SAN DIEGO S DEFENSE INDUSTRY AT A GLANCE

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1 Defense Editor s Note: The San Diego Regional Economic Development Corporation (EDC) would like to credit the San Diego Military Advisory Council (SDMAC) as a principal contributor to the following industry overview. SDMAC commissioned the San Diego Military Economic Impact Study in April Key narratives and statistics from the study are presented within the following pages.

2 SAN DIEGO S DEFENSE INDUSTRY AT A GLANCE San Diego is home to the largest concentration of defense assets in the world. The San Diego region is the homeport of more than 60% of the US Navy Pacific Fleet, and more than 30% of the US Marine Corps operations. Combined with the more than 100,000 service members stationed in the region, the $18.2 billion spent in San Diego by the Department of Defense created a $30.5 billion economic impact in The economic impact in the San Diego region is well known and has been part of the fabric of the community for over one hundred years. San Diego s strong military and veteran presence was set in motion during World War I and II with the establishment of the Navy Coaling Station in Point Loma in Paired with the presence of the largest number of military installations and defense manufacturers in the world, San Diego s defense industry rapidly grew, more than doubling the city s population between 1930 and Long considered a key driver of economic activity in the region, the defense industry has also contributed to the rise of San Diego s prominent status as a key science, technology and tourism hub. Contracting with local high-tech companies has promoted numerous technological advancements and helped to support San Diego County s other economic interests in fields such as biotechnology, communication, maritime technology, information technology, manufacturing and aerospace. In fact, in 2008 the defense industry had a direct $9.8 billion economic impact on San Diego s manufacturing and professional/technical services. Today, San Diego s defense industry remains a central figure in the region s economic prosperity. Department of Defense spending supports approximately 26% of the total jobs in San Diego County, and supports 354,627 jobs in the region. This spending contributes directly to the depth of San Diego s defense industrial base and world class capabilities in command and control systems, reconnaissance and surveillance systems, unmanned vehicles, and cyber security. Of the numerous defense contractors located in the region, eight of the top ten government contractors have sizable operations in San Diego County, including Boeing, Booz-Allen Hamilton, General Dynamics, Lockheed Martin, L-3 Communications, Northrop Grumman, Raytheon, and SAIC. ECONOMIC IMPACT OF DEFENSE SPENDING 2009 Economic Impact Direct Spending ($ billions) 18.2 Economic Output ($ billions) 30.5 Earnings ($ billions) 16.3 Employment 354,627 Summary points and table of a study released April 2011, by UCSD, commissioned by San Diego Military Advisory Council. Source: University of California, San Diego, School of International Relations (www.sdmac.org) The presence and impact of the defense industry is expected to grow as the Pentagon s recent Quadrennial Defense Review calls for a continuing movement of resources away from the Atlantic to a greater Pacific orientation. The San Diego region will reap much of the benefits of this strategic shift. As a result, San Diego s role in Department of Defense decision making, procurement, research and development and troop support will grow with a simultaneous impact on supporting infrastructure, procurement expenditures and opportunities within the region. Companies who have a presence in San Diego will reap much of the benefits from the positive trend lines including Cubic Corporation, General Atomics, SAIC and others. Although these companies focus on defense products and services, they are also integral players in the world of technology and services of other industry sectors in the San Diego region. Page 39

