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Defense spending to boost area economy

August 31st, 2018

By Doug LeDuc | Greater Fort Wayne Business Weekly

A lot of northeast Indiana residents make a living at jobs that affect the nation’s military strength, and the region stands to benefit economically from an increase in defense spending.

Members of the Northeast Indiana Defense Industry Association welcomed news earlier this month that Congress had passed, and the president had signed, a $717 billion Fiscal 2019 National Defense Authorization Act. The amount authorized was up from about $700 billion in FY 2018 and $634 billion in FY 2017.

“Northeast Indiana is regarded as a leader in the state of Indiana for defense contracting due to the companies and supply chain we have in the area,” said Alan Tio, who chairs NIDIA and just accepted a CEO position with Kosciusko Economic Development Corp. “We are well-positioned for near-term growth in the defense sector and parallel industries like aerospace.”

Several firms with locations in this region contract directly with the government. A few recent examples include Raytheon and Ultra Electronics-USSI. Subcontractors include Pro Seal & Plastics and Team Quality Services.

Northeast Indiana has seen some decline in its defense sector employment over the last five to 10 years, Tio said. But despite the impact of military spending cuts during many of those years, he said the region can still count its defense sector jobs in the thousands.

NIDIA member interest in the nation’s defense spending levels is shared by U.S. Rep. Jim Banks, R-Columbia City, who is on the House Armed Services Committee and served as a conferee on the House-Senate conference committee that drafted the final 2019 National Defense Authorization Act.

“Congressman Banks is on the record for his support of increased investments in the defense sector in order to support our nation’s warfighters, and he is certainly aware of the capabilities of NIDIA member companies and the importance of the programs they are involved with,” Tio said.

A statement issued by the congressman’s office the day President Trump signed the defense spending legislation listed several of its initiatives he championed because he considered them important to Indiana. The initiatives involving northeast Indiana employers included:

  • Ultra Electronics USSI: The National Defense Authorization Act includes increased funding for sonobuoy procurement, a critical acoustic sensor used to locate, track and obtain undersea threat criteria. USSI in Columbia City is a leader in sonobuoy production and provides 425 jobs in Indiana’s third district.
  • Harris Corp: The bill contains language that requires the Air Force to develop a plan to provide persistent weather imagery for U.S. Central Command after 2025. The plan is required by March 1, 2019. Harris, a manufacturer of components used in military weather satellites, employs 551 employees across Indiana and 530 employees in the Third District.
  • Raytheon: The NDAA includes increased funding for upgraded F-15C fighter jet electronic warfare equipment, essential in its air superiority role. Raytheon, a manufacturer of electromagnetic systems used in military hardware, employs 1,433 employees across Indiana and 511 employees in the third district.
  • Indiana National Guard: The bill includes language that requires the Army to do an annual report on equipment modernization and fielding parity between the active component and the reserve component. Indiana has the fourth largest Army National Guard in the nation.

“We’re going to see a regrowth of the defense industry in northeast Indiana,” Banks said in an interview that touched on the impact defense spending could have on the region’s economy.

“That’s a personal priority of mine as the first member to serve on that committee — to be the best advocate not just for our military, for the 122nd (Fighter Wing), and for the Indiana National Guard, but also to be the best advocate we’ve ever had to regrow what we used to have that was significant in northeast Indiana with the defense industry.”

The defense sector used to be among the strategic industry clusters the Northeast Indiana Regional Partnership sought to expand, but it had to shift focus away from that when defense spending went into a prolonged downward trend following enactment of the Budget Control Act of 2011, Banks said.

“In this year’s NDAA, there was a lot of emphasis on the threat of North Korea, the threat of Russia, the threat of China, where in the last 15 years we’ve been focused on Iraq and Afghanistan, so we’ve lost ground,” he said. “But, last year and this year put us back on the right trajectory to get the military back to where it needs to be. And that’s important to northeast Indiana. As we’re rebuilding, it’s BAE Systems. It’s Raytheon, Ultra Electronics USSI in Columbia City, Harris Corp., and a number of other businesses in the area that are subcontractors of prime defense contractors.”

The bill includes language Banks authored requiring the secretaries of defense and state to provide Congress an assessment of Afghanistan government efforts to manage, deploy and sustain equipment provided through U.S. government taxpayer funds, to ensure the money is spent efficiently and effectively while defeating terrorist organizations such as the Taliban.