Military’s bootprint in
region is a big one
Report sees increased
spending by Pentagon
By Jeanette Steele, UNION-TRIBUNE STAFF WRITER
Thursday, April 22, 2010 at 12:04 a.m.
![The Sky Warrior aircraft is part of General Atomics Aeronautical
Systems’ unmanned-aerial-vehicle program, which also includes the
Predator.](http://media.signonsandiego.com/img/photos/2010/04/22/skywarrior_t352.jpg?980751187beea6fc26a3a9e93795d379f58af1c4)
/ 2009
file photo / Union-Tribune
The Sky Warrior aircraft
is part of General Atomics Aeronautical Systems’
unmanned-aerial-vehicle program, which also includes the Predator.
What the movies are to Hollywood and finance is
to Wall Street, so the military is to this county, according to a
report released Wednesday by the San Diego Military Advisory Council.
Pentagon
spending in the region swelled in 2008, thanks mainly to a $1.7 billion
boost in purchases of goods and services, and more ships and personnel
being positioned in the West.
The boom, expected to last for at
least a few years, might make the Greater San Diego area the top
destination for U.S. military dollars, a title held in the past by the
Norfolk, Va., metropolitan zone.
The council’s report documents
what looks like a rising tide of Defense Department spending in the
local region.
“There’s a big footprint for (the) Navy here. ... I
see it getting bigger,” said Rear Adm. William French, commander of Navy
Region Southwest. “The growth is coming. The Pacific Rim is where the
focus is,” including China and North Korea.
In 2008, the most
recent year for finalized data, the Pentagon wrote checks totaling
nearly $16.2 billion in San Diego County and directly employed 136,729
people, or 9.7 percent of the region’s work force, according to the
report.
That outlay is up from roughly $14.2 billion in 2007 and
about $13 billion in 2006.
If the ripple effect is considered —
such as spending by companies that win government contracts — the impact
on the county’s economy amounts to $26.5 billion in output and 328,000
jobs supported by Pentagon dollars.
Projections for 2009 and 2010
are even higher, a fairly safe bet given San Diego’s big slice of
recently allocated federal stimulus funds. A large chunk of that money
is a $563 million earmark for a new hospital at Camp Pendleton.
Leaders
of the nonprofit advisory council, a booster group for the military,
said the Pentagon’s financial value to this region doesn’t get enough
headlines and airtime. So they commissioned the report, which was
prepared by graduate students at the University of California San Diego.
“The
military’s economic impact in San Diego has been a leveling force, a
stabilizing force, that has prevented rapid fluctuations in the region,”
said council President Tony Nufer, a senior manager at CSC, an
international computer-services company with government contracts.
“It’s
provided a stable employment base for a highly educated and highly
technically skilled group of people that prevents the ‘hourglass effect’
of the high earners and low earners, which can be present in periods of
recession,” he said.
A big reason for the recent rise in spending
is a massive campaign of construction at Navy and Marine Corps
installations around the county. All told, the military controls 28
percent of the region’s real estate.
There are new barracks to
house troops, upgraded runways to support more aircraft and new piers
for additional ships being designated for San Diego.
The council’s
report predicts that local Pentagon-related construction peaked in
fiscal 2009 at $1.26 billion, though it will remain higher than in past
years through at least 2011.
Non-hard-hat spending also is
considerable. Seven of the top 10 recipients of defense contracts in San
Diego County are technology or energy companies.
The largest is
Northrop Grumman, maker of the unmanned Global Hawk aircraft, with $1.13
billion in contracts. Science and engineering contractor SAIC, which
moved its headquarters from San Diego to Virginia last year, had work
totaling $1.06 billion.
Looking at the long-term picture, Navy
officials said any future decline in Pentagon contracts will be tempered
somewhat by the year-in, year-out salaries paid to the military
personnel stationed in this region. The compensation pattern is expected
to remain relatively stable.
Plans by the Navy and Marine Corps
to station more “boats and boots” here will provide another buffer
against the boom-and-bust cycle of military spending.
More than
4,000 additional Marines are expected to be stationed in the county as
part of the Corps’ “Grow the Force” expansion. The Navy is slated to add
roughly 7,200 sailors in the next few years.
Through 2012, San
Diego Bay will become home to 21 ships that are newly deployed or
redeployed to this area, according to the council’s report.
The
latest vessels are the aircraft carrier Carl Vinson, which arrived this
month. The Freedom, the first of a new class of Littoral Combat Ships,
is scheduled to reach the bay Friday morning.
There’s a potential
dark cloud in the economic forecast — the possibility that the Pacific
Northwest will keep the San Diego-based aircraft carrier Nimitz after
the ship heads there in coming months for prolonged maintenance, taking
with it more than $400 million in annual spending.
If ship
assignments and other sources of revenue remain high, the Greater San
Diego area could move into the Pentagon’s top spending slot. That’s the
forecast by people such as National University economist Kelly
Cunningham, whose research on 2007 data placed the county third after
Norfolk and the Los Angeles-Orange counties region.
“We could very
well be higher,” Cunningham said, though he added that general
manufacturing is still probably the county’s top job sector, followed by
the defense, biotech and technology industries and hospitality
businesses.