Defense industry helping strengthen state's economy
By Sean Hao
Advertiser Staff Writer
Housing, security projects to provide needed local boost
Advertiser library photos
While segments of the economy such as technology, telecommunications and tourism remain in the doldrums, people in defense-related industries have reason to be optimistic about 2003. Uncle Sam is expected to pump in more money to fight terrorism.
With the military one of the biggest sectors of the state's economy, new homes are being built, like these in the Pa Honua family housing development at Marine Corps Base Hawai'i.
Among the weapons systems being tested in Hawai'i is the EX-45, shown here operated by Air Force Master Sgt. Kevin McGinnis, foreground, at Marine Corps Base Hawai'i. The system allows the weapon to be remotely controlled using a video camera.
The state Department of Business, Economic Development & Tourism says the federal government employed 30,050 civilian and 34,322 active-duty military people in the Islands during fiscal 2001, making defense the second-largest sector of the state's economy behind tourism.
In Hawai'i, defense spending is a stable and important source of income, contributing $3.73 billion to the state economy in fiscal 2001, according to state economist Pearl Imada Iboshi.
"It's been pretty stable in recent years in terms of number of programs and jobs coming here," she said, and 2003 shouldn't be any different.
Among the larger developments for the industry next year are the military efforts to upgrade and privatize housing for military people such as a $100 million-plus project at Hickam Air Force Base. Construction is to start in spring, and the Army and the Navy also plan to eventually build new housing in the state, which may help home builders.
On the commercial side, local contractors expect the Navy to proceed with plans to seek bidders for the construction of the Pacific Security Analysis Complex at Pearl Harbor that would consolidate the Security Operations Center at Kunia and the Joint Intelligence Center Pacific.
The project, which one potential bidder estimated is valued at $220 million, is expected to go to bid next year.
Overall defense spending is projected to increase to more than $400 billion in the government's fiscal 2004 budget, including supplemental appropriations, said Paul Nisbet, a defense analyst with JSA Research in Newport, R.I. That compares with $296 billion in fiscal 2000. The government's fiscal year begins Oct. 1, and discussions about the 2004 budget begin in earnest in January.
Military spending increases are "going to be across the board," Nisbet said. Eventually, "I think it will slow down, even in terms of revenues increases, but it takes so long for things to go through the system that revenues will continue to improve for the defense contractors."
Much of that new money coming from federal coffers will be directed at programs such as missile defense, new planes, such as the F-22 Raptor and Joint Strike Fighter, as well as efforts to upgrade the military's communications and networking capabilities, Nisbet said.
But that doesn't mean Hawai'i will be left out. Because of its strategic location, the state continues to garner federal contracts for services and construction.
Still, timing on some projects remains a question.
Military contractors operating here, such as Pittsburgh, Pa.-based Dick Corp., expect to benefit from such spending gains. Dick is one of Hawai'i's largest military contractors, receiving $116 million in contracts during the federal government's 2001 fiscal year.
John Ogoshi, business development manager for Dick Corp.'s Hawai'i operations, said the company is waiting for the government to earmark more money for homeland defense-related projects at airports such as the installation of new X-ray machines and the redesign of parking areas to enhance security.
"We hope (projects) will take the form of beefing up security at other other federal buildings and military installations," Ogoshi said. "But it could be 2004 before that happens."
Reach Sean Hao at shao@honoluluadvertiser.com or at 525-8093.
