San Diego Military Economic Impact Study

Transcription

1 San Diego Military Economic Impact Study June 2012 Commissioned by: > Fermanian Business and Economic Institute i

2 Copies of this report may be obtained by visiting the San Diego Military Advisory Council website at: Copyright 2012 by the San Diego Military Advisory Council. All rights reserved. The material in this report includes forecasts and projections and may, in some instances, be judgmental in nature. PLNU, The Fermanian Business & Economic Institute, and the San Diego Military Advisory Council disclaim any and all liability from the use of this material. Publication or distribution of any portion of this document is prohibited without the express approval of the San Diego Military Advisory Council. ii

3 About the San Diego Military Advisory Council (SDMAC) Mission SDMAC is a nonprofit mutual benefit corporation, whose mission is to support, promote, and represent the common business and other interests of the military, their quality of life issues, and the defense industry community in the San Diego area. Membership SDMAC s current membership is comprised of 135 corporate members and over 300 individual members across the San Diego region. For general information and membership details, go to iii

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5 LETTER FROM THE SDMAC PRESIDENT June 2012 Dear SDMAC Members and Supporters: The San Diego Military Advisory Council (SDMAC) is delighted to present the 2012 San Diego Military Economic Impact Study (SDMEIS). San Diego is home to the largest concentration of military in the world. It is homeport to over 60 percent of the ships of the U.S. Pacific Fleet and over one-third of the combat power of the U.S. Marine Corps. There are over 100,000 active-duty Navy and Marine Corps personnel assigned to the ships and bases in the San Diego region. The strategic value of the San Diego region cannot be overstated. The unique relationship that exists between the military and the San Diego region exists nowhere else in the country. The Department of Defense (DoD) generates a significant economic impact on the San Diego region that far outpaces other industries in the area. In 2008, SDMAC undertook the effort to document the economic impact that the military has on the San Diego region. This was done utilizing quantitative economic data available from various agencies of the Federal Government, and applying processes and models that are recognized and accredited by the economic community. Earlier this year, SDMAC selected the Fermanian Business & Economic Institute of Point Loma Nazarene University to conduct the next two SDMAC San Diego Military Economic Impact Studies. The following 2012 SDMEIS reflects the most recent data available. The study also provides an initial projection of the impact of DoD budget trends on the region using information available from the proposed 2013 Defense Budget, information from the Program Objectives Memorandum (POM), and the Five Year Defense Plan (FYDP). The Budget Control Act of 2011 imposed automatic cuts to the 2013 Budget which take effect January 2, 2013 through a process called sequestration as a consequence of the inability of Congress to reach an agreement on reductions to the Federal deficit. This would impose devastating effects on the U.S. Military. I would like to extend our deepest appreciation to: Rear Admiral Dixon Smith, USN, Commander Navy Region Southwest; Brigadier General Vincent Coglianese, USMC, Commanding General Marine Corps Installations West; Rear Admiral Patrick Brady, USN, Commander SPAWAR; Rear Admiral Forrest Faison III, MC, USN, Commander Navy Medicine West; and, Brigadier General Daniel Yoo, USMC, Commanding General Marine Corps Recruit Depot San Diego. We thank them for their leadership, insight, and contributions to this Study. Sincerely James A. Johnson RADM MC USN RET SDMAC President 2012 v

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7 LETTER TO THE READER June 2012 Dear SDMAC Members and Supporters, Point Loma Nazarene University, through its Fermanian Business & Economic Institute, is pleased to present its research and analysis of the military s economic impact upon the San Diego Region. This report builds upon the previous research done by the FBEI for SDMAC regarding the significant economic role of the military in the San Diego Region. With the military s role as a key economic and employment force in the San Diego Region, strategic research and action are essential for the future vitality of both the military and the region. With the presence of more than 100,000 active-duty Navy and Marine Corp personnel, combined with the homeport activity for a majority of the U.S. Pacific Fleet, the military represents a significant influence for current and future community planning. This study presents our findings regarding the economic role the military plays in the San Diego Region and its importance in continuing the important mutual relationship between the military and the region. Every effort has been made to carefully collect, analyze, and present our research in a format that is straight forward and accessible for decision-making purposes in our process of actionable economics. On behalf of PLNU s Fermanian Business & Economic Institute, Chief Economist, Dr. Lynn Reaser, and Executive Director, Dr. Randy Ataide, we are pleased to present to the San Diego Military Advisory Council this report for your consideration and use. Positively, Bob Brower, Ph.D. President vii

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9 DEDICATION The SDMAC Military Economic Impact Study is dedicated to the memory of John Nersesian, SDMAC President 2009 and long term SDMAC Board Member who left us on May 29, It was John s vision that recognized the need to quantify and document the military s many contributions to the San Diego region, and it was his initiative, drive and encouragement that were the forces that resulted in the San Diego Military Advisory Council producing the annual Military Economic Impact Study. John was a patriot and a great supporter of the military and their families. His contributions to the military s mission and improving the quality of life for the military and their families in the San Diego area were truly significant, and are his legacy. He will be sorely missed. John Nersesian SDMAC President 2009 (Nov May 2012) ix

10 ACKNOWLEDGEMENTS SDMAC would like to acknowledge the following individuals who were key players in the preparation of this study: Military Jason Ashman Performance Management Navy Region Southwest N56 Ron Ronquillo Business Anaylst Navy Region Southwest N56 Jerry Avila Business Anaylst Navy Region Southwest N56 Chris Haley External Liaison Navy Region Southwest N00L Steven Davis Corporate Communications and PAO SPAWAR Bernie Lindsey Utilities and Energy NAVFAC Southwest Maj. Erin Mackin Public Affairs MCI West Mike Wiener Public Affairs Naval Medical Center San Diego Janice Hagar Public Affairs MCRD Jeremiah Glover Environmental Programs NAVFAC Southwest San Diego Military Advisory Council (SDMAC) 2012 Military Economic Impact Study (SDMEIS) Oversight Group Terry Magee, CAPT, USN (Ret.) SDMAC President 2008 Board Member and Co-Chair of SDMEIS Oversight Group Annette Peck, J.D. SDMAC Treasurer Board Member Fermanian Business & Economic Institute (FBEI) Staff Randy M. Ataide, J.D. Lynn Reaser, Ph.D. Cathy L. Gallagher Executive Director Chief Economist Director John Nersesian SDMAC President 2009 Board Member and Co-Chair of SDMEIS Oversight Group Larry Blumberg, CAPT, USN (Ret.) SDMAC Executive Director Emily Gallentine Manager Dieter Mauerman Research Assistant Special thanks to the entire FBEI student staff for their assistance. > Leah Crane > Billy Kailamai > Tim Marcacci > Kristen Raney The Fermanian Business & Economic Institute (FBEI) is a strategic unit of Point Loma Nazarene University (PLNU) providing expert business and economic commentary and speeches, as well as presentations, roundtables, consulting services, research projects, and events to our students, alumni, and the business community. x

11 SPONSORS SDMAC would like to thank the following companies and organizations for their generous support in helping to make this 2012 San Diego Military Economic Impact Study possible. xi

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13 TABLE OF CONTENTS INDEX OF EXHIBITS LIST OF ACRONYMS xiv xv EXECUTIVE SUMMARY 1 STUDY PURPOSE AND SCOPE 3 SECTION I: THE ECONOMIC IMPACT 5 The Military s Footprint in San Diego 5 Charting the Channels of Defense Spending in San Diego 7 Tracing the Ripple Effects of Defense Dollars 12 A Substantial Financial Impact to San Diego Region in Budget Cuts in Defense Spending Forecast and San Diego in Conclusions 21 Methodology 21 SECTION II: SOCIOECONOMIC IMPACT 25 Environmental Stewardship 25 Energy Conservation & Alternative Energy Development 28 Secondary Economic Impacts to the San Diego Economies 29 Engagement with Local Community 33 Conclusion 35 SECTION III: NAVY AND MARINE CORPS INSTALLATIONS 37 Navy Region Southwest 38 Naval Base Coronado 39 Naval Base Point Loma 40 Naval Base San Diego 41 Marine Corps Installations West 42 Marine Corps Base Camp Pendleton 43 Marine Corps Air Station Camp Pendleton 44 Marine Corps Air Station Miramar 45 Marine Corps Recruit Depot San Diego 46 Conclusion 47 xiii

14 INDEX OF EXHIBITS Exhibit 1 Military Funds Flow to San Diego through Different Channels 5 Exhibit 2 Military Dispersed By Installation 6 Exhibit 3 Military Reserves Are Strong in San Diego Region 7 Exhibit 4 San Diego Veterans Come from Different Wars 7 Exhibit 5 Defense Dollars Feed Directly into San Diego Region s Economy 7 Exhibit 6 Military Has Large Payroll in San Diego Area 8 Exhibit 7 Benefit Payments Help Retired San Diego Military and Veterans 8 Exhibit 8 Aircraft, Engineering, and Shipbuilding Lead San Diego s Procurement Contracting 9 Exhibit 9 Defense Contracts Buttress San Diego Firms 9 Exhibit 10 Procurement Contracts Disbursed over Time 10 Exhibit 11 Various San Diego Firms Benefit from Military s Credit Card Purchases 11 Exhibit 12 U.S. Marine Corps Graduates Drive Tourism Dollars 11 Exhibit 13 Defense Spending Creates Stability in San Diego s Job Market 12 Exhibit 14 Defense Sector Is Prime Income Generator for San Diego 12 Exhibit 15 Military Makes Large Contribution to San Diego s Gross Regional Product 13 Exhibit 16 Defense Spending Plays Key Role in San Diego 13 Exhibit 17 The Military Gives San Diego Needed Support in Exhibit 18 Military Responsible for 25% of All San Diego Jobs 14 Exhibit 19 Defense Creates Jobs in Many San Diego Industries 15 Exhibit 20 Jobless Rate Would Be Lower if Military Were Included 15 Exhibit 21 National Security Spending to Decline 16 Exhibit 22 Sequestration Would Drain U.S. Defense Spending 16 Exhibit 23 Military Spending to Hold Steady In San Diego 18 Exhibit 24 Military Employment to Remain High in San Diego 18 Exhibit 25 USS Ronald Reagan to Boost Navy Ship Crew Count in Exhibit 26 Previous Contracts Sustain Procurement Spending 20 xiv

15 LIST OF ACRONYMS ACSP C&D CALFIRE CBO CFFR CNRSW CRADA DECA DMDC DoD DoN EMS FBEI FPDS FEDFIRE FIRST FRCSW GPC LEED MAG MAW MCAS MCB MCRD MCI MHPI NAB NASNI NAVSUP NBC NBPL NBSD Audubon Cooperative Sanctuary Program Construction and Demolition California Department of Forestry and Fire Protection Congressional Budget Office Consolidated Federal Funds Report Commander, Navy Region Southwest Cooperative Research and Development Agreement Defense Commissary Agency Defense Management Data Center Department of Defense Department of Navy Environmental Management System Fermanian Business & Economic Institute Federal Procurement Data System - Next Generation San Diego Federal and Metro Fire and Emergency Services For Inspiration and Recognition of Science and Technology Fleet Readiness Command Southwest Government Purchase Card Leadership in Energy and Environmental Design Marine Aircraft Group Marine Air Wing Marine Corps Air Station Marine Corps Base Marine Corps Recruit Depot Marine Corps Installations Military Housing Privatization Initiative Naval Amphibious Base Naval Air Station North Island Naval Supply Systems Command Naval Base Coronado Naval Base Point Loma Naval Base San Diego xv

