San Diego Business Journal Defense: Estimates Show SPAWAR Worth $1B Alone

Following three years of gradual decline, San Diego County defense industry spending shot up during 1999, pumping more than $9.7 billion into the local economy. An annual assessment of the topic released by the San Diego Regional Chamber of Commerce showed military spending jumped 3.7 percent between 1998 and 1999, following yearly declines of 0.9 percent, 0.6 percent, and 0.6 percent.

Other areas of the nation absorbed much deeper cutbacks during the late 1990s, according to a summary of the report.

Navy and Marine Corps bases, industries serving the Defense Department, plus a sizable community of military retirees are all propelling the momentum in the economy, the report noted. All told, it said, Department of Defense spending accounted for 10.3 percent of San Diego's $94.4 billion gross regional product. The report called San Diego the top county in the nation in terms of Department of Defense wages (for both military and civilian jobs). The department paid out $3.88 billion in 1999, up 6.3 percent from $3.65 billion in 1998.

Roughly half the Department of Defense payroll sent to California headed south to San Diego. Statewide, the department paid wages and salaries of $7.95 billion during 1999.

Job Creation

The report estimated that every two jobs directly supported by the military , both active duty and civilian , creates income and spending to generate a third job in San Diego County. Some 275,000 local jobs, or one-fourth of the region's employment base, owe their existence to the defense industry, the report estimated. Only the manufacturing industry brings more dollars to San Diego, the report said. (It also acknowledged there is an overlap between manufacturing and defense.)

Defense contracts awarded to San Diego companies rose by 0.7 percent last year, growing from $2.39 billion in fiscal 1998 to $2.41 billion in fiscal 1999. Such contracts show an emphasis on computers and communications rather than aerospace, according to the report. Science Applications International Corp. was the top local defense contractor in 1999, the report stated, noting it received $1.6 billion worth of work. Rounding out the top 10 defense contractors were National Steel & Shipbuilding Co., $171 million; Southwest Marine Inc., $136 million; General Atomics, $126 million; Gerwend Enterprises, $110 million; Cubic Corp., $101 million; Harper/Nielsen Dillingham, $95 million; Allstar Maintenance, $67 million; Solpac/Soltek, $62 million; and Marconi Integrated Systems Inc., $49 million.

SPAWAR

Only five other U.S. counties had more defense procurement contracts than San Diego. Los Angeles, the No. 1 defense contract recipient during fiscal 1999, saw its work jump 6.4 percent from the previous year, from $6.89 billion to $7.33 billion. Chamber officials credit the Space and Naval Warfare Systems Command (SPAWAR) for "exerting a significant impact upon regional defense contracting work." SPAWAR's move to San Diego in late 1997 "is thought to have added up to a billion dollars to San Diego's economy," the report said. The document also noted San Diego's shipbuilding and repair contracts were off. The $334 million worth of local work during 1999 was a decline of 37 percent from 1998. The complete report is published in the July 2000 edition of the San Diego Regional Chamber of Commerce Economic Bulletin. The chamber gathered data from several federal agencies and estimated amounts for some contracts, including classified contracts.