The defense industry post-9/11 saw the most spending since World War II, peaking at $644 billion dollars in 2009. And while much focus is centered upon the Washington, D.C. metro area, defense spending has nationwide impact.
Indiana experienced the growth from the defense boom by about double the national average from 2001-2008. Since then, Indiana has received $43 billion in defense contracts and seen the number of contractors working with the contracts grow from 362 to over 1,100. The Indiana defense industry currently employs approximately 18,200, with another 20,000 sub-contractors and suppliers in tow.
However trouble looms on the horizon for the defense industry nationwide. With sequestration just months away and states across the country anticipating cuts, some are preparing for a more extreme blow than others, with less outside industry to cushion the blow. This is felt especially by those who have experienced the more significant growths and expansions and therefore stand to lose more. This is the case in Indiana. Come January 2nd, 2013, there will be a series of cuts totaling $1.2 trillion; this will come out to $55 billion a year over the next nine years. This is in addition to the $487 billion to be cut over the next ten years. The immediate impact will total an estimated 15% of the defense budget according to the Bipartisan Policy Centre.
This is not the first time Indiana defense contractors have felt the squeeze of tight times. From 2008-2010, they saw a 50 percent drop in military contracts received. As of right now, it is estimated that Indiana could lose up to $659 million annually and 1000’s of jobs. A prime example of the potential disaster is Tristar Engineering. Specializing in engineering support for weapons systems, Tristar Engineering fetches a contract value of about $51 million, but fears that they may lose about $50 million in military sales. But that is not to say that there is not hope.
With the Iraq war at an end and the onset of budget cuts, there will be less of a demand for research and development, technological advances and producing new weapons systems. However, the need to supply troops and field equipment for ongoing missions remains. For new contracts being issued, some states are refocusing efforts on keeping the winning bid close to home.
Just this month the Dayton Area Defense Contractors Association, or DaytonDefense, located in Dayton, Ohio, launched a new program to educate local businesses on the federal contracting process. The group hopes to help local companies win more contracts for work and materials for Wright-Patterson Air Force Base, the Air Force Material Command and the Air Force Research Laboratory.
DaytonDefense noted that the military often has unmet contracting needs, or instances of just one bid or a foreign bidder. It launched a social media and computer search technology that matches manufacturers with Department of Defense needs. It’s just one example of how a local community is seeking to retain defense industry business, even in the midst of a shrinking market. By keeping more defense dollars local, and ensuring a relevant manufacturer to meet every need, DaytonDefense is offering one potentially successful strategy for surviving a shrinking defense contracting market.
Troy is an Army brat and the father of combat medic. He is also a retired Infantry Senior NCO with multiple combat tours, in addition to several stateside deployments. Troy retired from the Army not long after switching careers from the Information Technology Consulting industry to becoming a Contractor for the US Army. He serves on several task-forces and enjoys working with soldiers every day. Troy is also a recognized and multiple-award winning military blogger who writes at www.bouhammer.com, and a familiar person in many social media circles.