16 NOSC NEX NMCSD NRSW OMB RDTA&E SCEP SDPTA SPAWAR STEM STEP TSC VA Naval Operations Support Center Naval Exchange Service Command Naval Medical Center San Diego Navy Region Southwest Office of Management and Budget Research, Development, Test, Acquisition, and Evaluation Student Career Employment Program San Diego Port Tenants Association Space and Naval Warfare Systems Command Science, Technology, Engineering, and Mathematics Student Temporary Employment Program Training Support Center Department of Veterans Affairs xvi

17 EXECUTIVE SUMMARY San Diego s military community and defense cluster continue to represent an integral part of the region s economy. This report documents the current impact on jobs, income, and output and explores the future role of national security spending in an era of greater fiscal austerity. > An estimated total of $20.6 billion of direct spending related to defense will flow into San Diego County during fiscal year 2012, an amount equal to more than $6,500 for each of the County s residents. > The military sector is responsible for 311,000 of the region s total jobs in 2012 after accounting for all of the ripple effects of defense spending. This represents one out of every four jobs in San Diego s economy. > The jobs created as a result of defense spending span a wide range, including engineering, food services, construction, shipbuilding, health care, real estate, financial services, and research. > San Diego s unemployment rate would be more than one-half percentage point lower than the officially reported number if Navy and Marine Corps personnel were included. > Defense-related activities and spending will generate $32 billion of gross regional product (GRP) for San Diego County in fiscal year This is more than the total economic output estimated for Colorado Springs, Colorado, or El Paso, Texas. > Dollars linked to national security enter San Diego through three primary channels: wages and benefits for active duty and civilian workers; benefits for retirees and veterans; and spending on contracts, grants, small purchases, and tourism from visiting family members and friends of the military. > Each defense-related dollar entering San Diego generates additional jobs, income, and output as orders feed through the supply chain and workers employed throughout that chain spend some of their resulting incomes on the region s goods and services. > For every $1,000 of output or GRP created directly as a result of defense-linked spending, another $550 is generated due to the ripple effects of that spending. For every 1,000 jobs created directly by defense expenditures, another 640 positions are made available due to multiplier effects. > The winding down of the U.S. military commitment in Iraq and Afghanistan together with budget pressures indicate that national security spending has peaked at least for the near-term. The Administration s Budget over the last few years has included Overseas Contingency Operations (OCO). For FY 2013 the budget calls for national security spending to equal $640 billion compared with an estimated $670 billion in fiscal year 2012 and $711 billion in fiscal year

18 > Failure of Congress to find ways to cut the budget deficit over the decade could trigger automatic spending cuts or sequestration as soon as January Such cuts would pare national security spending another $60 billion from projected levels for > San Diego will not be immune to the planned cutbacks in troop levels and spending by the Department of Defense. The Marine Corps is expected to see its size gradually reduced over the next five years primarily through attrition and a reduction in recruiting. > The number of Navy personnel based in San Diego is projected to increase in fiscal year 2013 with the return of a second aircraft carrier, the USS Ronald Reagan. The shift in strategic focus to the Asia Pacific region will continue to support the Navy s presence in San Diego as with the potential addition of a third aircraft carrier. > Various San Diego defense contractors will face a shrinking defense budget but could benefit from the emphasis on unmanned vehicles and equipment, cyber security, energy efficiency, and new technologies. The Military Gives San Diego Needed Support in 2012 FY estimate* Military Responsible for 25% of All San Diego Jobs Share of total, FY 2012 estimate Jobs 311,000 Jobs Supported by Defense Spending 25% Income $17.7 billion Gross Regional Product $31.9 billion Other 75% *Includes all ripple or multiplier effects Source: FBEI Source: FBEI Source: FBEI 18 2

19 STUDY PURPOSE AND SCOPE As San Diego strives to set its economy on a stronger track and define its future, two major issues must be considered. First, what is the current role of the military and defense spending in the region? Second, in view of current and anticipated budget constraints for DoD and changes in national defense strategy, what will be the implications for San Diego going forward? This report seeks to address these important topics. Section I of this study analyzes in detail the dynamics of the defense cluster in the San Diego region. It begins with a description of the military s footprint: the troops and supporting personnel based here; defense contracts, grants, and spending benefiting San Diego firms; and various benefit and other payments accruing to veterans and retired military and civilian workers. It then maps all of the various ripple effects on the broader economy as defense dollars feed through the supply chain and support household spending on a wide variety of goods and services. The military s total impact in 2012 is presented in terms of the impact on jobs, income, and gross regional product (GRP) along with comparisons to 2010 and The budget outlook for fiscal year 2013 is then explored, including the possibility of large automatic spending cuts under sequestration. The implications for San Diego in fiscal 2013 under the most likely path for defense spending are then discussed. The section concludes with a longer term assessment of the role of the military in the region s economy. Section II of the study looks at the more qualitative dimensions of the military s presence and defense spending in San Diego. It examines the military s impact on the environment and conservation, work force development, and community support through volunteer efforts and partnerships with schools and charitable organizations. Section III of the study provides a comprehensive description of the principal Navy and Marine Corps installations located throughout the region to provide a clear picture of the operations of this key San Diego cluster. 19 3

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21 SECTION 1: THE ECONOMIC IMPACT The Military s Footprint in San Diego The military and defense spending have long played a dominant role in the San Diego region. Even as the economy has diversified into other areas, including life sciences, telecommunications, alternative energy, and health care, national security comprises a significant part of the region. Funds devoted to fulfilling the nation s security mission flow into the San Diego area through three primary channels: wages and salaries to support the Navy and Marine Corps personnel stationed in the region; spending on materials, equipment, services, and research to both support the local bases and U.S. defense operations worldwide; and retirement benefits to individuals who have devoted significant parts of their lifetimes to serving the military. In fiscal year 2012 (1 Oct Sept. 2012), an estimated $20.6 billion will come to San Diego to support these three principal channels. This amount equals more than $6,500 for every San Diego resident. Nearly half (48%) of the 20.6 billion represent outlays for various defense contracts and other types of spending, while 39% represents the payrolls of active duty military and civilian workers connected to local military operations. The remaining 13% will go for the payment of retirement and other benefits accruing to veterans, retired military, and retired civilian Department of Defense employees. (See Exhibit 1.) Exhibit 1 Military Funds Flow to San Diego through Different Channels Billions of dollars, FY 2012 estimate Total= $20.6 Billion Retirement and Benefits 13% Wages and Salaries 39% Procurement and Spending 48% Source: FBEI Source: CNRSW; FBEI 5

22 San Diego s Military Face The People Exhibit 2 Approximately 100,000 active duty and 30,000 full-time civilian workers connected to the military currently work in various locations throughout the San Diego region. (See Exhibit 2.) Close to 51,000 of these are members of the U.S. Navy, which represents about one in six members of the nation s total Naval force. The largest share of the region s Navy (over 20,000) are stationed at Naval Base San Diego. Military Dispersed By Installation Number of Employees, FY 2012* Installation Civilian Marine Corps Navy Total MCAS MIRAMAR 453 9, ,376 MCB & MCAS CAMP PENDLETON ,620 3,949 47,319 MCRD SAN DIEGO 725 6, ,202 NAVMEDCEN SAN DIEGO 2, ,561 5,884 NB CORONADO (IMPERIAL BEACH) NB CORONADO (NAB CORONADO) ,280 6,061 NB CORONADO (NASNI and SCI) 4, ,060 16,263 NB POINT LOMA (NMAWC) 246 1,955 2,201 NB POINT LOMA (OTC) ,168 NB POINT LOMA 7,954 1,761 9,715 NB SAN DIEGO 2, ,040 22,742 NB SAN DIEGO (BROADWAY) NWS SEAL BEACH DET FALLBROOK NOSC SAN DIEGO OTHER, INCLUDING VA 2, ,658 Total 25,682 56,990 50, ,323 *Reserves not included Source: CNRSW; FBEI Marines total close to 57,000 in San Diego, which includes the average number of recruits located here during the year (approximately 4,000 in fiscal year 2012). Approximately one out of every four individuals serving in the Marine Corps is based in San Diego County. Camp Pendleton alone houses nearly 41,000 Marines. An additional 26,000 civilian employees on the payrolls of the Department of Defense (DoD) or Department of Veterans Affairs (VA) support the operations of active duty and retired personnel throughout the region. 6 Defense dollars support approximately 8,200 members of the Armed Services Reserves who reside in San Diego County. These individuals take part in various training exercises throughout the year and support crisis situations that may develop either in the U.S. or abroad. While nearly one-third of San Diego residents serving in the Reserves are affiliated with the Navy, sizable numbers also are aligned with the Marine Corps, Army, and Air Force. (See Exhibit 3.)

23 San Diego s defense face is also defined, often poignantly, by the more than 220,000 veterans who reside here. These individuals have served in various wars, including World War II, the Korean War, the Vietnam War, and the conflicts in Iraq and Afghanistan. (See Exhibit 4.) Exhibit 3 Military Reserves Are Strong in San Diego Region Percent of total, FY 2011 Exhibit 4 San Diego Veterans Come from Different Wars Percent of total Air National Guard 4% Navy 31% Air Force 7% Army Reserve 16% Post 9/11 25% WWII 8% Korean War 10% Marine Corps 23% Army National Guard 19% First Gulf War 23% Vietnam War 34% Source: FBEI Source: CNRSW; FBEI Source: U.S. Census Bureau; FBEI Source: U.S. Census Bureau; FBEI Charting the Channels of Defense Spending in San Diego Each of the three principal ways in which defense-related dollars (direct payrolls; contracts and other spending; and benefit payments) enter the region s economy has distinct characteristics and impacts the economy in different ways. Because some of these channels have significant tributaries, the dollars entering the region can be further delineated into several distinct streams of influence. (See Exhibit 5.) Exhibit 5 Defense Dollars Feed Directly into San Diego Region s Economy Millions of dollars, Fiscal Years e 2013f Procurement Outlays $8,278 $9,224 $9,736 $9,572 Active Duty Salaries $6,454 $6,563 $6,269 $6,458 Civilian Salaries $1,869 $1,849 $1,888 $1,845 Retirement and Veteran Benefits $2,296 $2,525 $2,614 $2,723 Government Purchase Card $100 $87 $91 $90 Grants $40.8 $39.8 $38.4 $36.2 Tourism (MCRD) $13.9 $14.2 $14.3 $14.0 Total $19,053 $20,302 $20,650 $20,739 e=estimate; f=forecast Source: CNRSW; FBEI 7

