Purpose

The purpose of this planning grant is to mitigate the potential devastating impact of defense budget cuts on a region which has become increasingly dependent on defense contracts. The impact of the defense industry on jobs and income in North Carolina plays a significant role in its overall economy.

 

Employment

According to the North Carolina Department of Commerce’s most recent economic study,  [1], the defense industry supports about 10% of North Carolina’s Employment. Of the roughly 578,000 military/defense supported jobs, 386,000 occur in the private sector.  The large majority of those in the private industry are in three sectors:  Professional, Scientific and Technical Services, Administrative and Waste Management Services, and Construction.

 

 

Prime Contracts and Subcontracts

In 2014, of North Carolina’s 100 counties, prime contracting in the defense military and defense industry was performed in 79 counties. The work accounted for about $2.4 billion in DOD prime contracting.[2]  During the same year, the Department of Defense subcontracting activity in North Carolina totaled over $204 Million.[3]

 

While those numbers might seem impressive, they have greatly decreased over the past 5 years. North Carolina’s Department of Defense Contracts have gone down over $1 Billion dollars. Since 2012, the value of DoD contracts performed in North Carolina has decreased from $3.8 Billion to $2.4 Billion in 2016.  The numbers rebounded to $3.3 Billion in 2017.

Sources: Defense Manpower Data Center, U.S. Bureau of Economic Analysis, U.S. Census Bureau, and Chmura Economics & Analytics

With an almost 25% decrease in federal DoD contracts in NC, many of the state’s most valuable industries are at risk of going out business.  The NC DIDI supply chain will research where companies experienced loses, how it has effected their revenue, employment and ability to subcontract as well as what opportunities are available for them to expand their business’s resources to other industries.  In order to make the business more competitive in North Carolina, the study seeks to aid companies in achieving better cost reductions and/or profit improvements.

[1] https://www.nccommerce.com/Portals/47/Publications/Industry%20Reports/2015-Economic-Impact-of-the-Military-on-North-Carolina.pdf

[2] Data supplied by the NC Military Business Center (Source: FPDS)

[3] 22Source: Federal Procurement Data System, provided by the NC Small Business and Technology Development Center’s Procurement Technical Assistance Center.