AUGUST 2007: AROUND THE STATE, HIGH TECHNOLOGY
Is defense in retreat?
The PacStar 3500
— essentially a portable office with a
ruggedized laptop and satellite modem — was
designed by a Portland company for remote
military teams.
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STATEWIDE — Despite the efforts of a regional business
coalition to increase Pentagon contracts awarded in Oregon,
last year the state fell to its lowest ranking in defense
spending per state in 10 years.
Military contracts fell to $562 million in 2006, a decline
from $589 million the year before. At the same time, Oregon
dropped from 40th to 43rd place when compared to federal
spending in other states.
However, those behind the Pacific North-west Defense Coalition
say Oregon’s low profile in the world of military
spending, while less than ideal, isn’t necessarily a bad
thing. And as the nation’s military presence in Iraq
presumably decreases in the coming years, the state could
benefit as the Department of Defense shifts its attention from
resupplying the armed forces to developing new technology.
Air crews wear
Flightcom’s E-13 ANR headsets to reduce the
low-frequency noises that induce fatigue and impede
communication.
Wilsonville-based
Crimson Trace’s handgun laser sights are used
by all branches of the U.S. Armed Forces.
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In 2005, about 20 defense companies in Oregon and southern
Washington formed the Pacific Northwest Defense Coalition
(PNDC). In April the group hired its first full-time executive
director, Brice Barrett.
Focusing on big-picture numbers is important, he says, but not
at the expense of what’s actually being accomplished.
“We don’t want to get lost. We don’t want to
set that [national comparison] as a performance benchmark.
Don’t get me wrong, [increasing Oregon’s ranking]
is a strategic goal, but trying to manage that number can very
dangerous.”
Compared to states with comparable populations — for
example, Connecticut ($7.7 billion in contracts in 2006) or
Oklahoma ($2 billion in 2006) — Oregon has never seen
much defense-industry cash. In the mid 1990s the state’s
annual total was sometimes as low as $130,000 for all
businesses combined.
Despite Oregon’s national reputation as a blue-leaning
state — think former Sen. Mark Hatfield’s
anti-Vietnam War stance or President George H. W. Bush’s
“Little Beirut” nickname for Portland — a
lack of contracts probably has little to do with politics, says
Bill Lunch, chair of Oregon State University’s political
science department.
The reasons are simpler: no major military bases. No marquee
defense companies. No skilled workforce to attract new defense
companies. “One thing builds on another,” Lunch
says. “In terms of defense spending, Oregon has always
been a bit of a backwater.”
With the invasion of Iraq came a little boom in the backwater.
In the leadup to the war, the state’s annual defense
contracts total exploded past $400 million. It peaked at $589
million in 2005.
In the last two years the PNDC has also grown; it boasts 80
member companies. Officials at those companies laud the
coalition for its success in helping businesses learn the
intricacies of the contract process. Winning a defense contract
is sometimes the easiest part, says Barbara Keepes, division
manager at Portland’s Flightcom, which makes aviation
headsets. A network of businesses that can answer questions and
explain paperwork can be invaluable.
When it comes to the value of defense con-tracts,
Barrett has some rosy figures. He estimates defense-related
companies employ more than 2,000 Oregonians, who earn more than
$122 million a year. But if Oregon businesses increase the
amount in contracts they get to $1.4 billion a year, the
workforce would jump to 5,000, wages to $300 million and income
tax to $16 million.
Is that even possible? Or does the 2006 drop in contracts
portend a return to 1990s-era figures?
There’s one thing that may prevent a continued downward
slide: Many Oregon companies make products with uses that
extend beyond wartime. Consider Wilsonville’s FLIR, which
makes infrared imaging systems; Portland’s HemCon, which
makes specialty medical bandages; and Clackamas’ Oregon
Iron Works, which among other types of work, has a defense
contract to work on a wave-energy project.
Bill Sundermeier, senior vice president at FLIR, put it most
succinctly. When the military is not at war, he says, its
emphasis shifts from re-supplying troops to creating innovative
technology.
Chandra Brown, vice president of Oregon Iron Works and vice
chair of PNDC, points out that the Department of Defense is
looking for sustainable energy sources. “Look at wave and
wind energy. That will be an area where Oregon and the Pacific
Northwest can play a bigger role in future acquisitions and the
greening of the military,” she says.
At the end of the Cold War, the defense in-dustry in
California took a major hit. Barrett remembers the fallout; he
oversaw the man-agement of defense contracts as a project
manager in the Air Force’s space program. He sees
parallels with the war in Iraq.
“At the end of the war there will be a whole different
kind of spending,” he says. “We’re not
building the bombs or the guns or the tanks. Therefore we can
provide a whole different kind of product.”
— Abraham Hyatt
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