Why Federal A&D Spending Is The Modern Interstate Highway System

bY Michael Bruno

Lockheed Martin recently broke ground on two new buildings in Courtland, Alabama, a small town 45 mi. west of Huntsville. The buildings will house the manufacturing and testing of hypersonics weapon programs. Lockheed expects to move at least 72 new jobs into Courtland and add another 200 in Huntsville over the next three years.

It is big news for Courtland, which saw its population drop to 609 in the 2010 U.S. Census from 769 in 2000. But in the grand scheme of things, the dozens or perhaps hundreds of jobs involved—it is unclear how many are new hires versus relocations or backfill—are a fraction of Lockheed's roughly 105,000-person workforce.

Yet it is what President Donald Trump wants to see—and where—and a result of record national security spending of $750 billion annually under his administration that includes new technology priorities such as hypersonics. Not surprisingly, Alabama's powerful Republican Senate appropriator Richard Shelby and Gov. Kay Ivey as well as Lockheed Chairman, CEO and President Marillyn Hewson and officials from the Air Force, Army and Navy made sure to be in Courtland for the public relations event Sept. 16.

In 2016, Trump campaigned with a promise to provide a $1 trillion infrastructure plan to upgrade America. Roads, bridges and airports featured prominently. After he took office, Trump latched on to a contentious Republican proposal to outsource FAA air traffic control, which the White House called the cornerstone of his infrastructure push. All of it died legislatively. But before Democrats or others try to score points over the failure, they should understand Trump has still delivered.

The truth is that Trump's defense spending and government support of commercial aviation and space are today's equivalent of the Dwight D. Eisenhower National System of Interstate and Defense Highways. They have been what passes for infrastructure spending, just without roads, bridges and airports. Increasingly, the employment figures are adding up, and so are the beneficiaries such as Courtland.

The U.S. aerospace and defense (A&D) industry was responsible for more than 2.56 million jobs in 2018, a 5.5% gain over 2017, thanks primarily to a return to growth across the top tier and supply chain, according to September statistics from the Aerospace Industries Association.

The trade association says A&D accounted for 20% of all U.S. manufacturing jobs and paid nearly $237 billion in wages and benefits last year, up 7.72% from 2017. In 2018, the average wage of an A&D worker was $92,742, an increase of 1.36%. That made the average A&D salary 87% higher than the national average salary of a U.S. worker.

Hewson promises to hire thousands of workers, almost all in the U.S. “Roughly 93% of our employees are U.S.-based, as are 93% of our 16,000 suppliers, making Lockheed Martin a proud driver of broad-based economic development and opportunity in America,” the company says. A map of employment shows the company has at least 100 employees in half of the 50 states.

This is the story across the industry, which is the model for farming taxpayer-funded work across the states in order to build political coalitions to support major A&D programs. On the same day of the Courtland event, Northrop Grumman unveiled its industry team bidding for the Ground-based Strategic Deterrent, including a contractor army of more than 10,000 people in at least 32 states.

But all good things come to an end, and warnings are emerging that A&D's infrastructure-like run could sunset. “Trump is now in full ‘2020-reelection mode,' with continued 2022-26 defense funding growth rapidly becoming a secondary issue,” notes longtime defense consultant Jim McAleese. He points to a Sept. 9 rally in North Carolina at which Trump characterized the “rebuilding” of the U.S. military as “complete.”

This can matter a lot to communities where federal A&D spending is focused. The Pentagon began to push out information this year to help states and local communities understand how much they depend on defense appropriations.

In a report unveiled March 19 at the Brookings Institution, the Defense Department found the top 10 states by total defense spending received in fiscal 2017 accounted for $239.7 billion of the $407 billion total tracked that year. “There's no obvious correlation of red states or blue states, not that there should be,” noted Michael O'Hanlon, a senior fellow and Brookings analyst.

Officials say communities should plan ahead. “It gets back to the rural areas,” says Patrick O'Brien, director of the Pentagon's Office of Economic Adjustment. “Some rural areas see a lot of defense spending; others do not. Where it is occurring, you probably have a very important facility or you have an important presence. And it's up to these local officials to get a better handle on it.”

https://aviationweek.com/defense/why-federal-ad-spending-modern-interstate-highway-system