24 Active Duty and Civilian Salaries The total payroll of Navy and Marine Corps personnel (including recruits) will total about $6.2 billion in fiscal 2012, with another $1.9 billion going to civilian workers. (See Exhibit 6.) While San Diego s military operations support a wide range of job categories and skill sets, the average pay for Navy and Marine Corps employees is about $59,000 (including benefits). For civilian workers, which include large numbers of scientists and engineers, salaries average about $75,000 per year. Retirement and Veterans Benefits Approximately $2.6 billion will benefit various San Diego residents in fiscal year 2012 who are retired military workers, retired DoD civilian employees, and veterans. (See Exhibit 7.) The Department of Defense funds the first two groups, while the Department of Veterans Affairs funds the latter. These funds provide a vital base supporting income and spending in the region. In addition, close to $420 million in government insured and guaranteed loans are expected to be provided to veterans in 2012, providing a vital support for the region s beleaguered real estate and housing sector. Exhibit 6 Exhibit Military Has Large Payroll in San Diego Area Billions of dollars, FY 2012 estimate Benefit Payments Help Retired San Diego Military and Veterans Billions of dollars, FY 2012 estimate Marines & Recruits Navy Civilian (DoD & VA) 0 Retired Military Veterans Retired Civilian Source: CFFR; FBEI Source: CFFR; OMB; FBEI Source: CNRSW; CFFR; FBEI 8

25 San Diego has a large cluster of firms who benefit from contracts with various branches of the military. Leading companies and industries involved with such contracts include aircraft, engineering, shipbuilding, construction, R&D, communications equipment, and electronics. (See Exhibits 8 and 9.) An estimated $9.7 billion will flow into San Diego County during fiscal year 2012 from current and past contracts. Exhibit 8 Aircraft, Engineering, and Shipbuilding Lead San Diego s Procurement Contracting Billions of dollars, FY 2011 Aircraft Engineering Shipbuilding Construction R&D Technical Services Communications Equipment Aircraft Parts Electronic Components Source: DMDC; FBEI Exhibit 9 Defense Contracts Buttress San Diego Firms Top 10 recipients, FY 2011 Company Name Dollars General Atomics Aeronautical Systems, Inc. $1,629,631,209 National Steel & Shipbuilding $964,512,995 Science Applications International Corporation $922,165,691 Northrup Grumman Corporation $758,389,180 Northrup Grumman Systems Corporation $681,788,162 BAE Systems San Diego Ship Repair Incorporated $364,165,802 General Atomics $261,798,782 Northrup Grumman Space and Mission Systems Corporation $243,851,991 Viasat, Incorporated $172,241,403 Harper Construction Company, Inc $141,895,667 Total $6,140,440,882 Source: DMDC; FBEI 9

26 Many defense contracts take place over time frames that can comprise up to five years or even longer. (See Exhibit 10.) R&D contracts typically are relatively short-term in nature, with much of the work completed within the first two years. Aircraft and construction projects frequently see a peak of activity in the second year, although sizable amounts of work continue into the third, fourth, and fifth years. Shipbuilding has the most even build-out rates, with about 10-20% of project funds expended during each of the five years of a typical project. Exhibit 10 Procurement Contracts Disbursed over Time Percent of total spending per year 60 R&D Construction Aircraft Ships 10 0 Year 1 Year 2 Year 3 Year 4 Year 5 Source: OMB; CBO; FBEI The Navy and Marine Corps contract with other firms to provide a wide range of goods and services to carry out the operations and maintenance functions of the facilities based within San Diego County. These include food service, janitorial, telecommunications, logistics, and other functions. Government Purchase Cards In addition to the goods and services furnished to military operations based in San Diego County through various procurement contracts, smaller transactions (less than $3,000) are carried out using Government Purchase Cards (GPC). These purchases, which are estimated to total $91 million in fiscal year 2012, benefit a wide range of businesses in the San Diego region. These include various business services (such as printing), retailing (such as automotive parts), building materials, electronic components, and laboratory instruments. (See Exhibit 11.) 10

27 Grants Grants from the Defense Department and VA represent another source of funding for San Diego County firms, with the total estimated at about $38 million for fiscal year These fund a variety of research efforts related to medical, weapons, alternative energy, intelligence, and other defense issues. Tourism Completing the total procurement and spending channel of the military s influence on San Diego, tourism injects funds into the region. While not funded by the government as are the other components of defense-related dollars, family members and friends related to military personnel bring a considerable sum of funds from outside the region into the San Diego region each year. This effect is particularly evident in relation to the multiple graduations that take place each year at the Marine Corps Recruiting Depot (MCRD). In fiscal year 2012, it is estimated about 16,000 individuals will graduate from the facility. Approximately 53,000 family members and friends will come to the ceremonies over the course of the year, spending an estimated $6.3 million on hotels, $5.0 million on food, and $3.0 million on entertainment, for an estimated total of $14.3 million. (See Exhibit 12.) Exhibit 11 Exhibit 12 Various San Diego Firms Benefit from Military s Credit Card Purchases Millions of dollars, FY 2011 Business Services Misc. Retail U.S. Marine Corps Graduates Drive Tourism Dollars Millions of dollars, FY 2012 estimate General Merchandise Building Materials Electronic Components 2 Laboratory & Medical Instruments Hotels Food Entertainment Source: NAVSUP; FBEI Source: San Diego Convention & Visitors Bureau; FBEI Source: San Diego Convention & Visitors Bureau; CNRSW; FBEI 11

28 Tracing the Ripple Effects of Defense Dollars The impact of all of the direct spending of dollars connected to the military (wages and salaries, procurement and other spending, and benefit payments) is only the starting point for measuring the impact on the San Diego region. Two additional dimensions are important. First, supply chain effects are significant. For example, once a firm receives a contract to complete a construction project on a military base, it will need to purchase building materials and hire workers to carry out the work. Second, consumer spending will receive a boost. Workers employed by the prime contractor plus those benefiting along the supply chain will spend a part of their related earnings on various goods and services produced in San Diego. Accounting for the supply chain and consumption effects means that each dollar of defense-related expenditures goes much further than its face value in creating jobs, income, and additions to the region s gross regional product (GRP). (See Exhibits ) Exhibit 13 Exhibit Defense Spending Creates Stability in San Diego s Job Market Thousands of jobs, fiscal years Construction Defense Sector Is Prime Income Generator for San Diego Billions of dollars, fiscal years Construction Supply Chain Direct 10 5 Supply Chain Direct e 2013f e 2013f e=estimate; f=forecast Source: FBEI e=estimate; f=forecast Source: FBEI For every $1,000 of direct defense-related spending coming into the San Diego region each year and contributing to its gross regional product, an additional $550 dollars is generated through the supply chain and consumption dynamics. Similarly, for every 1,000 workers employed as a result of the initial injection of funds, an additional 640 individuals will find jobs as those dollars ripple through the economy. 12

29 Exhibit 15 Military Makes Large Contribution to San Diego Region s Gross Regional Product Billions of dollars, fiscal years Construction Supply Chain Direct e 2013f e=estimate; f=forecast Source: FBEI Exhibit 16 Defense Spending Plays Key Role in San Diego Fiscal Years e 2013f Direct Spending ($ billions) $19.1 $20.3 $20.6 $20.7 Jobs (thousands) Income ($ billions) $17.6 $17.8 $17.7 $17.7 Gross Regional Product ($ billions) $32.1 $32.2 $31.9 $32.3 e=estimate; f=forecast Source: FBEI e=estimate; f=forecast Source: CNRSW; FBEI 13

30 A Substantial Financial Impact to San Diego Region in 2012 The estimated $20.6 billion of direct defense-related spending will have a major impact on the San Diego region s economy in Incorporating all of the ripple or multiplier effects, the military will be responsible for about 311,000 of the jobs existing in San Diego in fiscal year These jobs will be accompanied by $17.7 billion in income or earnings accruing to wage and salary workers along with various business proprietors. The impact of national security related spending will be responsible for generating about $32 billion of output or gross regional product (GRP) in the San Diego region during (See Exhibit 17.) This is more than the total economic output that is estimated for Colorado Springs, Colorado, or El Paso, Texas for To appreciate the importance of the significant reach and impact of defense spending in the region, consider the influence on the job market. In 2012, the military and its indirect effects will be responsible for one quarter of all of the jobs existing in San Diego County. (See Exhibit 18.) Exhibit 17 Exhibit 18 The Military Gives San Diego Needed Support in 2012 FY estimate* Military Responsible for 25% of All San Diego Jobs Share of total, FY 2012 estimate Jobs 311,000 Jobs Supported by Defense Spending 25% Income $17.7 billion Gross Regional Product $31.9 billion Other 75% *Includes all ripple or multiplier effects Source: FBEI Source: FBEI Source: FBEI The jobs emanating either directly or indirectly from defense-related dollars represent a large variety of industries. These include engineering, food services, construction, shipbuilding, medical offices, real estate, investments, research, and hospitals. (See Exhibit 19.) The unemployment rate would also be lower in San Diego if the uniformed personnel based in the region were included. Official statistics exclude members of the armed forces from both the labor force and employment counts. The jobless rate would be more than a half percentage point lower if the military were included. For fiscal 2012, the unemployment rate would be about 8.5% versus the 9.1% expected to prevail on average for the year. (See Exhibit 20.) 14

31 Exhibit 19 Exhibit 20 Engineering Food Services Construction Shipbuilding Medical Offices Real Estate Investments Research Defense Creates Jobs in Many San Diego Industries Thousands of jobs, FY 2012 estimate Jobless Rate Would Be Lower If Military Were Included Percent, 2012 average, estimate 9.1% 8.5% 21 Hospitals Reported Jobless Rate Including Military Source: FBEI Source: FBEI Source: FBEI Source: FBEI 15

32 Budget Cuts in 2013 For at least the near-term horizon, defense spending in the United States has probably already peaked. With the ending of most of the military commitment in Iraq, a winding down of operations in Afghanistan, and a growing national debt, defense spending will be under intense pressure. The failure of Congress and the President to forge a plan to address the federal deficit has amplified the uncertainty surrounding the defense budget. Last year s enactment of the Budget Control Act stipulated that if an alternative agreement to achieve deficit reductions of $1.2 trillion through fiscal year 2021 could not be reached, automatic spending cuts (sequestration) would be triggered at the beginning of Defense spending would bear half of the total cuts. The budget submitted by the Administration in February 2012, for FY 2013, shows spending for national security (including programs funded by departments separate from DoD) declining from $711 billion in fiscal 2011 to an estimated $670 billion in fiscal 2012 to $640 billion in fiscal The 2013 amount would fall further to $580 billion if Congress fails to find an alternative path to achieve the $1.2 trillion overall deficit reduction target. (See Exhibit 21.) Under sequestration, defense spending would be $60 billion less than the amount included in the President s budget request submitted in February Underscoring the rapid paring of defense spending targets, national security spending after sequestration would be $105 billion below the figure that had been planned for fiscal 2013 by the Administration a year earlier in February (See Exhibit 22.) Exhibit 21 Exhibit 22 National Security Spending to Decline Billions of dollars, fiscal years Sequestration Would Drain U.S. Defense Spending Billions of dollars, FY * *under sequestration e=estimate; f=forecast e 2013f Source: U.S. House Armed Services Committee; CBO; FBEI -120 Cut from Feb Administration Request Cut from Feb Administration Request Source: U.S. House Armed Services Committee; FBEI Source: U.S. House Armed Service Committee; FBEI 16

