Defense spending continues to be an integral part of the San Diego, CA region’s economy, with one out of every four jobs in the region tied to the defense industry.
San Diego County will receive an estimated $20.6 billion of defense spending during the fiscal year 2012, which is equivalent to more than $6,500 for each of the County’s residents, according to the San Diego Military Economic Impact Study.
The military sector is responsible for an estimated 25 percent of all jobs in San Diego, or 311,000 of the region’s total jobs in 2012, which includes ancillary jobs created by defense spending. Overall, defense-related spending will generate $32 billion of gross regional product (GRP) for San Diego County in fiscal year 2012.
San Diego’s maritime industry continues to thrive, employing nearly 46,000 people, with a fiscal impact on the region of more than $14 billion according to the Maritime Industry Report. Employment in the maritime industry is expected to grow by 12 percent from 2011 to 2020 the report stated.
The number of Navy personnel based in San Diego is projected to increase in fiscal year 2013 due to the return of a second aircraft carrier, the USS Ronald Reagan. The Navy’s presence could continue to grow in San Diego with the shift in strategic defense focus to the Asia Pacific region and the possible addition of a third aircraft carrier.
However, San Diego will not be immune to defense cuts. The possibility of automatic spending cuts through sequestration could cost the San Diego region 31,000 jobs, according to the San Diego Military Advisory Council. The most threatened areas include the addition of a third aircraft carrier, an aircraft maintenance facility at North Island Naval Air Station, the Marine Corps Recruit Depot, Space and Naval Warfare Systems Command, and shipbuilding and repair jobs, according to an analysis by San Diego business groups.
For the shipbuilding and repair sectors in San Diego, private shipyards and maintenance contracts in San Diego may be particularly hard hit, said Derry Pence, chief executive of the Port of San Diego Ship Repair Association, in the San Diego Union Tribune. “Most of the money we spend is on surface ships. They are at the bottom of the pecking order. When they get to parceling out the dollars, carriers will get as much as they can because of their strategic importance.” For San Diego, “that’s a loss to the industrial base that cannot be restored.”
While San Diego defense contractors will be affected by a declining military budget, they could benefit from the military emphasis on unmanned vehicles and equipment, cyber security, energy efficiency, and new technologies, according to the San Diego Military Economic Impact Study.