San Diego Business Journal

The U.S. armed forces , the second largest employer in San Diego County , pumped $11.7 billion into the region in 2004, a new report says.

Despite the much-heralded diversification of San Diego County's economy in recent years, the report released Jan. 31 by the San Diego Regional Chamber of Commerce found that "the U.S. military continues to play a significant role in the local economy."

According to the report, defense spending in San Diego County has risen by more than $3 billion since 1993, growing from 2002 to 2004 by 15 percent during that time. For every 1 million in defense dollars spent in the region, the economy supports 12 jobs.

Among other findings of the report, which includes the latest available data:

- San Diego ranks first among all counties in the United States for defense spending, making it one of the largest beneficiaries of incoming federal defense dollars.

- In 2004, the economic impact of the U.S. military was $18.3 billion in gross regional product, 14.7 percent of San Diego's total economic activity. The U.S. Navy accounts for 65 percent of this, and the U.S. Marine Corps 23 percent. The remaining 12 percent is undistributed, due to the inclusion of general procurement contracts and retirement and disability benefits.

- In addition to supporting more than 148,600 military jobs, defense spending indirectly supported an additional 142,500 jobs in the local economy , 20 percent of total employment in the region.

- Defense spending in the county also generated $5.6 billion in earnings, 9 percent of all earnings in the county.

- Manufacturing , the largest employment sector in San Diego , benefits the most from the business created by defense spending. Defense-related manufacturing supports 19,800 jobs and $4.5 billion in economic output. The professional, scientific and technical services sector was second, with military spending generating $2.4 billion, and 19,000 jobs for those industries.

Of jobs generated, San Diego's retail sector led the way, with 20,000 positions in 2004, followed by manufacturing and professional, scientific and technical services. Health care ranked fourth, and the hotel/food industries fifth, supporting 16,000 defense-related jobs apiece.

- Before 2010, the regional economy is expected to get a boost from incoming U.S. Navy units, Marine Corps personnel increases, and the development of the Navy Broadway Complex, the latter of which could generate $2.7 billion during the course of its build-out, and more than 22,000 jobs for the local economy.

This study is the most comprehensive ever done on the military's impact on San Diego's economy, said Ruben Barrales, chamber president and chief executive officer.

"I hope that this will set a benchmark," he said. "We feel very comfortable in using and sharing this with policy-makers at the local and state level, and in Washington."

The chamber isn't releasing how much it spent on the study.

Commented Rear Adm. Len Hering, of Navy Region Southwest, based here in San Diego, "We can now make much better, more informed and very conscientious decisions about our future."

Navy Region Southwest provides base operating support and services for all operating forces and shore activities in the Southwest.

For defense contracts totaling $25,000 or more, between the years 2001 and 2005, for companies based locally or with large operations here: Science Applications International Corp. topped the list, with an annual average of $714 million.

Following SAIC was National Steel and Shipbuilding Co., with more than $650 million; Northrop Grumman Corp., more than $462 million; and General Atomics, more than $285.7 million.

The study was prepared by Export Access, part of the International Relations and Pacific Studies graduate school at UC San Diego.

Brett Hamsik, the study's lead author and researcher, said that he didn't know when more recent data would be available on the economic impact of the military in San Diego.

Founded in 1870, the San Diego Regional Chamber of Commerce is a nonprofit organization with the goal of promoting the business interests of its 3,000 members.