The $700 billion dollar Pentagon budget passed by the U.S. Senate this month is expected to boost the fortunes of the state's military cluster.
The budget has more than a few legislative hurdles to clear before contracters would see any money.
Oregon lacks an active-duty military base but supports a thriving defense industry. Although federal military spending decreased over the past decade, Oregon contractors grabbed more of the overall market share.
Since the latest budget was announced, “the pace of the increase has increased," said Dave Hunt, director of the Pacific Northwest Defense Coalition, a local trade association.
Jake Sullivan, CEO of Portland defense startup Radio Hill Technologies, said, “it’s a bill that we’re tracking and working with a congressional delegation on."
Oregon companies that contract with the U.S. military have secured several notable contracts over the past year.
Radio Hill, which makes a “dronebuster” device for disabling pesky private drones, scored a $2.5 million contract with the Air Force in April. This September, PacStar Communications landed a $10 million contract with the Marines for a frontline communication system.
Shipbuilder Vigor Industrial announced this month a nearly $1 billion, ten year contract, its largest to date, to design and build the Army’s new landing craft.
Concept renderings of the Vigor design for the Army's new landing craft / Vigor Industrial
The North Korean nuclear missile threat could send more defense work Vigor’s way.
Vigor builds the silos for the U.S. ground-based missile defense system. Congressional defense committees recently approved shifting $400 million to missile defense programs. Vigor expects that project to grow in 2017-2018 and beyond, vice president of public affairs Jill Mackie said.
PacStar’s revenue exceeded $50 million this year, “substantially up” from last year, said CEO Peggy Miller.
In 2016, the company tripled its manufacturing space, and soon after doubled it again.
Hunt said he’s seen significant recent growth from FLIR Systems, Sigma Design and Columbia Helicopters.
This spate of multimillion-dollar contracts reflects the steady increase in defense dollars to Oregon. Twelve years ago Oregon was second-to-last for defense spending among the states. Since then, the state has climbed ten spots, to 39th place, Hunt said.
Data from the Office of Economic Adjustment, a division of the Pentagon, shows the Army is the top spender in Oregon, followed by the Navy and Marines, and then the Air Force.
Multnomah County spent the most on defense at $294 million. The top contractors were URS Electronics, FLIR, and Vigor. Oregon spent 1.2 billion in state on defense, and completed $700 million worth of federal contracts.
Oregon’s thriving tech community makes it fertile ground for defense innovations.
“We’re very tech focused,” Miller said, “We’ve got a lot of very talented, creative people here.”
Hunt and the PNDC connect Oregon companies that can provide technologies or workers to produce combat-ready products they couldn’t make on their own.
Radio Hill sources 90% of its supply chain from Oregon. The company relies on tech shops in Portland and Oregon companies including Sherpa Design, API, and Real Axis Machining. For PacStar, local suppliers of metals, custom cables and other materials provide 36% of the cost of goods.
Along with U.S. Sen. Jeff Merkley, Sen.Ron Wyden voted against the Pentagon budget increase, and has opposed military spending in other areas. He reintroduced a bill this September to limit the transfer of military equipment to law enforcement.
Wyden sidestepped a question about concerns arising from Oregon's growing military cluster. Instead, press secretary Hank Stern emailed the following statement:
“Senator Wyden knows full well that innovative Oregon businesses compete successfully on a level playing field and appreciates that companies in our state have worked hard to earn these contracts for defense products, many of which also have civilian use here at home.
It’s essential to a strong national defense and economy that all defense contracts go to the best-qualified companies because those serving our country in uniform deserve the highest-quality equipment and taxpayers deserve the most from their tax dollars.”
Sen. Merkley's office did not respond to a request for comment.
Correction appended: This article has been amended to reflect the correct amount of Vigor Industrial's Army contract. The original article mistakenly valued the contract at $10 million.
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