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MassDevelopment In The News
State Ranks Eighth in Defense Contracts
January 31, 2008: The Lowell Sun, by Matt Murphy
BOSTON — Lucrative defense contracts, accounting for $14.7 billion in economic activity in Massachusetts in 2005, have proven to be a crucial catalyst for high-tech jobs and manufacturing in the state, according to a new report.
Massachusetts ranks eighth nationally in defense contracting, pulling in $9.2 billion in federal dollars that have sparked an additional $5.5 billion in activity, according to a study compiled by the UMass Donahue Institute.
General Dynamics, with divisions in Pittsfield and elsewhere in the state, scored the second-largest paycheck, raking in more than $1.7 billion in 2005 — about 18 percent of the total contracts awarded in the state.
Specializing in information systems developed primarily for the U.S. Navy submarine program, General Dynamics employs about 900 people at its Pittsfield facility.
"Virtually all of our business is federal," said Tim Taylor, a spokesman for the company.
The defense industry is directly responsible for about 32,240 jobs in the commonwealth, and another 39,187 jobs statewide connected with these contracts.
Berkshire County, in total, saw an influx of $56.4 million in defense contracts.
The study, conducted for MassDevelopment and the Executive Office of Housing and Economic Development, highlighted the significant growth in the defense industry between 2000 and 2005, when the value of contracts awarded increased by about 92 percent.
The spike has been driven, in part, by a $1 billion increase in Navy contracts to the state.
The authors of the report, along with economic analysts, attributed the success of luring these contracts to Massachusetts to the wealth of skilled workers and educational opportunities in the state.
"We must protect our position in this important arena, and nurture its growth," said Dan O'Connell, the state's secretary of economic development. "Fortunately, we're well positioned to leverage our already impressive record by making sure that federal agencies and defense contractors know we want their business and have the workforce, business base and will to meet their needs."
The giants of the defense industry, including companies, like General Dynamics and Raytheon, however, aren't the only businesses that have benefited.
More than $1.2 billion in contracts went to federally recognized small businesses, and more than $1 billion went to nonprofits and hospitals. In total, 2,435 companies received some federal defense funding.
Rebecca Loveland, research director of the Donahue Institute, said many small businesses use these military contracts to jump-start other ventures.
"A lot of these small businesses use the defense contracts and that economic engine to create products that span tactical as well as home household and consumer uses to branch out into other markets," Loveland said. "It's kind of a springboard engine."
Gov. Deval L. Patrick and other state officials said yesterday's report highlights the need to work closely with the state's Congressional delegation to ensure these dollars continue to flow into the state.
State Rep. John Olver pledged to continue to do his part to make sure large and small companies, along with universities like UMass-Amherst, continue to receive the funding they need to thrive and provide an educated workforce.
"So much of defense work these days is technologically based. This study really underscores the fact that our state has a very strong cutting edge tech sector," Olver said. "It also calls attention to the research being done at our world class colleges and universities."
© Copyright 2008 The Lowell Sun.
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