Small Business Success Story: Overcoming Effects of Sequestration as a Small Business

Original Article: DailyPress

The outlook for Davis Interiors was anything but rosy when Rep. Bobby Scott visited in 2013. The family-owned, small defense contractor was struggling to recover from federal budget cuts and a brief government shutdown. At its lowest point, the company had to lay off nearly a third of its 30 employees. Those who stayed didn’t always get a full 40-hour week.

Last week, the Newport News Democrat returned to the site along Azalea Garden Road and found business humming again, thanks in part to a congressional deal in late 2013 that provided two-year relief from defense cuts.

But he could not guarantee smooth sailing for later this year and beyond. If Congress and the Obama administration can’t work out a new deal, strict budget caps will return Oct. 1, the start of the federal fiscal year. And the roller coaster ride for Davis Interiors and other Hampton Roads defense contractors could take another downward swing.

John Gibson, vice president of operations, doesn’t want to live through another drop in military spending. “The work is back,” he said, “and we survived the worst part of it.”  Gibson, who has devoted his life to the company and whose father helped build it, said 2013 “was awful,” thanks to the shutdown and across-the-board spending cuts under sequestration. The Navy needs what Davis provides, even though the company doesn’t manufacture deadly weapons or sophisticated radar systems. It specializes in habitability spaces, supporting sailors where they live.

A Navy warship on deployment requires more than basic military hardware. It uses sofas, chairs and desks built to military specifications. Sailors snoozing in their racks expect privacy curtains. Commanders require a well-appointed dining room to entertain foreign dignitaries when making port calls.

Davis Interiors makes an array of shipboard furniture and flooring. It makes draperies and custom throw pillows. It outfits the ship’s chapel, the crew theater and the barbershop. It makes custom equipment, such as a shelf that keeps coffee mugs from falling out when the ship turns. Gibson once made a lighted cigar box at the request of one officer. Whitney M. Weireter works in sales and is the company president’s daughter.

“Habitability is not just making it look pretty,” she said. “It’s making it functional, but also comfortable. It’s a part of defense contracting that no one ever thinks about. It’s really important to us that it looks good. We’re representing our Navy, our country and our government. It’s important that it look professional.”

The company’s small warehouse is stocked with equipment ready for delivery to the aircraft carrier USS Harry Truman and the guided-missile destroyer USS Mahan, both based in Norfolk. Because of the nature of its work, Davis Interiors is one of the last subcontractors to work on a ship, providing finishing touches such as curtains and sofas just before a ship leaves on deployment.

Scott said he hopes the company can continue on a high note, but so far, he does not see a long-term solution to federal budget woes.

The House last month passed a defense authorization bill that skirts the budget caps by shifting defense dollars into the Iraq-Afghanistan war budget, which is not subject to the limits. Scott voted against the bill because the domestic side of the budget doesn’t have such a loophole.

The authorization bill was “a phantom cut” to defense, he said. “You didn’t do that for Head Start, or Pell Grants (for college student aid) and everything else,” he said.

The rules of the House, Scott said, require lawmakers to show how they will pay for new programs, either through new money or spending cuts elsewhere. Tax cuts require no compensating moves. Yet tax cuts come with a cost.

“It’s a challenge for someone who believes in arithmetic because the numbers just don’t add up,” he said. “Tax cuts have something to do with the budget, and the budget has something to do with services. So it’s a difficult conversation.”

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