33 The Pentagon is only beginning to plan for the possibility of sequestration as enormous uncertainties exist regarding the legal and technical requirements of the law exist. For example, various defense programs could face an across-the-board cut of 8.3%, which would widen to 10.5% if the law is interpreted to exclude military personnel. Planning on spending for various defense programs would face havoc under sequestration. Even if an alternative budget reduction program is ultimately achieved, the military budget can be expected to bear a sizable part of spending constraint efforts going forward. Defense Spending Forecast and San Diego in 2013 Under any budget scenario, San Diego can be expected to fare better than most other regions which have a significant defense cluster although the region will certainly not be immune to the shrinkage of the defense budget. Six major elements of current U.S. national security strategy will work in San Diego s favor: > The shifting of focus to the Asia Pacific, with the nation s Naval operations moving to a split of 60% in Pacific forces and 40% in Atlantic forces versus the current 50%-50% division. > The defense strategy with its emphasis on deterrence and and forward presence, Navy and Marine Corps missions, plus a greater reliance on special operations forces, which will bolster certain military contingents active in the San Diego region, such as the Navy SEALs. > An emphasis on unmanned military aircraft and weapons, benefiting a number of San Diego firms that have developed expertise in the San Diego area. > An increase of resources devoted to cyber security, supporting a rapidly growing cyber security cluster in the San Diego region. > An acceleration of efforts to boost efficiency and productivity, which should bring additional business to companies developing software and more cost-effective equipment. > Continued efforts to achieve energy savings and meet environmental objectives, which could support firms involved in producing more fuel efficient ships, vehicles, aircraft, and facilities. 17

34 Overall direct spending on national security through its various channels in the San Diego region is expected to hold relatively steady in fiscal 2013 at about $20.7 billion, although this will represent a small decline after inflation. (See Exhibit 23.) Exhibit 23 Military Spending to Hold Steady in San Diego Region Billions of dollars, fiscal years e=estimate; f=forecast e= estimate; f= forecast e 2013f Source: FBEI Source: CNRSW; FBEI The expected impact on the region will come from the planned downsizing of the nation s US Marine Corps by 20,000 over the next five years. San Diego is expected to see a reduction in its US Marine Corps base by about 3,500 over that time frame. Most of these reductions will be achieved through attrition and a scaling back of recruiting programs. For fiscal year 2013, total employment of active duty, civilian defense workers, and reserves in San Diego is projected to average about 142,200 workers. This will represent a modest gain from the 141,500 military and civilian count estimated for fiscal year (See Exhibit 24.) Exhibit 24 Military Employment to Remain High in San Diego Region Number of jobs, fiscal years e 2013f Navy 56,394 56,695 50,651 52,800 Marines 57,583 57,715 56,990 56,100 Reserves 8,320 8,396 8,199 8,200 Civilian 25,431 25,167 25,682 25,100 Total 147, , , ,200 e=estimate; f=forecast Source: FBEI 18

35 San Diego s Navy payrolls dropped in fiscal year 2012 largely because of the change of homeports of the USS Nimitz and the USS Ronald Reagan, and the always changing landscape of the military. (See Exhibit 25.) The return of the USS Ronald Reagan in 2013 will help boost the Navy s total personnel count to an estimated 52,800 in fiscal This will compare with the approximately 50,650 individuals in Navy uniforms in fiscal year Exhibit USS Ronald Reagan to Boost Navy Ship Crew Count in 2013 Thousands, fiscal years e 2013f e=estimate; f=forecast Source: FBEI e= estimate; f= forecast Source: CNRSW; FBEI Excluding recruits, the Marine Corps is likely to scale its personnel base down by about 700 in fiscal year The average number of recruits trained during the year is expected to cause another reduction of about 200. As a result, the Marine Corps will stand at about 56,100 in fiscal year 2013 compared with a count of about 57,000 in fiscal year The number of people living in San Diego serving in the Reserves is likely to hold steady at about 8,200 in fiscal year As the nation reduces the numbers of its full-time armed forces personnel, the role of Reserves in the future could become more important. For fiscal year 2013, current plans call for the Air Force and Navy to reduce their numbers of Reserves, while the Army and Marine Corps maintain their Reserve counts. Civilian payrolls are likely to face a reduction of about 600 workers in fiscal year 2013 due to budget cuts. Most of the decline is likely to be achieved through retirements, with many workers having deferred retirement in recent years. Procurement is the area of defense spending affecting San Diego which faces the greatest uncertainty. For this study, it is assumed that Congress will complete few actions before the November election. Automatic spending cuts, or sequestration, could potentially have a major impact unless Congressional action is taken prior to the end of calendar year

36 Defense departments are expected to operate under a Continuing Resolution Act for the first six months of fiscal year 2013 as Congress fails to enact the required appropriations bills. Spending in the latter half of the year is assumed to follow the general guidelines of the Administration s FY 2013 Budget. Many defense contractors will be seriously and adversely affected by a Continuing Resolution Act as they will be unable to proceed with contracts even where programs have been previously authorized. The additional uncertainty caused by the possibility of sequestration will further hamper the spending and hiring plans of these firms in the region. The primary mitigating factor of contract reductions or delays will stem from the spreading out of contract work over time. As a result, although the value of defense contracts is projected to decline for a fourth consecutive year in San Diego during fiscal 2013, backlogs and work on previous contracts will sustain actual procurement spending at a high level close to that of fiscal year (See Exhibit 26.) On balance, the combined effects of a slight overall increase in military-related payrolls, a still sizable amount of procurement and other spending, and the continued flow of benefit payments to retirees and veterans in the region implies that defense and related activities will continue to play a critical role in San Diego during the coming year. For fiscal year 2013, spending supporting national security will contribute another $32 billion to the San Diego region s gross regional product and be responsible for more than 300,000 of the area s total jobs. Exhibit Previous Contracts Sustain Procurement Spending Billions of dollars, fiscal years Contracts Annual Outlays e 2013f e=estimate; f=forecast Source: DMDC; CFFR; OMB; CBO; FBEI 20

37 Conclusions The pressing need for deficit reduction will clash with changing but ongoing global security risks during the next several years. San Diego will experience repercussions of the ultimate outcome of the decisions that are made. However, the gradual emergence of China as a major military power together with other risks in the Asia Pacific region implies that San Diego s Navy and Marine Corps presence will remain strong. Demands for better intelligence, unmanned vehicles and equipment, new defensive and offensive weapons, cyber security, and greater efficiency throughout the defense establishment promise sizable business opportunities for many San Diego area firms. The presence of large numbers of military and civilian retirees along with veterans will also represent a force in the region s economy. The region can be expected to see effects of the military s downsizing and spending cutbacks going forward. Firms supporting the military complex currently face enormous uncertainties about the future of various contracts and programs. > To mitigate these effects, policymakers will need to continue to forge a close and supportive relationship with the military operations based in San Diego. > San Diego firms will need to extend their lead in cutting-edge technologies as competition for a piece of a smaller procurement budget pie intensifies. > Defense contractors will need to continue to reduce their cost structures, with further gains in labor productivity necessary to offset San Diego s higher wage rates relative to other regions. > Businesses dependent on military contractors will need to find applications for their products for other commercial or consumer segments. The military will continue to represent a major force in San Diego s economy for many years into the future. That support, however, should not be taken for granted. San Diego firms and policymakers need to partner with the defense establishment to ensure that the region retains its supportive role while developing ways to apply defense related technologies and products to other markets. Methodology The methodology of this study entailed two major phases. First, data on the different aspects of the primary channels through which defense-related spending affects San Diego was collected, estimated, or forecast for the four fiscal years, 2010 through Second, the IMPLAN V3.0 modeling program was used to estimate the ripple impact on the economy in terms of employment, income, and gross regional product through supply channel and consumption effects. IMPLAN is a well known and accepted economic programming model widely used in economic impact analysis. 21

38 Direct Spending Inputs The dollar amounts linked to national security flowing into the region were organized into six categories. Active Duty and Civilian Salaries The numbers of active duty and civilian workers were obtained from records accessed by the Commander, Naval Region Southwest, Marine Corps Recruit Depot, Marine Corps Installations (CNRSW, MCI West, and MCRD) for 2010 through Projected numbers for 2013 were developed based on national plans published by the Department of Defense, consultations with military officials in the San Diego area, and estimates by FBEI. Current wage rates for 2012 of the different classes of employees were obtained from the CNRSW. Estimates for 2010, 2011, and 2013 were then calculated based on the average wage increases that have been implemented during the past two years together with expectations for (For military workers, uniformed personnel are assumed to receive a wage increase of 1.7% outlined in the FY 2013 Budget, whereas civilian workers in San Diego are assumed to see no cost-of-living adjustment in line with the pattern of the past two years.) Retirement and Veterans Benefits The numbers of retired military and civilian workers together with their total benefits for fiscal years 2010 through 2012 were obtained from the CNRSW. Forecasts for fiscal year 2013 were developed based on expected retirement plans, location trends in San Diego, and expected cost-of-living adjustments. The level of total veterans benefits flowing into San Diego County for fiscal year 2010 was secured from the Consolidated Federal Funds Report (CFFR). The number of veterans residing in San Diego County was estimated for fiscal year 2010 through fiscal year 2013 based on figures supplied by the U.S. Bureau of the Census, the Department of Veterans Affairs (VA), and FBEI s expectations for separation rates from the armed forces, demographic trends, and location patterns in San Diego. Average benefit payments were estimated based on the FY 2013 Budget projections for the Department of Veterans Affairs. Procurement Contracts Procurement data was obtained for fiscal years 2006 through 2011 from the FPDS-NG, CNRSW, and the Defense Management Data Center (DMDC). FBEI then sorted the data according to industry classifications. Annual disbursement rates (indicating the annual spend-out rates on various types of contracts, such as aircraft, shipbuilding, electronics, research, and other procurement orders) were obtained from the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). FBEI projected procurement contract values for fiscal year 2012 and fiscal year 2013 based on data available for 2012 and DoD plans contained in the FY 2013 Budget. Annual spending totals were then calculated for individual industries for each year by summing amounts accruing from the contracts of the current and preceding four years. 22 Government Purchase Cards Government Purchase Card data was obtained for 2010 and 2011 from CNRSW and the Naval Supply Systems Command (NAVSUP). Estimates for 2012 and 2013 were made by

