September 11, 2011

The 1990s were not kind to this state's once-booming defense industry.

But fast forward and you'll find a surge in defense contracts to Connecticut.

Mark Prisloe, an associate economist with the state's Department of Economic and Community Development, says Connecticut over the past several years has experienced one of the largest surges in national security spending in its history.

Prisloe, in an analysis of this state's defense industry in the September issue of The Connecticut Economic Digest, says Connecticut prime contract awards from 1994 to 1997 averaged $2.6 billion. From 1996 through 2010, those awards averaged $6.8 billion. In the 2009 fiscal year, that number spiked to $12 billion - the highest contracts ever awarded in Connecticut in one year.

This spike in defense spending, according to Prisloe's analysis, was part of a national trend, as well as a response to 9/11 and spending on the wars in Iraq and Afghanistan.

Connecticut has had a long history of defense spending. It's home to some big defense contractors, including Pratt & Whitney in East Hartford - also a big commercial contractor - Sikorsky Aircraft in Stratford, Hamilton Sunstrand in Windsor Locks and the Electric Boat shipyard in Groton.

Connecticut ranks sixth on a per-capita basis for defense-related expenditures - that works out to nearly $5,000 per person. That figure is higher than the national average, which works out to almost $3,000 per person.

And here in southeastern Connecticut, the defense industry remains a major employer. In fact, Electric Boat has been hiring engineers, which is good news for our economy.

The state says the Naval Submarine Base in Groton, which employs about 9,500 workers, including active duty personnel, civilian employees and contractors, had a $4.5 billion economic impact in the fiscal 2009 year, up from $3.1 billion in the prior fiscal year.

Electric Boat's Virginia-class submarine program also has a big impact on the economy, with 622 suppliers spread across our five congressional districts. The largest concentration is not here in the 2nd District, but rather in the Hartford area's 1st District. It's estimated those 600-plus firms supply more than $600 million in goods and services.

Prisloe, writing in the economic digest, says Connecticut ranks third-highest in prime contract awards per capita, behind Virginia (first) and Alaska (second). "Among Connecticut's counties," Prisloe says, "the distribution of defense contract dollars was overwhelming in New London and Fairfield." In the 2011 fiscal year, New London had the biggest share with 38 percent, while Fairfield had 35 percent. Those are big numbers; by comparison, Litchfield, Middlesex, Tolland and Windham counties combined had 1 percent of the defense dollars. Over the years, Connecticut - and southeastern Connecticut, in particular - has fretted about too much of a reliance on defense spending. Of course, as defense spending downsized during the 1990s, fears began to grow that southeastern Connecticut was becoming too dependent on casino-related employment and spending.

But Prisloe says the dependency issue isn't cause for too much worry. "The short answer is that the economy seems sufficiently diversified so as not to be overly reliant on the defense industry."

He concludes that Connecticut's $211.3 billion economy is, indeed, bolstered by a vibrant defense industry, including its prime contractors like Electric Boat as well as its many subcontractors.

"They serve," says Prisloe, "not only as investments in our state's highly skilled workers, but they are vital to maintaining a strong national defense."