What’s Red, White, and Blue—and Green All Over?

You probably already know that military and defense industry activities play a vital role in our economy and our economic development, but you might not know just exactly how important they are. Allow us to reduce the guesswork: According to a recently released WEDC-funded BERK study, military and defense contracting activities supported approximately 191,000 total jobs and $12.2 billion in total output in Washington for FY 2009—nearly 7% of all state jobs and 4% of the state’s overall gross domestic product (GDP). That’s a whole lot of green!

In addition, military and defense contracting activities are of strategic importance to our region and our state for at least the following four other reasons: (1) bases and contracting provide employment opportunities for workers across a very wide range of skills and industries; (2) defense purchasing is generally not subject to major rises and falls of the economy, and, as a result, provides a stable economic base; (3) retiring military personnel add to our rich pool of skilled workers; and (4) defense contracting activity can be an driving force for innovation.

For all of the reasons noted above, it’s crucial that Washington not only maintain its existing levels of military activity, but try to attract more. Right now, we’re leaving money and opportunities on the table. The new BERK study finds that while Washington ranks 7th among states in terms of military personnel (a strong showing given we’re the 13th largest state by population), we rank a much lower 23rd in our receipt of defense contract dollars.

What can we do to improve? The study outlines a range of tactics to better promote our defense-related economy, coordinate defense-related economic development efforts, and help companies develop successful contracting bids and R&D proposals. A lot of these are things we’ve talked about on this blog before—the need to better market our region, to participate in trade shows and events, to expand small business assistance, and expand outreach efforts. There are also some new ideas in the mix—developing and broadly disseminating defense market research, supporting the state’s emerging defense organizations, and developing new online resources and toolkits for potential contractors. Even more, we could raise awareness and find ways to help companies from clusters we might not always associate with defense—like life sciences, IT, and cleantech—figure out how to tap into contracting areas where their strengths converge with defense needs (advances in care for veterans, bioterrorism defense, disaster response, interactive media / simulation, and off grid water and energy generation).

I guess what I’m driving at here is that the new study, “Washington State’s Defense Economy: Measuring and Growing Its Impact” could be quite a catalyst for efforts to grow our military base and defense-related activities.

The WEDC plans to present and further discuss the report’s findings at the fall 2010 meeting of the Washington Defense Partnership (an outcome of the Prosperity Partnership’s Military Cluster Development Strategy). If you’re interested in attending the meeting, contact Olivia Robinson at orobinson@psrc.org.

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2 Responses to What’s Red, White, and Blue—and Green All Over?

  1. Not so fast. While military spending has had quite useful spin-offs in medicine and some advanced technology, the spending discussed in this article does little to increase productivity. In this context, it is informative to consider that the collapse in the Soviet empire is often attributed to excessive military spending at the expense of basic research and provision of basic goods and services.

    The article skirts this issue by its focus on the disproportionate amount of military spending in Washington state. This may be good for the local economy but only at the expense of the larger national economy.

    Second, the article assume a constant or increasing amount of military spending. This assumption is highly questionable. In the face of its debt burden, the new conservative government in England has proposed a 20% cut in military spending. The only difference between the English situation and our own is that in England, two of the three major parties are willing to work together to address a national problem. I suspect that the US economy will remain underperforming as a result of the financial meltdown of 2007 (well before Obama). Eventually, politicians here might realize that a continued stalemate does neither party good and will, therefore, agree to work together to realign budget priorities.

    Bottom line: dependence on military spending to advance the local economy is far from the sure thing suggested in the “Prosperity blog.”

  2. sambrose says:

    A few points of clarification:

    First, Washington does not receive a disproportionately high share of U.S. military contract spending. As the blog post indicates, Washington actually receives less contract spending than would be expected given its size and level of military personnel.

    Second, whether overall U.S. military spending rises, falls, or remains flat, there are opportunities for Washington to increase its share of total spending, as well as to pursue high value-added areas of contracting activity.

    Third, this blog is in no way intended to promote regional dependence upon military spending. Rather, it is intended to highlight the important role that military activities already play in our economy and the potential to further leverage federal dollars to support a broad range of our other important industries (from food services to IT).

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