39 FBEI based on data available for 2012, historical trends, budget plans for the two years, and projected personnel levels at the various San Diego area military facilities. Purchase data was sorted into the various recipient industries of the expenditures. Grants The dollar values of grants from the Department of Defense and Department of Veterans Affairs for fiscal year 2010 were obtained from the CFFR and allocated to appropriate industries by FBEI. Estimates and projections for fiscal years 2011 through 2013 were made by FBEI based on national budget totals and plans by the DoD and VA. Tourism The number of graduates from the Marine Corps Recruit Depot (MCRD) for fiscal years 2010 through 2012 was obtained from MCRD. Forecasted graduate totals for fiscal year 2013 were made by FBEI in consultation with MCRD and CNRSW. Based on data from the San Diego Convention & Visitors Bureau, an average 3.3 visitors per graduate were assumed to travel to San Diego for the graduation and stay in the region for four days. The number of room nights booked for each year, hotel rates, and average spending on food and entertainment was determined for each year based on data from the Convention & Visitors Bureau and estimates by FBEI. Based on guidance provided by the Bureau, CNRSW, and MCRD, it was assumed that 95% of the visitors and money spent over the course of the four-day period comes from outside the San Diego region. Economic Impact Analysis The IMPLAN Model was used to map and analyze the dynamics and total impact of each of the channels of defense spending on San Diego County for 2010, 2011, 2012, and The direct effect of military operations in the region was analyzed by inputting the information on total personnel counts and total payroll dollars. Benefit data for retired workers and veterans was analyzed by inputting the benefit dollar totals for different household income groups. Annual spending totals for procurement contract allocations and grants were inputted into the various appropriate industry classifications for each year. Spending for various goods and services from Government Purchase Cards was assigned to various commodity groupings. Spending on hotels, restaurants and food services, and entertainment was inputted for the appropriate industries. All calculations were performed in current dollars (i.e., before adjustment for inflation). The Model produced estimates for each year for the supply chain, consumption, and total impact of the various channels of direct spending in terms of employment, income, and gross regional product. The impact on individual industries was also computed. All results, including implied multipliers, were checked for reasonableness and consistency. 23

40 24 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council

41 SECTION 2: SOCIOECONOMIC IMPACT The military s impact on San Diego and its citizens cannot be solely quantified by economic factors of jobs, personal earnings or output described in Section I of this report. The impact also includes: environmental stewardship and conservation; energy conservation and alternative energy development, secondary economic impact, and extensive engagement with local communities. Environmental Stewardship The Navy and Marine Corps go to great lengths to balance their Camp Pendelton operations with protection of our 125,000 acres natural resources. Responsible Last significant stretch of 17 miles of mostly undeveloped land use, sustainable solid waste land on the Southern California coastline programs, water, and energy Habitat more than 700 species of mammals, birds, fish, reptiles, and amphibians. conservation, and alternative energy development highlight how the Navy and Marine Corps have effectively adopted green programs and initiatives that help support local efforts. CNRSW and MCI West recognize that sustainable use of natural resources contributes to both the environmental stability and economic prosperity within the greater San Diego area. Stewards of the Land Training ranges are critical to the success of our military forces. Our military must train as they fight in order to be as prepared as possible. 67% of the nation s military training airspace is in the Southwest and more than 7 million acres of ground military training ranges, and 44 million acres of ocean ranges are in the six-state Southwest Region. The proximity of training ranges to our military installations is essential to minimize the time spent traveling from home base to a training range. Federal agencies, including those within the Department of Defense, are responsible for 28 percent of the acreage in San Diego County. The Marine Corps has more than 125,000 acres and the Navy has more than 60,000 acres of land under their care. Because development outside federal fence lines has reduced habitat availability for many local species, much of the acreage inside the fence line is now prime habitat for local wildlife. There are 32 endangered species on military controlled land in the San Diego region, and more than 100 nesting sites of endangered species on Navy property in San Diego. Twenty endangered or listed species are on Marine Corps installations. All bases take special precautions to ensure nesting, foraging, and roosting areas remain little disturbed by training operations and protect designated management areas with sensitive wildlife and plants.federally managed land has become prime habitat for many local species. The open land unencumbered by development provides pristine habitat unavailable elsewhere. There are more than 200 archeological sites and almost as many historic buildings and structures on Naval bases in San Diego. Naval Base Ventura County was recognized in 2010 by the City of San Diego Historical Resources Board for Adaptive Reuse. 25

42 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council Sea, air, land ranges and military operating areas in the Southwest Region. Five installations won 2011 CNO Environmental Awards (Naval Air Weapons Station China Lake, Naval Weapon Station Seal Beach, Naval Base Coronado, Naval Base Ventura County, Naval Base San Diego), recognizing outstanding performance in promoting environmental quality, natural resources conservation, and protection and enhancement of human health. San Diego Navy Installations 60,000 acres Endangered or Listed Species on San Diego Naval Bases Plants Animals Orcutt s Spineflower Arroyo Toad Salt March Bird s beak California Least Tern San Diego Button Celery Coastal California Gnatcatcher San Diego Mesa Mint Green Sea Turtle Willowy Monardella Least Bell s Vireo Light Footed Clapper Rail Quino Checkerspot Butterfly San Diego Fairy Shrimp Southwestern Willow Flycatcher Western Snowy Plover 26

43 Sustainable Solid Waste Program The Navy has operated recycling centers throughout the San Diego region since Recycling efforts have had a considerable impact on San Diego s environment and economy. Thousands of tons of materials a year are diverted from the waste stream. This stimulates businesses within the local area, provides jobs and extends the life of the Miramar Landfill. Diversion extends the life of Miramar Landfill. Since 2003: > Diverted more than 600,000 tons of material > Saved 2.4 million cubic yards of landfill space > Diverted 72.9% (228K tons) of waste in 2011 The Navy has been recognized as the City of San Diego s Recycler of the year for 10 years in a row. The Water Conservation Navy and Marine Corps installations continue to aggressively pursue water conservation measures at all installations. Installations in the San Diego region continue to place an emphasis on irrigation management and to closely monitor water consumption. Landscape irrigation represents a large water requirement across all installations. Improvements to infrastructure are ongoing. These improvements, coupled with best irrigation practices, have resulted in dramatic reductions in water usage. Navy and Marine Corps installations have incorporated Smart Landscaping initiatives that conserve resources by replacing water-consuming vegetation with non-watering, indigenous, and drought tolerant plants and foliage. These efforts also include upgrading irrigation systems, installing synthetic grass, and not watering training areas. MCAS Miramar is a leader among the DoD in water conservation and is the largest user of recycled water in the San Diego metropolitan area. Navy Region Southwest Water Reduction Progress Metro San Diego Installations FY FY Baseline (KG al/ksf) KG al/ksf Water Reduction Goal (KG al/ksf) Current KG al/ksf Navy Region Southwest installations have collectively reduced water consumption by approximately 36% since the 2008 baseline. This equates to 1.1 billion gallons savings annually. MCRD s water use has been reduced by 20% from the 2008 baseline. 27

44 Energy Conservation & Alternative Energy Development Despite growing in assets and manpower, the Navy in San Diego has reduced their energy consumption by 21% compared to The Marines have implemented similar environmental management programs. MCRD San Diego has more than 3.7 megawatts of photovoltaics installed generating approximately 6 million kilowatt hours of electricity annually. This accounts for 22% of the Depot s energy usage. In addition to maximizing the output from renewable energy, MCRD has also made reduction efforts with the replacement of 1,500 halogen spot light with LED lights in its retail stores, reducing lighting energy consumption by 84% and also reducing the demand on space cooling. MCI West s bases have made substantial progress in the development of alternative sources of energy such as solar, wind turbines, and biodiesel. Camp Pendleton also has the first hydrogen refueling station in California that is located on a military base. 60 Navy Region Southwest Energy Reduction Progress Metro San Diego Installations FY MCAS Miramar recently started using a 3 megawatt landfill-to-gas project to generate electricity from methane gas produced by the Miramar landfill. Baseline MBtu/KSF=74.06 MBtu/KSF Current MBtu/KSF 4th Quarter, 2015 Reduction Goal: -30% The Navy completed renewable energy projects totaling $109 million from FY These projects resulted in 4 mega-watts (MW) of new solar infrastructure, increasing the Navy total capacity to more than 7 MW in solar energy across the Region. Established in 1919 on NAS North Island, Fleet Readiness Command Southwest (FRCSW) is one of the oldest, continuously operating aviation Maintenance Repair and Overhaul (MRO) facilities in the Department of Defense. FRCSW has a long standing commitment to protecting the environment in and around San Diego County. The command works closely with the local community and has established an award winning environmental program. FRCSW is hailed as a benchmark organization for environmental controls by the San Diego Air Pollution Control District, the San Diego County Industrial Environmental Association and the California Air Resources Board. These groups utilize FRCSW as a training site allowing them to show other organizations the correct way to approach environmental sustainability. 28 In 2010 FRCSW was awarded the prestigious Department of Defense Environmental Sustainability Award Industrial Installation Category. This award signifies that FRCSW not only conforms to the letter of the law but strives to exceed simple compliance with environmental laws resulting in long term environmental sustainability. FRCSW received a $605,077 check as part of SDG&E Energy Saving Incentive Program.

45 Secondary Economic Impacts to the San Diego Economies While most of the military impact on the economies of San Diego is in the Military sector, there are also contribution in other areas. Labor Force The presence of the military also has a qualitative impact on the nature of employment in the area. Its presence draws significant educational opportunities and resources to the region. From the medical education opportunities at Naval Medical Center San Diego, to academic relationships among acquisition commands such as Space and Naval Warfare Systems Command (SPAWAR) and SPAWAR Systems Center Pacific, defense contractors, and universities, the military provides resources for training and innovation. Military personnel take their training with them when they join the private sector. At the same time, the military raises the demand for highly skilled workers through procurement contracts for professional services such as research and development and trades work such as shipbuilding and aircraft maintenance. The military establishes basic minimum requirements for enlistment and offers extensive training to its members. This ensures the military workforce has a solid education base with strong earning potential. Military personnel leaving active duty represent a highly trained and competent element of the work force. Efforts should focus on keeping service members in San Diego after their active duty service ends. Ships and Aircraft Both the USS San Diego and the USS Independence arrived in San Diego since the last report. As the shift to the Pacific continues, San Diego expects to see additional ships arrive. These ship increases will require more supporting elements, potentially opening up more mid-level jobs. Over the next few years, new equipment will be arriving throughout the region. The MV- 22 Osprey replacement for the CH-46E Sea Knight helicopter has begun its basing at MCAS Miramar and MCAS Camp Pendleton. These cutting edge warfighting platforms require sophisticated logistics which will drive greater technological development, stimulating and supporting San Diego s economic growth. Fleet Introduction Teams will maintain a long-term presence at Marine Corps Air Station (MCAS) Camp Pendleton to ease the transition to these new aircraft, thus bolstering San Diego s service industry. The approximately 5,000 people working at MCAS Camp Pendleton, including about 250 civilian contract employees, may temporarily increase to nearly 29

