01/09/2013 10:54 EST | Updated 03/11/2013 05:12 EDT

Military funding bill saves Ohio tank plant caught in fight between Congress, White House

TOLEDO, Ohio - A new defence spending plan will keep the nation's only tank manufacturing plant operating through the next two years, ending months of worry about the future of the factory where about 800 workers refurbish the Abrams tanks.

Funding for tank upgrades has been on the chopping block the past two years and the debate over the potential cuts backed by the White House entered into the presidential campaign this past fall.

But last week President Barack Obama signed off on a defence bill that includes $136 million to maintain minimal production at the plant in Lima, which is about 80 miles south of Toledo.

The Pentagon had wanted to halt production at the plant, saying it would soon have enough tanks and could restart the plant in a few years when it was ready for the next generation of battle tanks.

Some members of Congress from Ohio, mostly Republicans, fought to restore funding for the tanks against White House opposition, arguing that shutting down the plant and then restarting it would be more expensive than keeping production going. The Army disputed that.

Plant operators also said that a pause in production would mean they'd need to rebuild their network of 800 suppliers nationwide once the plant resumed work.

The possible shutdown came up during the campaign when Republican vice-presidential nominee Paul Ryan visited Lima in September.

He warned that Americans could be put at risk overseas by the Obama's administration plan to halt production of the tanks. "We need a strong military," Ryan said.

General Dynamics Corp.'s land systems unit, which operates the government-owned plant, said it's too early to speculate about the impact on jobs beyond the next two years, but added that the funding indicates support for continued production.

"This award shows the Army's long-term commitment to improving the Abrams tank's capabilities," said Donald Kotchman, the company's vice-president for heavy brigade combat teams.

General Dynamics also hopes that increased foreign sales will help the plant make up for the minimal funding from the military.

The plant already is doing some work on an armoured personnel carrier for the Israeli military, and General Dynamics says it won a $133 million contract last week to continue updating tanks for Saudi Arabia.

The threat of losing high-paying manufacturing jobs was a big concern in Lima where in the early 1980s when there were 3,800 workers and tanks rolled off the assembly lines every day.

Workers there now complete upgrades on one tank about every two days, adding weapons and navigation and communications systems. The plant also makes the Stryker light-armoured vehicle.