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Mass. Defense Industry Facing Large Cuts In Federal Spending

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BOSTON — There are growing concerns that cuts to the Pentagon’s budget will hurt the recovery in Massachusetts and the state’s economic future. President Obama’s proposed budget would trim more than half a trillion dollars in defense spending over the next 10 years.

WBUR business and technology reporter Curt Nickisch joined Morning Edition to discuss the possible ripple effects in Massachusetts.

Deborah Becker: First, to get an idea of what’s at stake here, how big is the defense industry in Massachusetts right now?

Curt Nickisch: Huge, but hidden. You don’t see high numbers of military uniforms on the street like you see in San Diego, for instance. But if everyone in Massachusetts who owes his or her job to defense spending were to put on a uniform this morning, there would be more than 100,000 more people in the state in military dress. Massachusetts ranks fifth in the nation in defense contractor spending.

Raytheon last fiscal year got more than $4 billion. General Electric got more than $1 billion. MIT got more than $1 billion. More than 2,000 other companies and universities got the rest of the money. It all added up to more than $14 billion just last year.

So how much are we talking about losing under the proposed cuts?

It’s a moving target. No one expects the president’s budget to go through as is. Also unlikely in its current form is a Republican plan to protect — to sequester — defense dollars from budget cuts.

One person who’s been wrestling with this is Martin Romitti. He’s the director of economic and public policy research at the UMass Donahue Institute:

We know the dept of defense budget is going to be cut. But will that just be a little trim around the ears in the Massachusetts defense industry? Or are we really talking about a military-style crew-cut? We’re not quite sure.

His best guess is that Massachusetts will lose somewhere between 20,000 and 30,000 jobs over the next 10 years due to the spending cuts.

Nobody likes to see jobs cuts, but some people might say that 3,000 job losses a year here in the Bay State in order to save billions of dollars off the deficit, let’s take that trade-off.

The problem for Massachusetts is that it’s more than just 30,000 average jobs. Romitti says these are high-paid, high-skilled jobs:

Aeronautics, communication, medical devices. So, you know, some of our major innovative, high-tech products and services. We’re concerned that, with the reduction in the Department of Defense budget, it sort of unwraps or unwraps that fabric. And that’s something we hope won’t happen.

Because like it or not, defense is a big part of the Massachusetts knowledge economy, and if you shave some of that away, you weaken universities, you weaken hospitals, you weaken tech firms, you weaken the cluster.

So is this the concern at Hanscom Air Force Base, where contractor firms are bracing for cuts?

Great example. Hanscom doesn’t have any planes. So while base closings may come back up as part of these reductions, and the six bases in Massachusetts could be at risk, the bigger danger is not losing planes and pilots, it’s losing all these high-tech research firms that you may have never heard of.

Besides lobbying, what can the contractors and the state government do?

Adapt. The federal government will spend less money on defense. But it’s also going to change what it spends its money on, and that’s the key. The Massachusetts defense industry hasn’t grown from $6 billion to more than $14 billion over the last decade making shoelaces for combat boots. It’s making high-tech defense solutions.

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