46 6,000 people within the next four years to assist with the transitioning of aircraft and their crews and the construction of a new hangar. In addition, taxiway improvements, repair and expansion of hangars and buildings, and installation of new aircraft training simulators are all scheduled to occur within the next few years. Creating Business Opportunities Nearly $2.5 billion of Naval Facilities Engineering Command s $3.4 billion annual budget is contracted out to businesses in the San Diego region. Included in NAVFAC s budget is Marine Corps construction in excess of $3.3 billion from 2009 through 2015 for Miramar and Camp Pendleton. The majority of these funds are tied to the arrival of the MV-22 Osprey and the Joint Strike Fighter. Ground was broken in early 2011 for the new Camp Pendleton Naval Hospital, using $563 million in American Recovery and Reinvestment Act (ARRA) funding, the largest ARRA funded project in the Department of the Navy. The project is expected to be completed in late 2013 or early Military construction has provided a major offset to many of the recessionary forces facing the San Diego region and is providing a critical boost to help transition the region to economic recovery. Expenditures on various construction projects at the six military installations in San Diego have exceeded $1 billion in fiscal years Military construction dollars injected into the region trigger several rounds of ripple effects as workers are employed throughout the supply chain, supplies and materials are purchased, and consumer spending is stimulated by the jobs and incomes generated. Throughout fiscal year 2011, the MCI West Regional Contracting Office awarded more than 2,700 contracts valued at over $242 million in the San Diego area. Additionally they processed more than 29,000 Government Purchase Card transactions valued at almost $29 million. With 2,500 contracted workers entering Camp Pendleton and MCAS Miramar daily, a majority of the labor, material, and service contracts for projects are infused directly into the local economy with designated job order contracts for service disabled veterans, minority and women-owned businesses. The MCI West safety program spends $500,000 annually in contracted support through Cape Fox Professional Services for the Traffic Safety Training Program. SPAWAR and SPAWAR Systems Center Pacific are at the forefront of research, engineering, acquisition, and support services providing vital decision superiority to our forces. SPAWAR s national footprint in FY2011 was $10.2 billion, with $555 million going directly toward salaries in San Diego. 30 When compared to other sectors in San Diego, SPAWAR Systems Center Pacific typically ranks in the top ten organizations for new patents annually. SPAWAR awarded more than $3.8 billion in contracts in FY2011. Over the past 11 years, SPAWAR Systems Center Pacific has seen a steady growth with annual orders of more than $2 billion last fiscal year. Of that amount, more than 51 percent supports partnerships with industry and small businesses.

47 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council FRCSW has been a significant economic influence in the greater San Diego community for over 90 years and is currently the largest aerospace employer in San Diego County. FRCSW is supported by a diverse work force of more than 4200 personnel, including 1000 active-duty military, over 2700 civilian Department of Defense workers and approximately 500 contractors. Of FRCSW s highly skilled, talented, innovative and dedicated employees, 1/3 hold either a professional certificate or degree ranging from Associates to PhDs, and have an average experience level of 20 years. FRCSW is preparing for future increases in workload due in general to the renewed focus on the western Pacific region and specifically to the addition of more helicopter squadrons at NBC-North Island. Future H-60 workload at the command is anticipated to ramp up with the arrival of these additional aircraft at North Island and in FY2013 FRCSW s Vertical Lift program anticipates servicing 47 H-60 aircraft generating a total revenue stream of more than $28,000,000. The command is moving forward with plans to build a new helicopter hangar designed to accommodate the increased workload and is also working on funding approval for a second hangar which will be utilized for V-22 Osprey airframe work. The Osprey workload is expected to begin in FY2015 with 2 aircraft, and approximately $900,000 in revenue, increasing to 15 aircraft and $7,000,000 in revenue by FY2017. Health Care Naval Medical Center San Diego Naval Medical Center San Diego (NMCSD) operates in the highly Active Research Protocols 258 competitive health care industry. Cooperative Research Agreements 67 More than 6,500 highly skilled Partner Contributions $6.5M Active Duty and Civilian physicians, nurses, technicians, and support personnel provide care for more than 100,000 San Diegans. NMCSD attracts these top performers because of patient case volume and complexity, the command s emphasis on research, as well as access to cutting edge equipment such as femtosecond lasers for refractive ophthalmologic surgery and the most technologically advanced radiological equipment available. NMCSD supports ten local Schools of Nursing through the provision of 500 annual student clinical rotations. NMCSD s efforts help aid the San Diego community to address the shortage of qualified registered nurses, while contributing to the addition of mid-level income earners. NMCSD s unique quality culture and patient base attracts not only physicians, but research projects and dollars as well. The medical center maintains 258 active research protocols and 67 cooperative research agreements with non-military organizations. These partner organizations have contributed approximately $6.5 million to the studies. 31

48 Training Training Support Center (TSC) San Diego delivers 449 educational modules to 66,000 students per year. Courses range from single day workshops to six month, in-depth seminars. The topics include engineering, fleet maintenance, IT support, and leadership. TSC operates a fully functional Littoral Combat Ship simulator which allows sailors to gain hands-on experience before their first day at sea. TSC delivers both journeyman and master-level apprenticeship programs. Many TSC graduates have become Microsoft Certified System Engineers through TSC training. These programs meet and exceed the requirements of civilian certifications issued by the Department of Labor. Armed with these certifications and degrees, many Navy men and women navigate into civilian careers in technical industries, which in turn support San Diego s high technology community, enhance the labor/job mix, and increase the number of high skilled workers in the San Diego labor force. The Navy Region Southwest Fleet and Family Support Program s Transition Assistance Management Program adds to the local economy by preparing separating service members and their families for transition into the local civilian population and job market. Potential employers are encouraged to consider this well educated, highly skilled labor source. Members planning for military retirement or separation are provided job search and interviews skills. Employers often save on training by hiring separating military members who come with the requisite training and requirements for specialized positions, and current security clearances. Retirees and veterans are also taught how to fully access their military benefits, which helps relieve local governmental services. Efforts expended by the Joint Task Force Financial Health Southwest and Navy Region Southwest Fleet and Family Support Center Personal Financial Management Counselors have resulted in fewer military personnel and their families going into debt and incurring heavy financing obligations. Based on the records of the Personal Financial Management Program, military families are defaulting on loans and payments at a lower percentage than the general population. Navy Region Southwest Fleet, Family and Child Programs are helping support the growth of the next generation of principled, responsible citizens via successful programs that include Kool Fun in the Sun, Safe Parks, Naval Sea Cadet Corps Partnership; youth program 4-H Clubs and Big Brothers and Sisters (BIGS). Engagement with Local Community 32 Navy and Marine Corps service members impact their communities by actively engaging in volunteer work and forming long-term relationships with local schools, youth athletic programs and charitable organizations, just to name a few. Partnerships in the areas of emergency response and transportation issues have mutually beneficial outcomes, including a more efficient use of resources and taxpayer provided funding.

49 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council Military installations have hosted numerous events over the years including runs, triathlons, the Coronado Classic Speed Festival, Fleet Week San Diego, Marine Corps Recruit Depot s Boot Camp Challenge, and the MCAS Miramar Air Show. These events have a positive economic impact and enrich community life. Educational Outreach The military works with all school districts in San Diego County. Within these districts, there are more than 61,549 military-connected (Active Duty, Guard, and Reserve) schoolaged children. Each of the 42 local school districts have an appointed a military liaison to work with the military s School Liaison Officers to ensure the highest level of support and direct-service to military students within their districts. There are 54 San Diego metro schools with partnerships with Navy commands and an additional 12 with partnerships with USMC commands. Of those, twenty-nine have 20% or more students from military families. Service members volunteer hundreds of hours assisting with: self-help beautification projects, event support, tutoring, mentoring, traffic control, and sharing expertise. With assistance from the military s School Liaison Officers, there are currently five Department of Defense Education Activity (DoDEA) Grants totaling $16.6 million, currently operating in San Diego County providing direct math, science, and technology support to military-impacted Schools.MCB Camp Pendleton and the Oceanside Unified School District have been awarded athe Partnership of Excellence Award by the Military Child Education Coalition, a nationwide organization dedicated to recognizing outstanding partnerships between schools and military installations. SPAWAR has shown its dedication to helping nurture the next generation of science, technology, engineering and mathematics (STEM) professionals by hosting K-12 education outreach events including: classroom demonstrations and presentations, community events, science fairs and festivals, and internship and mentorship activities. 33

50 SAPWAR s For Inspiration and Recognition of Science and Technology (FIRST) robotics competition attracted a crowd of 700. SPAWAR Systems Center Pacific cosponsored a FIRST robotics qualifying tournament in San Diego for FIRST Lego League robotics teams. SPAWAR Systems Center Pacific actively engages with local colleges and universities and offers various student employment programs including the Student Temporary Employment Program (STEP), the Student Career Employment Program (SCEP) and the San Diego State University (SDSU) Research Foundation program. MCI West partners with San Diego State University and CSU San Marcos, to provide undergraduate and graduate level internships in public affairs, human resources, government affairs, nursing and information technology. The partnership at SDSU also includes Troops to College and Troops to Engineers, promoting discharging service members to enroll in engineering programs. Department of Defense Education Activity (DoDEA) Grants San Diego Unified School District, two DoDEA grants working simultaneously in military impacted schools serving Naval Base San Diego/Naval Base Point Loma San Diego Unified School District - Virtual Grant (online student support) serving Naval Base San Diego/Naval Base Point Loma Coronado Unified School District serving Naval Base Coronado University of Southern California-operated grant serving Naval Base San Diego/Camp Pendleton/Miramar Total $5 Million $2.9 Million $1.1 Million $7.6 Million $16.6 Million Emergency Response The Navy and Marine Corps have assets and expertise that support local agencies in protecting area resources when threatened by natural disasters or emergencies through mutual aid agreements. The military responds to wildfires as requested, with evacuee site management experience and up to twelve DoD firefighting teams. USMC, Navy, California Department of Forestry and Fire Protection (CALFIRE), and other regional, state, and federal agencies participate in an annual wild land firefighting exercise held each spring at Marine Corps Air Station Miramar and Marine Corps Base Camp Pendleton. This exercise enables the participants to exercise command and control of helicopters rigged for firefighting, and culminates in practical use of the helicopters to put out a simulated fire at Camp Pendleton. The annual exercise is an element of the Operating Plan developed jointly by the Marine Corps, CALFIRE, and the U.S. Forest Service, Pacific Southwest Region following the 2007 southern California wildfires. USMC and NRSW partner closely with San Diego County Office of Emergency Services, U.S. Coast Guard, and other local entities in planning for and dealing with the consequences of disasters that affect the city of San Diego. 34

