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The defense budget has nearly doubled since 9/11, to pay for the two wars and update the U.S. military.
But now the tide is changing again, and as it’s unclear what’s in store for the central New York companies that supply the armed forces.
Defense contractors have become a visible part of the upstate New York economy - some of the last big players left standing.
Lockheed Martin, for example, is now the Syracuse-area’s largest private employer, though it’s down from a peak of about 20,000 employees to around 2,600.
Senator Chuck Schumer, who’s been a vocal advocate for upstate contracts, puts in this way:
“The upstate economy has played a major role in protecting America as well as creating good jobs in the central New York Area.”
But defense contractors are not lining up to tout their role in job creation. I called four for this story, and all refused to to talk to me, or never called back. As one communications officer said to me outright, “we don’t want to be seen to be profiteering.”
Top of the roller coaster
That concern could be justifiable. Michael O’Hanlon at the Brookings Institute says, incontrovertibly, military spending has gone up.
“If you look at defense spending on a graph,” O’Hanlon says, “you tend to see something that is an up and down wave pattern.”
O’Hanlon says the growth of the defense industry over the past decade has been relatively tame by historical standards. The nation is up to spending around 5 percent of its GDP on the military. That’s about half the percentage allocated during the Cold War - but just a few tics more than the record low during the Clinton Administration.
Moreover, a lot of that money has been going to new personnel costs, not to procuring equipment from the manufacturers in the Syracuse region. But certainly some of the cash has made its way to defense contractors - the Associated Press found that defense industry profits have almost quadrupled over the past decade.
Leaner times ahead
But now, change is underway, yet again. End dates are in sight for the wars in Iraq and Afghanistan. A super-committee of Congress has been ordered to make a deal to close budget gap, or face big across-the-board cuts.
“We’re calling it the doomsday device in town, or some of us are,” says Sam LaGrone, a Washington, D.C.-based staff writer for Jane’s Defence Weekly. He says it’s accepted that the defense budget is getting cut - the question is how much.
In a worst case scenario, military manufacturing might have to shrink a lot, but according to Lagrone, it’s hard to say if or where that would happen.
“It’s such a terribly complicated question as to what the effects are going to be. At this point no one knows,” LaGrone says. “Everyone has a theory, but we’re going to see ... who’s right, where are these cuts going to come from.”
LaGrone says the Pentagon has begun thinking differently about how it spends its money since President Barack Obama came into office. The military used to identify its needs and spend whatever it took to get the highest-end equipment to fulfill them.
“And that conversation has changed now,” he says. “People are starting to look at much more cost-effective options.”
In central New York, Schumer says he thinks the specialization of the local defense industry might protect it from the big cuts.
“There have to be cuts everywhere. But I don’t think the areas that affect going after terrorists, the surveillance and the tracking, [are] going to be cut that severely.”
But Michael O’Hanlon from the Brookings Institute cautions that we live in a new economy. This means that if people do get laid off from defense work, there probably won’t be special programs to help them like we had at the end of the Cold War.
Rather, anyone laid off today will have to join people from all sectors of the economy looking for a job.
