Wednesday, June 20, 2012
The San Diego Military Advisory Council breakfast meeting was packed for the release of the 2012 Report on the Military's economic impact on San Diego.
The military remains a powerful driver of the San Diego economy, according to the latest study of its economic impact. However there is uncertainty about future military spending.
The latest SDMAC report estimates about a quarter of all jobs in San Diego continue to rely on federal military spending.
National defense spending has declined from $714 billion in 2010 to $670 billion in 2012. However, Department of Defense spending in San Diego has increased from $19 billion in 2010 to an estimate of more than $20 billion in 2012.
Almost 40 percent of that - $8 billion – is spent on wages and salaries for active duty and civilian employees; about 140,000 people.
But many more jobs, like food services, construction and research, depend indirectly on federal defense spending. The report estimates 311,000 jobs in San Diego are supported by the military’s presence.
That’s down from more than 350,000 jobs in last year’s report.
Lynn Reaser is Chief Economist with Point Loma Nazarene University. Its Fermian Business Institute produced the report this year. Reaser said they used different statistical models. However, she said, the number still represents about 25 percent of San Diego’s overall jobs, because the number of jobs in San Diego has also declined.
Reaser said the key words to describe the military investment in San Diego this year are “holding steady.” She said the biggest question is about the future.
“A lot of people are worried about what happens after 2012,” she said. “With the ending of the war in Iraq, winding down the war in Afghanistan, concerns about the federal budget, we will see defense spending under considerable pressure. Still, San Diego retains some significant buffers."
Reaser cited the redirection of military strategy toward the Asia-Pacific region, reliance on unmanned aircraft, a focus on cyber security, and the need for training ranges.
Brigadier General Vincent Coglianese, head of Marine Corps West, said training continues to be important, even as the conflicts draw down.
“As we draw down out of Afghanistan and refocus on the Asia-Pacific region,“ Coglianese said, “our training installations are even more important - specifically Camp Pendleton.”
Navy Mayor, Admiral Dixon Smith, said San Diego also offers key sea and air training space.
“We have 67 percent of our air training ranges here in the southwest,” he said.
Smith said the size of the sea training range off the San Diego coast is equivalent in square miles to the size of California.
SDMAC 2012 Military Spending
Defense contracting makes up a little less than half of DOD spending in San Diego this year. The top 10 defense-contracting firms in San Diego earned about $6 billion in 2011, down from $7 billion in 2009. The report estimates the amount of money spent on defense contracts in San Diego overall peaks in 2012, at just under $10 billion. The amount remains fairly steady through next year, but much of that money is from contracts signed several years ago, rather than new contracts.
Projections for the future of military spending in San Diego depend on budget cuts and on whether the threat of "sequestration," a potential 10 percent, across–the-board cut, is avoided next year.
Sequestration will be triggered if Congress fails to reach agreement on how to cut the federal deficit.
Ruben Barrales, President of San Diego’s Chamber of Commerce, said the chamber has invested in a lobbyist in Washington, D.C. for the first time since 2005, to work on behalf of San Diego businesses.