51 Private and Public Projects In 1996, Congress established the Military Housing Privatization Initiative (MHPI) as a tool to improve the quality of life for its service members and their families by improving housing.1 MHPI was designed to attract private sector financing, expertise, and innovation to provide necessary housing faster and more efficiently than traditional military construction processes. In San Diego, four public-private venture (PPV) partnerships currently maintain and operate 24,000 family housing units for sailors and Marines. The San Diego consortium Naval Reserve Officer Training Corps (NROTC) Unit is hosted at the University of San Diego. Students at five local universities [San Diego State University, University of California at San Diego, Point Loma Nazarene University, California State University at San Marcos, and University of San Diego] participate in this program - which annually produces between 50 and 75 commissioned officers in the United States Navy or the United States Marine Corps. Naval ROTC participants undergo a four-year process to develop them mentally, morally, and physically for service as Naval Officers. While attending college courses leading to a bachelor s degree, Naval ROTC students additionally take a series of Naval Science classes, to include physical fitness activities and hands-on training utilizing the military facilities in the San Diego area. Supporting a variety of community-service events, Naval ROTC students also serve as Big Brothers/Big Sisters to area high school Junior Naval ROTC participants. Conclusion Military presence in the San Diego region clearly has a substantial socioeconomic impact on the cities, the County, and its citizens that is impossible to quantify using economic metrics alone. The impact that the Navy and Marine Corps has on San Diego only begins to be seen in context when you add the stewardship that is applied to the natural, cultural, and historical resources under their cognizance. In addition, one must consider the level to which the sailors, and Marines, and their families are engaged in the community: churches, youth sports, scouting, charitable organizations, etc., all benefit from having these men and women and their families in our community. The quantitative and qualitative impacts the military provides are equally important and key to San Diego s continued prosperity. 35

52 36 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council

53 SECTION 3: NAVY & MARINE CORPS INSTALLATIONS Military commands can be grouped into two broad categories installation commands and tenant commands. Shore installation commands are assigned responsibility for the base operating support: care and management of land, buildings and structures, and the provision of quality of life services for the force. The tenant commands are usually a tenant on a military installation and are charged with an operational mission and are supported by shore installations to execute their missions. Sea, air, land ranges and military operating areas in the Southwest Region. Installation Commands Naval Base Coronado, Naval Base Point Loma, Naval Base San Diego, Marine Corps Base Camp Pendleton, Marine Corps Air Station Camp Pendleton, Marine Corps Air Station Miramar, and Marine Corps Recruit Depot San Diego are geographic entities ( bases ) and Navy or Marine Corps commands. In addition to their operational assignments the officer placed in charge of these commands serves as the landlord for these bases. Tenant Commands Examples of tenant commands include Commander, Naval Air Forces, Commander, Naval Surface Forces, Commander, Third Fleet, Naval Facilities Engineering Command Southwest, Commander, Space and Naval Warfare Systems Command and SPAWAR Systems Center Pacific, Training Support Center San Diego, Naval Medical Center San Diego, and Navy Special Warfare Command. They are relieved of the burdens associated with maintaining infrastructure (buildings, roads, structures, etc), allowing their commanders to focus their energies on operational concerns. 37

54 Over the last decade both the Navy and Marine Corps have consolidated and regionalized base operating support under Commander, Navy Region Southwest (CNRSW) and Marine Corps Installations (MCI) West. The guiding principle behind regionalization has a place in this discussion of economic impact. The Department of the Navy applies a simple litmus test to determine what functions should be regionalized. No command should do for themselves what a base can do more efficiently. No base should do for themselves what a Region can do more efficiently, and no Region should do for themselves what the surrounding community can do more efficiently. This principle helps explain why San Diego, as a regional center, has received an increasing role among the Southwestern military installations and why military contract dollars into the San Diego economy have increased as installations shed activities to the private sector. It makes good business sense to engage and partner with the community. Navy Region Southwest San Diego is home to the headquarters of the Commander, Navy Region Southwest (CNRSW); the Navy in San Diego County largest concentration of naval facilities and personnel in the Active Duty Military Civilian Employees 50,651 19,496 world. CNRSW s relationship with the various Source: US Navy 2012 tenant commands operating on or from regional installations is a landlord-tenant relationship, with the primary focus of CNRSW and regional installations being to support the tenant commands with the infrastructure and services necessary to efficiently and effectively train and execute their missions. The three CNRSW installations in the San Diego area are: > Naval Base Coronado > Naval Base Point Loma > Naval Base San Diego The other installations within Navy Region Southwest are: > Naval Weapons Station Seal Beach > Naval Base Ventura County > Naval Air Facility El Centro > Naval Air Weapons Station China Lake > Naval Air Station Lemoore > Naval Air Station Fallon > Naval Postgraduate School / Naval Support Detachment, Monterey 38

55 Naval Base Coronado Naval Base Coronado (NBC) has a long history of Naval Base Coronado serving as a home base for Naval Aviators, Navy SEALS, Fleet sailors and their families and is home Active Duty Military 17,834 to eight major air, Civilian Employees 4,744 Source: DMDC surface, special warfare and training commands, two aircraft carriers, 16 helicopter squadrons, two fixed-wing squadrons, and more than 120 other military units and commands. Airfields, ports, and air, surface and subsurface training ranges and support facilities provide critical operational and training functions for west coast Navy and Marine Corps operating forces. This diverse and expansive number of operational and training resources provides naval operating forces the support needed to achieve and maintain military readiness and contribute to national security. Operating as a consortium of eight geographically separate locations, NBC encompasses 57,000 acres extending throughout San Diego, Riverside, and Los Angeles Counties including 1,565 non-housing buildings and structures, 21 piers and wharfs, 3 airfields, and more than 45 miles of shoreline. Installations located on Coronado Island include Naval Air Station North Island, Naval Amphibious Base Coronado, and the Silver Strand Training Complex. Also located near Coronado is the Navy Outlying Landing Field Imperial Beach. Other outlying locations supported by NBC in the San Diego and Los Angeles Counties include Mountain Warfare Training Center Camp Michael Monsoor, Camp Morena, Remote Training Site Warner Springs, and Navy Auxiliary Landing Field San Clemente Island. Future Plans Specifically, serving as the shore platform, NBC continues to be actively involved in the Helicopter Wing Realignment and MH-60R/S Helicopter Transition in support of Commander Naval Air Forces, Naval Aviation Helicopter Master Plan. In addition, the high demands on the Navy s Special Warfare units have involved NBC adjusting to increases in student throughput and ensuring access and availability to ground mobility, land warfare, waterborne action, tactical assault and weapons operation, and training ranges. Several years of strategic planning have assessed the requirements and determined the progressive actions needed to accommodate the increased demands as a result of the assignment of additional squadrons and Special Warfare Command requirements. Scheduled construction and repair projects have included hangar, pier, bachelor housing, childcare and other support facility construction and improvement projects. These construction and improvement projects combined with the current capacity in existing facilities, will provide NBC with the ability to meet operational objectives of Special Operating Forces, Naval Air Forces, and Naval Surface Forces. 39

56 Naval Base Point Loma The Point Loma peninsula is home to Cabrillo National Monument, the Veterans Administration s Fort Rosecrans National Cemetery, Naval Base Point Loma (NBPL) Main Base Complex, Point Loma Nazarene University, U.S. Coast Guard and the Point Naval Base Point Loma Active Duty Military Civilian Employees Source: DMDC 4,078 8,994 Loma Wastewater Treatment Plant. Together in partnership they help preserve the habitat and cultural resources of this historical location which include three endangered species, two pre-historic aboriginal sites, Spanish heritage sites, WWI and WWII military forts, bunkers and two National Register eligible historic districts. Spread beyond Point Loma and throughout the county of San Diego, Naval Base Point Loma maintains six complexes and 41 special areas, comprising 1,869.5 acres of land to include Old Town Complex, Taylor Street Complex, Naval Mine Antisubmarine Warfare Complex, Point Loma Topside Complex, Commander Third Fleet Complex, Point Loma Main Base Complex, Mt. Soledad, Fleet Intelligence Training Center Complex, Balboa Complex, and the Naval Consolidated Brig Miramar. With over 71 tenant commands, NBPL supports a variety of fleet, flag headquarters, training and Research, Development, Testing and Evaluation (RDT&E) commands. NBPL is considered the technical hub of San Diego s naval activity, hosting some of the nation s premier research centers for communications and weapons technology, including C4ISR at SPAWAR Systems Center Pacific. Additionally, NBPL is the primary home of fast attack submarines on the west coast, home porting all six of Squadron Eleven s SSN submarines, as well as their entire shore support requirements of logistics, maintenance and ordnance handling, which includes the floating drydock, ARCO ARMD 5, for depot level repairs. NBPL also provides the largest Fuel Supply Center and the only Magnetic Silencing Field in the Pacific, supporting the requirements of the surface Navy as well. 40

57 Naval Base San Diego As the Navy s premier Pacific Fleet surface Naval Base San Diego force installation, Naval Base San Diego (NBSD) encompasses the NBSD main-site, the Broadway Active Duty Military 23,960 Civilian Employees 5,383 Complex in downtown San Diego, the Mission Gorge Source: DMDC Recreation Center, Balboa Hospital, and 16 family housing sites. NBSD occupies approximately 1,556 acres of land and 326 acres of San Diego Bay, with 12 Piers and two channels offering 56,616 feet of berthing. NBSD has an on-base population of 31,090 military, federal civilian, and contracted employees. NBSD is divided into two distinct areas: the maintenance and repair area along the shoreline (wet side) and the community facilities complex east of Harbor Drive (dry side). NBSD supports 57 ships and 182 tenant commands. NBSD is also home to Military Sealift Command, Maritime Administration, and U.S. Coast Guard ships, as well as numerous other U.S. vessels. In addition, NBSD provides services including housing, security, public works, environmental, supply, and administrative facilities for tenant units. Future Plans In response to the 2006 Quadrennial Defense Review shifting naval forces to the Pacific area of operations, Naval Base San Diego will have a net gain of 7 ships and 8,201 personnel and dependants by The base also serves as the homeport for the Navy s first two Littoral Combat Ships, Freedom (LCS 1) and Independence (LCS 2). 41

58 Marine Corps Installations West Marine Corps Installations West is comprised of seven Marine Corps bases and stations in the Marine Corps Installations West southwestern United States, three of which are in Active Duty Military 56,990 the San Diego area. Marine Corps Recruit Depot Civilian Employees 3,928 San Diego is a separate command and does not fall under the purview of MCI West. Marine Corps Source: DMDC Installations West provides the base and range infrastructure that enable the operational forces to develop and sustain operational readiness. The three MCI West installations in the San Diego area are: > Marine Corps Base Camp Pendleton > Marine Corps Air Station Camp Pendleton > Marine Corps Air Station Miramar San Diego is the hub of U.S. Marine Corps training on the West Coast. Each of the MCI West bases is a vital link in this chain, providing unique training opportunities in preparation for joint warfighting. MCI West maintains a close working relationship with Commander, Navy Region Southwest to coordinate training and activities in the San Diego region. For example, the U.S. Navy runs San Clemente Island; however, both Navy and Marine Corps units use it for training. Upcoming Changes Over the next five years, the Marine Corps will cut the size of its overall force by 20,000 Marines, reducing the force from around 200,000 to around 180,000. It is estimated that MCI West will reduce its ranks by approximately 3,500. Reductions will be gradual and mostly through attrition. A slight reduction in recruiting is also expected. Nonetheless, in the next few years new aircraft will arrive throughout the region. Once the National Environmental Policy Act analysis is completed and the final sites approved, the region will see the introduction of the F-35 Joint Strike Fighter. The MV-22 Osprey replacement for the CH-46E Sea Knight helicopter will be based at MCAS Miramar and MCAS Camp Pendleton. These innovative war-fighting platforms require sophisticated logistics, which will result in the importing of greater technological development to stimulate and support San Diego s economic growth. 42