3 Much of the region s Naval procurement and research and development will continue to originate from one central location. Based in San Diego, the headquarters of the US Navy s R&D and procurement, the Space & Naval Warfare Systems Command (SPAWAR) is one of the world s leading research, science and technology intensive centers. In support of these interests, SPAWAR actively works to develop external partnerships with the research and development communities in industry, academia and government. Although the defense industry continues to diversify, this sector remains a stable and substantial contributor to the overall economic health of our region. San Diego ranks as the world s largest concentration of defense assets and one of the largest beneficiaries of incoming federal defense dollars. This spending benefits the local economy by supporting an active defense contracting industry. Many of the smaller defense contractors, especially those applying high technology show great opportunities for convergence with other sectors and industries, commercial applications and exports. LARGEST RECIPIENTS OF DOD CONTRACTS PERFORMED IN SAN DIEGO COUNTY, FY 2009 Recipient Total Value of Contracts General Dynamics* $1,493,474,604 Science Applications International $1,475,910,577 Northrop Grumman* $1,455,091,021 General Atomics $1,315,647,326 Harper Construction $324,498,526 BAE Systems* $262,846,222 Turner-Penick $213,303,344 Hensel Phelps Construction $177,640,072 Cubic Corporation $174,020,374 Booz Allen Hamilton $135,562,060 Top Ten Total $7,027,994,126 *Includes Subsidiaries Source: CNRSW, DMDC and Export Access (SDMAC Impact Study 2011) TOP 10 DEFENSE CONSTRUCTION PROJECTS 2011 Prime Contractor Project Contract Amount CDM Filanc JV South Regional Tertiary Treatment Plant expansion $163,518,000 Webcor and R.A. Burch JV 1st Reconnaissance Battalion and the 1st Air Naval $124,300,000 Gunfire Liaison Company CDM Constructors Inc. Organic carbon corrosion control facility $46,286,423 Harper Construction Co. Recruit barracks for the School of Infantry $40,497,265 T.B. Penick & Sons Inc. Recruit field barracks for Ranges 501 and 503, 31 Area $16,818,418 R.A. Burch Construction Co. Inc. Mess hall expansion at Marine Corps Recruit Depot $15,917,288 T.B. Penick & Sons Inc. Bachelor quarters at San Clemente Island $15,407,072 T.B. Penick & Sons Inc. Child development center at Marine Corps Base $13,353,244 Billbro Construction Co. Inc. Weapons and field training battalion support facilities $13,165,628 Edson Range, 31 Area Shaw Environmental & Infrastructure Las Pulgas landfill at Marine Corps Base $12,40,4,924 Top Ten Total $491,668,262 Source: San Diego Business Journal Book of Lists 2011 Page 40

4 DEFENSE TRADE ORGANIZATIONS IN SAN DIEGO Defense trade organizations throughout the San Diego area provide excellent networking and collaboration opportunities through the region. These groups serve as windows into the defense industry, providing real-time opportunities for local industry to pursue. Armed Forces Communications and Electronics Association San Diego Chapter (AFCEA) The San Diego Chapter is AFCEA s fourth largest chapter in the county with over 1000 members, of which more than 300 are associate members through a corporate sponsor, representing the heart of high technology in one of the country s most lucrative markets. AFCEA is one of the world s premier C4I professional societies. The Association serves the military, government, industry, and academia to advance professional knowledge and relationships in the fields of communications, IT, intelligence, and global security. Association for Unmanned Vehicles Systems International San Diego Lindbergh Chapter AUVSI is the world's largest nonprofit organization devoted exclusively to advancing the unmanned systems community. San Diego is at the forefront of unmanned systems technology - rich in technology in both the Public and Private Sectors, San Diego is the ideal region to develop an effective business interface for the mutual benefit of all members. The San Diego Lindbergh Chapter is dedicated to the advancement of Unmanned Systems and Technology in the greater Southwest region. The Chapter enthusiastically engages in initiatives with the public and private sector for the advancement and advocacy of Unmanned Systems, and is a value added resource for the integration and interoperability of space, air, ground, sea and undersea systems. National Defense Industrial Association San Diego Chapter (NDIA-SD) NDIA-SD is dedicated to uphold the vision and mission of the national organization with a focus of bringing together the defense community of the city and county of San Diego in an effort to advocate new technologies, promote a government-industry national security team, and provide a legal and ethical forum for the exchange of information between industry and Government on National Security issues. San Diego Military Advisory Council The San Diego Military Advisory Council (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. SDMAC will advance the partnership and communication between the military, San Diego s elected and appointed officials, and the business community while working to enhance recognition of the military s many contributions to the greater San Diego area. The Security Network The Security Network was created to advance security by Fostering Innovation through Collaboration worldwide. The Security Network is a unique non-profit, non-partisan San Diego-based organization that promotes two goals the rapid commercialization of dual-usage security technologies from around the world and the development of effective regional security. Page 41

5 San Diego Regional Economic Development Corporation (EDC) is supported by more than 150 of San Diego s largest companies and most influential business leaders. EDC s business development program supports significant corporate outreach and retention, while nurturing emerging industries and attracting new corporate investment through targeted marketing initiatives. EDC strives to attract high-wage, technology-driven companies to the region from around the world and assist those here with expansion plans, and to champion foundational efforts to improve the region s competitiveness. Contact us for more information! San Diego Regional Economic Development Corporation Office (619) Fax (619)

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