incentives as well.

“I think you have to have tax incentives, number one, and number two they need to address the regional differences in health care costs across the country,” Prusmack said.

While the company offers the same health care coverage to all of its employees, it uses two different providers for its New York and Alabama workers. In New York, coverage for families through United Health Care is $144 per week ”“ more than double the $63 per week that coverage through BlueCross BlueShield costs families in Alabama.

“And we pay 80 percent of that cost,” Prusmack said.

Marcel Branis, DHS Technologies vice president of manufacturing, said the company wasn”™t the only one feeling the strain, saying high property taxes and other costs of living were slowly pricing people out of the Hudson Valley.

“The problem is the workforce is moving out because they can”™t afford to live in the area. Fifteen, even ten years ago we could find people with the technical skills we needed right here,” Branis said. “Now it”™s much harder to retain them.”

In addition to frustration with the slow pace of change on the statewide level, Prusmack said that DHS Systems has increasingly had to work around inefficiencies at the federal level.

With the federal government operating without a budget and instead on continuing resolution, “Everything is in turmoil.” Being a defense contractor, “There are a lot of politics involved in the process.”

When he needs to get something accomplished on the federal government level, Prusmack said he often seeks assistance from Alabama”™s Congressional representatives, citing disappointment with New York”™s delegation.

“I”™m very disappointed with the lack of support from our Congressional delegation in New York, while in Alabama we have much better support,” he said.

Despite the many political and economic challenges, Prusmack said that the company is poised for a solid year in 2011 and a much better year in 2012 after a “terrible year” in 2010.

“Our equipment is the standard army command post equipment and is listed on MTOE (Modified Table of Organization and Equipment that is distributed to each battalion in the U.S. armed forces) as a permanent line item,” so every unit will continue to need the company”™s products.

As the U.S. draws down its forces in Afghanistan and Iraq, Prusmack said there will still be a demand for DHS Systems”™ DRASH shelter systems, both from the armed forces and from civilian organizations. “Our equipment is a standard piece of equipment. It is needed during war and during peacetime.” In one recent example, Prusmack said that the company just made a large portable field hospital unit for the state of Connecticut.

In addition to the two DHS Systems facilities in the U.S., the company has seven regional support facilities at major army bases spread throughout the country, in addition to a facility owned by DHS Systems International L.L.C. in Hereford, England. Both DHS Systems and DHS Systems International are owned by DHS Technologies, which was formed in 2004.