59 Marine Corps Base Camp Pendleton Since its purchase in 1942, Marine Corps Marine Corps Camp Pendleton Base (MCB) Camp Pendleton has occupied 125,000 acres of largely undeveloped land with Active Duty Military - Marines 35,665 more than 17 miles of coastline. Located in Active Duty Military - Navy 3,949 Civilian Employees 2,695 northwestern San Diego County, it is the Marine Source: DMDC Corps expeditionary amphibious training base and its only West Coast amphibious assault training center. Camp Pendleton is home to more than 10 operational tenant commands to include I Marine Expeditionary Force (I MEF), 1st Marine Division and 1st Marine Logistics Group, as well as numerous training and administrative commands. MCB Camp Pendleton provides a valuable training environment for Marines because it spans a variety of terrain from sea level to an elevation of 3,000 feet. This variety of terrain enables the Marine Corps to conduct combined air and ground training which is essential to preparing and meeting the requirements of diverse missions. The proximity to a variety of military units, including air elements and naval forces, allows for frequent and sustained training of this nature. The mild weather of the region provides an ideal environment for training for amphibious, ground, and joint operations. In addition to the 40,000 active duty service members that report to units within MCB Camp Pendleton daily, Camp Pendleton employs 2,700 civilian employees at various operational, training, Navy, and administrative commands aboard the base. Daily visitors include construction and service contractors, product vendors and delivery personnel, military family members who live in off-base residences, military retirees and their family members, as well as other base guests and visitors. It is estimated that daily Camp Pendleton will have anywhere from 10,000-30,000 additional persons in these various categories onboard the base. Construction and Upgrades MCB Camp Pendleton is undergoing one of the largest new construction programs at any DoD installation. Currently more than $1.7 billion in active construction projects are under way. Ground was broken in late 2010 for a new 512,000 square foot Naval Hospital. Located near the main gate and commissary, the hospital will serve more than 150,000 Marines, family members and retirees and allow for growth in the beneficiary population. In addition to the new hospital, the military construction program consists of a wide range of facility types and infrastructure improvements which include: roads, utilities, renewable energy, operations and training ranges, administrative, maintenance, warehousing, galley, retail and troop housing. There are currently 39 new Bachelor Enlisted Quarters nearing completion as well as up to 924 new family housing units aboard the base. MCB Camp Pendleton continues to make numerous training enhancements a top priority. Phase II of the Infantry Immersion Trainer is complete, at a cost of $30 million, and provides the operating forces a small-unit training range that consists of urban structures furnished and decorated to replicate specific geographic locations. The stateof-the-art Improvised Explosive Device (IED) Training Lanes are also complete, at a cost 43

60 of $9 million, and help Marines identify and neutralize IEDs. The enhancements to the Combat Convoy Simulator, Tactical Video Capture System, Live-Fire Convoy Course, Combined Arms Raid Facility, Close Air Support urban target sites, combat towns, industrial urban training site, as well as numerous smaller urban training sites, are additional examples of further training systems that Camp Pendleton currently operates in order to support today s fight while preparing for tomorrow s future. Land Use Marine Corps Base Camp Pendleton is first and foremost a training base that supports the combat readiness of the operating forces and the mission of other tenant commands by providing training opportunities, facilities, services, and support responsive to the needs of Marines, sailors, and their families. Camp Pendleton has 95 live fire ranges, 38 training areas, five training beaches, three sea space areas, nine impact areas, nine urban training facilities, and four separate blocks of airspace. MCB Camp Pendleton also provides one of the last stretches of undeveloped land on the southern California coastline. A lease for 2,000 acres belonging to MCB Camp Pendleton, leased to the State of California since 1970, will expire in Currently under the National Environmental Policy Act review process, an environmental assessment is set for release to restore a former agricultural area located at the northern end of the base to a training area that will house several new urban training facilities. Marine Corps Air Station Pendleton Marine Corps Air Station (MCAS) Camp Pendleton is a major helicopter base for the 3rd Marine Air Wing (MAW) based at MCAS Miramar. MCAS Camp Pendleton houses 11 active squadrons under Marine Air Group (MAG) 39. Marine Corps Camp Pendleton Active Duty Military - Marines 4,955 Civilian Employees 55 Source: DMDC 44 The Air Station hosts the only training squadrons for both CH- 46E and H-1 helicopters. Within its 458 acres, MCAS Camp Pendleton conducts training, testing and maintenance, as well as environmental and facility maintenance functions. Squadrons at MCAS Camp Pendleton benefit from its proximity to ground troops and training ranges within both MCB Camp Pendleton and MCAS Miramar and in partnership with other services.

61 New Aircraft Over the next few years, MCAS Camp Pendleton will see the introduction of the UH-1Y and the AH-1Z, the upgraded versions of the UH-1N Huey and the AH-1W Super Cobra currently in use. In addition, MCAS Camp Pendleton will receive the MV-22 Osprey replacement for the CH-46E Sea Knight. Fleet Introduction Teams will maintain a longterm presence at MCAS Camp Pendleton to ease the transition to these new aircraft, thus bolstering San Diego s service industry. Planned Improvements With the transitioning of aircraft and their crews and the construction of a new hangar there will be a temporary increase to nearly 6,000 people working on MCAS Camp Pendleton within the next five years. In addition, taxiway improvements, repair and expansion of hangars and buildings, expansion of the Combat Aircraft and Loading Area and construction of aviation training and avionics communications facilities are scheduled to occur within the next few years. Aviation technical training will increase from 600 to 900 students over the next five years. MCAS Camp Pendleton plans a 20% increase in personnel and a 50% increase in students undertaking technical training over the next four years. Marine Corps Air Station Miramar MCAS Miramar is home to the 3rd Marine Aircraft Wing, including Marine Aircraft Group Marine Corps Air Station Miramar (MAG) 11 s fixed wing F/A-18 Hornet and KC- 130J Hercules squadrons as well as MAG 16 s MV-22 Osprey, CH-46E Sea Knight and CH- Active Duty Military - Marines Active Duty Military - Navy Civilian Employees 9, Source: DMDC 53E Super Stallion helicopter squadrons. In addition, MCAS Miramar houses a variety of support commands including Marine Wing Support Group 37, Marine Air Control Group 38 and the 3rd Marine Aircraft Wing Band. Elements of MAG 46 and the 4th Tank Battalion, both major reserve components, are also stationed at MCAS Miramar. Training MCAS Miramar provides a strategic training location. Its central location near more than 10 U.S. Navy and Marine Corps installations makes MCAS Miramar a crossroads that provides flexibility for training on land and sea. East Miramar, encompassing 15,000 acres of hilly desert terrain, provides a location for five small arms ranges, a facility for nuclear, biological and chemical training, and an aircraft fire rescue training site, as well as ground training in land navigation and convoy operations. Besides active duty Marine units in the San Diego area, U.S. Army, Army National Guard, Navy, Marine Reserve and Reserve Officer Training Corps units all utilize MCAS Miramar s facilities and training areas. In support of local civilian law enforcement, the San Diego Sheriff s Department operates firing ranges and a canine training facility at MCAS Miramar. 45

62 Upcoming Changes Up to eight squadrons of the MV-22 Osprey, which is the replacement for the CH-46E Sea Knight, will be stationed at MCAS Miramar. In addition, MCAS Miramar will receive up to six squadrons or 96 of the F-35B Joint Strike Fighters. Over $167 million in construction was awarded in FY 2011 with runway/taxiway expansion, aircraft hangar modifications, and sustainable/renewable energy projects. Air Show and Tourism Impact The annual MCAS Miramar Air Show draws up to 700,000 visitors to watch the spectacular aeronautic performances and to explore the static displays and vendor booths. The weekend event brings in an estimated $9.25 million. MCAS Miramar also provides tours to visiting groups and brings educators from west of the Mississippi River to San Diego area bases. Marine Corps Recruit Depot San Diego About 16,000 recruits are transformed into Marine Corps Recruit Depot San Diego Marines annually at Marine Corps Recruit Depot San Diego. During the 12-week course Active Duty Military - Marines 6,278 recruits tackle physical challenges, learn martial Active Duty Military - Navy 199 Civilian Employees 725 arts skills, complete weapons qualification, Source: DMDC; (includes average number of recruits) undergo field training and conquer the Crucible which is a capstone event that requires recruits to work together as teams to complete the 54-hour event. MCRD San Diego also serves as Headquarters for the Western Recruiting Region. Drill Instructor School provides more than 500 hours of training during an 11-week course for future Drill Instructors, all of whom have volunteered for duty. MCRD houses the only Marine Corps Recruiters School, graduating more than 1,500 new recruiters each year who serve at recruiting stations throughout the United States. 46

63 Facility Renovations In 2007 MCRD San Diego began updating and expanding its facilities to support 5,000 additional U.S. Marine Corps recruits per year entering recruit training at the Depot. One additional standard barracks and one special training company facility for injured recruits have been added. The facility is the first stand alone Marine Corps funded sports medicine facility dedicated to the prevention, assessment, and rehabilitation of injuries related to recruit training. The 33,476 square foot, two-story building serves as a sports medicine hub for the Depot. It houses the Marine Corps Sports Medicine and Injury Prevention Program and the Navy Sports Medicine and Reconditioning Center. The staff includes two sports medicine physicians, orthopedic trained physician s assistants, and ten certified athletic trainers. It features a state-of-the-art diagnostic ultrasound machine as well as a cutting edge rehabilitation gym equipped with antigravity treadmills and a dedicated therapy pool. It has earned a platinum certification from LEED for its design and strategies aimed at achieving high performance in clean and efficient energy, water savings, and recycled building materials. Additionally, current academic instruction classrooms are being updated and a new logistics support building is being constructed to replace older less energy-efficient buildings. Over $61 million has been spent on the construction of new facilities. Tourism Industry Support Over 50,000 friends and family members from throughout the western United States and the Pacific visit San Diego annually to see their Marines graduate from MCRD San Diego. In addition, MCRD San Diego hosts reunions of veterans groups, attracting groups of visitors who stay in local hotels and explore the unique sights of San Diego. One of three Marine Corps command museums is located at MCRD San Diego, which is a major attraction and welcomes 128,000 visitors per year. Twenty-five buildings at the installation are listed on the National Register of Historic Places. Conclusion Each installation supports a unique set of local requirements. he specific combination of tenant commands, geography, proximity to other commands, and training opportunities provides an environment that cannot be duplicated and supports the global effort of our National Defense strategy. Because the land, air, and sea ranges are within practical traveling distance from these home bases, our sailors and Marines can train as they fight, maximizing their time home with their families and in our communities. 47

64 64 San Diego Military Economic Impact Study June 2012; San Diego Military Advisory Council

65 3900 Lomaland Drive, San Diego, CA (619)