Described as paradise to those who have visited it, Hawaii is also strategically located in the Pacific Ocean, and plays a crucial role in addressing potential threats in the Asia-Pacific region. The U.S. military is thus a crucial part of the state’s community. Hawaii is also one of the few states that is home to all branches of the military including the Army, Navy, Marines, Air Force, Coast Guard, Space Force and National Guard.
Just this month, the first Space Force Guardians were sworn in and have been assigned to the Air Force Research Laboratory on Maui. The officers will continue their work with Detachment 15 on Haleakala Summit, where they work on US space domain awareness.
Defense Sector in Hawaii Important Component
After tourism the defense is the second largest sector of Hawaii’s economy, and a total of $7.5 billion of total defense spending is in the Aloha State. Defense spending also accounted for 7.7% of the state’s GDP in 2018, while more than 70,000 residents at the time were employed in the defense sector – including more than 41,000 active duty military personnel. Hawaii ranked number two in state defense spending just behind the Commonwealth of Virginia.
Given those figures, it isn’t surprising that Hawaii has sought to form a Defense Industry “Alliance” that would support local businesses, and give those enterprises the ability to compete for lucrative defense contracts. Additionally, the alliance would support efforts to utilize military money to grow other sectors of Hawaii’s economy.
The plan is based on recent analysis by the Department of Business, Economic Development and Tourism (DBEDT) and was funded by a grand from the Office of Local Defense Community Cooperation.
“Hawaii’s military defense sector continues to remain strong and is helping to stabilize our economy during this pandemic,” said Mike McCartney, director of DBEDT, via a statement. “As the second largest sector of the state’s economy, military procurement spending has generated $4.5 billion in economic impact this year, with $2.3 billion in federal contracts throughout the state, helping to sustain more than 30,000 jobs statewide. Our Hawaii Defense Economy project SWOT Analysis Report and Action Plan allows us to identify and determine initiatives that will help us to diversify and strengthen our state’s economic resiliency, which is now more important than ever.”
Establishing a DoD Industry Specific Organization in Hawaii
DBEDT’s action plan has called for the establishing of a Hawaii-focused Department of Defense (DoD) industry specific organization that would be designed to identify current and future industry challenges, and to develop solutions.
The alliance would include representation from three industry focus areas that include Engineering Services, which remains important due to the very large annual defense spending in Hawaii and includes system repair; maintenance and facility construction; IT Services, which outside of the defense economy also support jobs across a multiple of industries in the state; and Ship Repair and building, as Pearl Harbor Naval Shipyard (PHNSY) is the nation’s largest, most comprehensive fleet repair and maintenance facility between the U.S. West Coast and the Far East.
Pearl Harbor currently is the largest industrial employer in the state and has a civilian workforce of more than 5,000 as well as more than 500 active-duty Navy personnel.
Strengths and Weaknesses of DoD Dependency
The DBEDT study identified key strengths and opportunities, while it also spelled out some weaknesses and threats facing the state. On the positive, the financial health and defense market outlook were seen as strong, and expected to continue to present new opportunities in the future.
However, market flexibility remained an issue, while there remains DoD dependency in the state, which indicated a potential threat should there be a downturn in defense spending in America’s 50th state.
The goal of the alliance would be to bring together representatives from industries and businesses that work closely with the military, and are also most invested in defense spending. It would also be charged with finding new ways to expand contracting opportunities for local small businesses. Likewise, while state officials would help the new group obtain federal grants, the long term goal is to stand back, and instead allow it to be operated by a contractor who would have experience dealing with the sector partnerships to put companies and the DoD together.
The Hawaii Defense Economy (HDE) Alliance also announced that would also provide a program management function, as well as a working group concept to support the success of other complimentary recommendations identified in the action plan. These would include a workforce/curriculum development; a Hawaii-based DoD small business mentorship and support program; and regulatory/legislative advocacy to improve the business climate in the state.
