NEWPORT, Ind. — Telic Corp., a military service and weapons contractor, plans to create up to 500 jobs in the first quarter of 2010 at the Newport Chemical Depot, becoming the first business with plans to operate on a site that once produced and stored a deadly nerve agent.

Telic President Frank Minton, a native of Gary, said Thursday that the company he started in 1998 is familiar with the depot, as it served as a subcontractor to Parsons Infrastructure and Technology Group for design and surveying of a facility to neutralize more than 2.5 million pounds of the Cold War-era chemical weapon. Telic served as a subcontractor at the depot, about 30 miles north of Terre Haute, from 2003 to 2007.

Telic now plans to invest more than $1.2 million to site and administrative support, manufacturing and development center at the depot. The company intends to hire workers, which include scientists, physicists and electrical engineers, at an average wage of $37 per hour, Minton said. Minton said the company has ¡§decade¡¨ long-term contracts. Telic¡¦s proposed Newport facility would work on two contracts, the first as a subcontractor for Fluor, an international design, engineering and contracting firm.

That (contract) includes food services workers for the military soldier, all the way to electricians or engineers or technicians such as air conditioning technicians. We are one of Fluor¡¦s labor services contractors,¡¨ Minton said.

The second is a Navy seaport contract. ¡§That is a contract that we will provide technical support for airplanes and ships, for submarines and missiles or rockets,¡¨ he said.

Telic Corp. plans to relocate equipment that makes parts and components for military weapons from its Albany, Ky., plant to Newport.

¡§The facilities here (in Newport) are shells. They are not set up for anything. What we have in our facilities in Kentucky are Japanese machines. What these machines do is, someone can program them to make a decoy flare or a grenade piece. Our plan is to bring those into the facilities here,¡¨ Minton said.

¡§We are a true ordnance company and this facility is a true ordnance facility, where they made RDX (Royal Demolitions Explosive), heavy water and the VX nerve agent,¡¨ Minton said. ¡§We are involved with decoy flares, grenades, testing photons (used in night vision cameras) and involved with nuclear weapons and facilities. This base is like being in our own backyard,¡¨ Minton said, adding that the site ¡§is a perfect situation¡¨ for the company.

The company already has a business site in Indiana at Crawfordsville and another in Kabul, Afghanistan.

Telic could start operations before the U.S. Army relinquishes ownership of the depot, planned for the summer of 2010, to the Newport Chemical Depot Reuse Authority through a proposed interim leasing agreement, said Tom Mulligan, vice president of the Reuse Authority and president of the Vermillion County Economic Development Council.

The Indiana Economic Development Corp. offered Telic up to $3.8 million in performance-based tax credits and up to $125,000 in training grants based on the company¡¦s job creation plans. Vermillion County officials will consider providing property tax abatements.

¡§Our efforts around Newport for a long time were making sure the environmental aspects were handled perfectly, and as far as I can tell, they were. Now we can turn to a new chapter,¡¨ Gov. Mitch Daniels said after a formal announcement at Newport.

¡§Just three or four years ago, people were writing that Indiana was going out of what little defense business we had,¡¨ Daniels said, referring to the closing of Fort Benjamin and possibly that of Naval Surface Warfare Center, Crane Division.

¡§There was a great goal line stand to save (Crane). Now, just three or four years later, we have a fast-growing participation in the defense-related industries,¡¨ the governor said. ¡§Crane is booming and new businesses are locating on its periphery,¡¨ the governor said, adding that private investment is being made around the former Fort Harrison. In addition, an urban warfare training center under development at Muscatatuck Urban Training Center in southeast Indiana ¡§is becoming a major source of federal jobs and funds,¡¨ Daniels said.

¡§We are back on the map in a part of the economy that is not only big, but probably a little more recession-resistant. The needs of national defense are there, whether in a good year or a slump,¡¨ Daniels said.

Newport history

The Newport Chemical Depot is undergoing a closure process under the congressionally mandated Base Realignment and Closure program. The depot must close by Sept. 15, 2011, but is expected to close in the summer of 2010.

The depot, about 25 miles southeast of Danville, was established in 1941 as the Wabash River Ordnance Works, to produce explosives during World War II. More than 50 homes and farm sites, a school and two churches were displaced when the War Department established the site, originally 22,000 acres that extended from the Wabash River to the Illinois state line.

The depot now covers 11 square miles, about 7,000 acres.

Depot facts:

ƒÞ Produced Royal Demolitions Explosive (RDX) in 1942.

ƒÞ From 1943 to 1944, a production plant, including a 7-million-gallon covered reservoir, was added to manufacture heavy water, used in making a nuclear bomb. The plant was placed on standby status in 1946. The heavy water plant was reactivated in 1952 and closed in 1957.

ƒÞ A chemical plant constructed from 1951 to 1961 produced all of the nation¡¦s 4,400 tons of the nerve agent VX. In 1968, President Richard Nixon ceased chemical weapons production.

ƒÞ More than 1,200 tons of VX remained stockpiled until neutralization of the agent began in 2005. The last of the chemical agent was neutralized in August 2008.

ƒÞ Construction began in 1970 on a TNT plant to supply explosives during the Vietnam War. Only two of five production lines were operational before the plant was shut down in 1975.

Source: U.S. Army Chemical Materials Agency