The Business of Defense
by Becky Skillman
When Col. Joe E. Rameriz, visited the Muscatatuck Urban Training Center in 2010 he remarked, “People have tried to explain this, but you can’t really grasp the capability until you see it first hand, this is big... we are spending millions trying to build this, and you already have it in Indiana.” Echoing the same fascination with the rest of the state’s defense industry, the Indiana Business Resource Center declared, “The prominence of the defense industry in Indiana may be one of the most important untold stories of the past decade.”
Only now is that story beginning to fully unfold.
Indiana’s Asset Base
In 2001, Indiana had fewer than 400 defense contractors whose total contracts valued at $1.8 billion. By 2010, 1,136 Hoosier businesses had received 9,889 federal defense contracts amounting to $4 billion, a rate of growth nearly twice as great as the increase in total U.S. defense contract dollars. Over that same period, Indiana attracted a total of $47 billion in defense contracts. And these dollars translate intogood jobs. Jobs directly supported by these contracts had an average salary of $64,000 in 2010 while manufacturing jobs had an average salary of $90,000. Moreover, for every 10 jobs with an Indiana defense contractor, an additional 11 jobs were created throughout the state.
Comprising the foundation of Indiana’s defense dollar magnet are the state’s hard assets. Muscatatuck Urban Training Center is considered the largest, fully functional real brick and mortar urban training environment in the United States. Muscatatuck offers the only site in the nation where unmanned systems can fly in restricted airspace and collect data from an urban environment. Its counterpart Camp Atterbury is one of the premiere training and mobilization facilities in the country. NSWC-Crane is the world’s third largest Naval installation and pumps a massive $2 million into the Indiana economy every day. The technology that comes out of Crane can be found on the nation’s toughest warfighters; on nearly every Naval ship, submarine, missile, and aircraft; and in every branch of the military. Taken together, these installations, also known as the Indiana Test Bed, provide unmatched training and testing capabilities for the nation’s armed forces, law enforcement and homeland security.
Indiana is also home to the Jefferson Proving Ground, Hulman Field, Grissom Air Reserve Base, the 181stIntelligence Wing, and the 122nd Fighter Wing of the Indiana National Guard.
Helping to fuel the industry are the states many defense contractors. Big hitters like Raytheon, BAE Systems and ITT have set up shop in the state but so have smaller, lesser-known tech firms like Simulex, Odyssian Technology and Next Wave Systems. Hoosiers will also be pleased to know homegrown firms like Eli Lilly and Cummins are among the state’s largest defense contractors. Some of these contractors have coalesced around the hard assets and comprise clusters, or hot beds of innovation and development. These can be found in and around Indianapolis, Fort Wayne and the southern Indiana installations. According to Northeast Indiana Regional Partnership director John Sampson northeast Indiana has an especially robust defense tech cluster because it “is home to more than 4,300 employees working at Fortune 100 companies and other technology and related manufacturing operations.”
Indiana’s universities are also adding significant value to America’s national security while drawing in big defense dollars for the state. In 2010, Purdue University attracted a whopping $7.9 million in contracts due in large part to the Institute for Defense Innovation and its six centers of excellence. Indiana University is nationally recognized as a leader in instruction in all of the strategic languages and is the only institution to be awarded three DoD National Security Education Program Language Flagships in Chinese, Swahili, and Turkish. Moreover, the university’s impressive work in cyber security and information assurance have won it recent attention from the National Science Foundation in the form of a $4.3 million grant. Notre Dame’s world-renowned research on nano-magnetic logic has attracted many defense contracts. The university is conducting cutting edge research on the transmission and computation of data using magnetic fields, rather than electrical currents. Indiana State University is one of the only universities in the country that has a major or even a minor in unmanned aerial systems and human capital development. Other academic institutions that have attracted defense dollars include Rose-Hulman, Trine University, Taylor, Ball State, Vincennes, and Valparaiso.
While Indiana’s seventy-six colleges and research universities provide highly trained and talented graduates that are attractive to defense companies, the state’s education advantages go beyond the post-secondary level. Indiana’s K-12 STEM programming and the presence of the highly-acclaimed Project Lead The Way give the state a further edge on developing a highly skilled labor force. Already, we have more than 61,000 defense industry jobs and over 6,400 engineering and technical defense workers. The increased investment in Indiana’s defense industry signals a greater need for higher human capital— which Indiana can provide—and consequently higher wages for the target labor force.
Investing in Our Future
All told, Indiana’s thriving but relatively quiet defense industry will continue to be a major economic engine even as the nature of warfare shifts to include untraditional threats, irregular warfare and increasingly dynamic challenges. With this in mind, Governor Daniels and I have tried to support the warfighter since taking office by investing in our assets here in the Heartland.
Governor Daniels and I both have shown our support for the $12 million Battery Innovation Center at the WestGate@ Crane Technology Park. Though the center’s defense-related research will benefit from its close proximity to NSWC- Crane, the center is also geared for commercial applications. According to the Indiana-based Energy Systems Network, the global market for advanced batteries is nearly $50 billion. Economists predict double-digit annual growth over the next decade driven by increasing adoption of electric vehicles, the implementation of smart electric grid technologies, and other applications for flexible energy storage.
In further support of the WestGate Technology Park, our administration has worked to build a southern extension of I-69 that will better connect the state’s central hub with the assets in southern Indiana including Crane. At the groundbreaking of the center, Governor Daniels told the crowd, “There are a lot of reason to see [the I-69] project through. By listening to folks here I came to understand and believe deeply that the future growth of this facility was the top one such reasons.”
Passing the Torch. Providing Continuity.
As our administration transitions out of office, we have set up an organization to provide continuity of strategy and to bolster economic development in the state while adding muscle to the U.S. military. In early 2012, I announced the creation of the National Center for Complex Operations to oversee Indiana’s economic development strategy as it relates to the defense industry. The NCCO acts as a “one-stop-shop” to connect state, federal, and private interests with services, programs, training and testing capabilities that will serve the U.S. armed forces and government agencies at all levels. In essence it is a portal that expedites and facilitates the relationship between parties on both sides of the fence. The NCCO has identified five specialty areas that mesh particularly well with Indiana’s defense asset base. These are: Special Operations, Energy, Modeling, Simulation, Cyber Readiness, and Unmanned Aerial Systems (UAS). It is UAS that the NCCO is focusing on initially.
Since its recent inception, the NCCO has started to develop an impressive track record. In response to the FAA search for six UAV test sites, Indiana has teamed up with Ohio to attract the attention of federal dollars, which will go towards developing the proper regulations for unmanned flight. Taken together, Indiana’s restricted airspace coupled with Ohio’s robust defense sector provide our states with a competitive edge. Most recently, the NCCO brokered a business deal with its first customer, BAE Systems’ Unmanned Aircraft Group. BAE Systems is a multi- billion dollar company and will bring a mutually beneficial relationship to Indiana’s growing UAV industry.
Past conversations about national security have drawn people’s attention to the coasts, but with the role of high technology in today’s military we have the opportunity to shift focus to the Midwest, especially Indiana. While the notorious sequestration is cause for concern, the programs that funds are likely to flow to include unmanned systems and cyber-security, both of which are strengths of our state. National defense and homeland security will be provided with unmatched advantages because of Indiana’s progressive, low-cost business environment, world-class research capabilities, technological innovation, engineering excellence, and manufacturing expertise. More importantly, Hoosiers will benefit directly from the good jobs created and the influx of wealth that will occur if we continue to support our troops through the innovation and manufacturing that we do best.
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