Lisa Katz| Crain’s Detroit Blog

For more than 100 years, the state of Michigan has been a proud producer and supplier of defense industry innovation, machinery, weaponry and personnel. Military installations statewide have trained personnel, produced land, sea and air transportation and developed the technology platforms used in vehicle and troop transport, ground and air communications, navigation systems, weapons systems and much more.

The Southeast Michigan region even gained the nickname “Arsenal of Democracy,” alluding to the tanks and equipment built here that helped fight Nazi Germany during World War II.

Declining defense spending

Between 2012 and 2014, there was a decline of $1.2 billion dollars in total defense spending in the 13-county Advance Michigan region, a disinvestment of 38 percent. Total defense contracts in the Advance Michigan Region have declined from 3.42 percent (FY 2012) of total U.S. Department of Defense spending to 2.59 percent (FY 2014), according to data and analysis by the Workforce Intelligence Network.

These notable declines, in conjunction with military drawdowns in Iraq and Afghanistan mean the region must work to diversify the supply chain.

To date, Southeast Michigan has been heavily invested in the engineering and design of land systems, predominantly used in conflicts in the Middle East, such as the Bradley Fighting Vehicle and the Abrams Tank. With future defense investments more oriented to the Asian-Pacific and aerospace and naval equipment, the likelihood that spending would benefit Southeast Michigan is not nearly as great as in years past.

Meanwhile, the region faces yet another threat, as policymakers debate whether to maintain the national fleet of A-10 Thunderbolt II, nearly two-dozen of which are based in Michigan. With the potential for these to be placed on backup status, or slated for retirement, National Guardpersonnel could face major reductions, as the A-10 accounts for a majority of the military allocations within the state.

Difficulty of finding defense workforce data

The true number of job losses in the defense industry are buried in a myriad of occupations, sub-sub-subcontractors (or similar) and contract houses that lend their talent depending on need, minimizing the need for defense prime contractors to directly hire workers.

There also seems to be a fairly recent trend among defense contractors to hire more contractors rather than regular employees, giving them the ability to fluctuate their staffing depending on contracts gained or lost.

Preliminary research by WIN identified a loss of 3,400 jobs from 2012 to 2014 from contractors to the Department of Defense, ranging from major defense contractors and camouflage manufacturers, to cell phone providers and hotels. These numbers are likely very low compared with actual layoffs, as this data was gathered only from a few of the defense primes in the region and notices of massive layoffs or closures reported to the state of Michigan (WARN notices).

Regardless of the difficulty of tracking the defense workforce, it is reasonable to assume that with declines in Department of Defense dollars obligated to the region, there is also a decline in defense workers.

Retaining defense workers, expanding business diversification:

Based on numerous conversations with defense-affected partners, WIN has identified a few possible methods of adjusting to the regional decline in defense dollars:

  • Diversified sales: Many of the defense prime contractors have already started transitioning to other industries and looking to foreign sales. Without this method, it is likely that many more defense jobs in the area would be lost and the ability to create and innovate for U.S. needs would be diminished.
  • Build secure cyber capacity and expertise: This is the future of conflicts. By building capacity in cybersecurity (including talent, expertise in “hardening” and testing products), defense employers are likely to stay (and possibly even grow) here. This can also be a benefit to businesses of all types if infrastructure is developed to allow private industry to test the security of their products.
  • Leverage expertise in autonomous and connected vehicles: Southeast Michigan is a hotbed of activity when it comes to connected vehicles, including those leveraged by the military. This same knowledge and expertise can be deployed for connected products in general (i.e., the Internet of Things). Reimaging and redeploying connected and autonomous technologies for other manufactured goods could help diversify, revitalize and grow jobs in the regional economy.
  • Help redeploy dislocated defense workers: During the recent economic crisis, tens of thousands of highly qualified workers left the regional labor force to find jobs in other areas. As defense industry spending declines in the region, there should be a way to quickly identify and reconnect those workers with growth opportunities in the region, before they decide to leave the area.

Recently, the U.S. Department of Defense Office of Economic Adjustment awarded a $5.97 million grant to partners in Southeast Michigan to help move some of the above strategies forward. The effort promises to help support regional economic transformation and worker transition at a critical time for the economy.

This blog post was prepared with research and content from Tricia Walding, project manager-research and policy, Workforce Intelligence Network.

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