San Diego used to be thought of as recession-proof. With an economy heavily rooted in the defense industry, the region for decades rode out recessions with little damage. Then came the 1990s, the end of the Cold War and the resulting cutbacks in defense spending. Suddenly, San Diego found itself as vulnerable to recessionary woes as any other region.
Over the past decade, San Diego struggled back from the economic brink and built itself a broader foundation of industries. But we never really let go of our ties to military spending. In past the month, that determination paid off nicely for three local companies.
In the past three weeks, National Steel and Shipbuilding Co., Titan Corp. and TRW’s Radio Systems Division in Ranch Bernardo have each received major government contracts.
Nassco signed a deal with the Navy to build a new line of cargo ships that, if taken to full build-out, could total $3.7 billion. TRW’s local division, a key player in the development of the newly approved F-35 Joint Strike Fighter, will receive some $500 million from that contract and hire 300 additional workers.
Titan, responding to the anthrax threat, will now provide the U.S Postal Service with equipment to sanitize mail. The Postal Service will buy eight of the electron beam machines , originally designed to treat food products , for a price of $40 million, with an option to buy up to 12 more machines. Though not truly a defense contract, Titan’s equipment will play a key role in homeland defense.
While these contracts don’t harken a return to the days when San Diego’s lifeblood was defense spending, they do hint at what could be a chance for local firms to , as the saying goes , make lemonade out of lemons.
Since the vicious attacks of Sept. 11, Congress has taken a renewed bipartisan interest in bolstering military spending , not just in increasing pay and housing for service personnel as lawmakers have done in recent years, but also in developing new technology for power projection and homeland defense.
The House Appropriations Committee bill for 2002 defense spending now stands at $317 billion , $19 billion more than current levels , and is likely grow to $340 billion or more before it hits the floor. A Senate version of the bill will likely be as generous, particularly in the area of homeland security.
A good deal of that money will be funneled through the Space and Naval Warfare Command, the Navy’s main contracting arm based here in San Diego. Another $50 million will go into a new Army-sponsored nonprofit venture capital corporation that will invest in companies offering technology with both civilian and military use.
While San Diego should never return to the days of defense-dependent economics, it’s good know that an old ally , the defense industry , may once again come to the aid of the region’s physical and economic security.
