Study finds defense industry added $33.9B to New England economy in 2011

Posted June 25, 2012, at 10:11 p.m.

BOSTON — Federal defense and homeland security contracts added $33.9 billion to the New England economy in 2011 — an 85 percent increase from eight years ago, according to a new study from the University of Massachusetts Donahue Institute.

Released Monday at a Capitol Hill briefing, the regional study commissioned by the Defense Technology Initiative found that the defense and homeland security industries are highly interconnected among all six New England states and important to the region’s economy.

“The real value of the report is beginning of our commitment to keep this data refreshed on a regular basis,” said Initiative President Christopher Anderson.

Tracking data from 2003 to 2011, the report examines the trends in defense spending and the interconnections between the six New England states. It estimates that the total direct and indirect economic activity spurred by federal defense and security contracts in the region exceeded $62 billion last year.

Massachusetts, the report’s top earner, received nearly $13.9 billion from Department of Defense and Department of Homeland Security contracts — an increase of 83 percent over the study period.

The contracts are responsible for 130,000 jobs in Massachusetts, with most of the defense-related spending in the state reserved for professional, scientific and technical services for research and development.

Sen. John Kerry, a Massachusetts Democrat, said in a statement that gathering this information is important so New England’s congressional leaders “can keep making the smartest case for a strong defense industry at home.”

Sen. Scott Brown, his Republican counterpart, urged Massachusetts universities, research labs and defense industrial base to collaborate in an effort to move technology forward.

“In today’s tough fiscal environment, we must work together to find responsible, bipartisan solutions that meet current and future threats, keep our nation secure, and ensure warfighters are equipped,” he said in a statement.

Additionally, the report found that Connecticut experienced the second largest revenue boost from federal contracts in the region, with $12.7 billion pumped into the state’s economy last year — up 58 percent from 2003 and accounting for more than 101,000 jobs.

New Hampshire gained $1.3 billion from defense contracts, more than doubling its amount revenue. And Maine’s contract for new Navy destroyers at the General Dynamics Iron Works facility in Bath, contributed to the largest state increase since 2003, bringing in $5 billion in 2011, compared to the $1 billion brought in just eight years earlier.

Meanwhile, Rhode Island and Vermont received the smallest direct economic boost from federal defense and homeland security contracts, each taking in less than $1 billion in 2011.

“Rhode Island doesn’t have prime investments, but it benefits from contracts in other states,” Anderson said, adding that the indirect flow from out-of-state vendors largely elevates the economic impact of federal defense and security contracts on the state.

He also said that states like New Hampshire and Connecticut see similar benefits as Massachusetts bases employ a large number of out-of-state residents.

“If we collaborate as a region, across borders and across parties, we should be able to deliver solutions from new employers, researchers and expand the role we have in serving missions,” Anderson said.

The Defense Technology Initiative and the Donahue Institute will be releasing more in-depth studies on Connecticut, Massachusetts, and Rhode Island in the fall.

 

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