In 2016, Industry Expansion Solutions (IES) and the North Carolina Department of Military and Veterans Affairs (NC DMVA) received a grant from the U.S. Department of Defense (DOD) Office of Economic Adjustment (OEA) to produce data and new insights about the defense manufacturing supply chain in North Carolina. The partnership was later named the North Carolina Defense Industry Diversification Initiative (NC DIDI). Working with the Strategic Development Group (SDG), NC DIDI embarked on a process to compile and aggregate critical information about defense-related supply chains in North Carolina.


This report is meant to serve as a guide to economic developers, lawmakers, the DOD and others interested in the defense and manufacturing industry to underscore the various opportunities and risks to the companies and communities in North Carolina that help power the nation’s broader defense supply chain. Manufacturing supply chains consist of organizations that exchange products, services, data and money to deliver a product to an end user. Understanding which organizations are involved in defense supply chains is very important for all involved.


This report will help economic developers better understand the supply chain perspective to identify opportunities and risk. One of the greatest opportunities is to leverage these insights to better position the state and its companies to win business. Commercial and government customers are increasingly looking for companies that not only meet requirements for price, quality and delivery, but also make good supply chain partners.


There were several major findings in the analysis of government procurement data that shed light on the composition of the region’s industrial base participating in defense work.


The largest defense industry sector in North Carolina by number of companies is North American Industry Classification System (NAICS) 54 – Professional, Scientific and Technical Services, with 2,284 firms. Second largest is NAICS 31, 32 & 33 – Manufacturing, with 1,719 companies.

  1. In fiscal year 2017 (FY17), the largest group of products purchases by the DOD from North Carolina companies was related to textiles, totaling more than $142 million. Next was firefighting, rescue and safety equipment, with purchases slightly over $140 million.

  2. North Carolina companies support a variety of weapon systems, with $37 million in sales related to the F-16 fighter and another $19 million for other aircraft.

  3. Small- to medium-sized enterprises (SMEs) in the state are not well-prepared to participate in sophisticated supply chains. The companies surveyed rely on inefficient data exchange tools and have limited awareness of their lower-tier suppliers.


The analysis of these and other findings identified several major strengths and weaknesses for the region.


  1. Professional services is a core strength, with 2,284 companies covering the state.

  2. Another strength is the 1,719 manufacturers in the defense industrial base that produce goods from raw materials to finished goods. This is particularly true for the textiles industry.

  3. One potential weakness is the small number of machine shops participating in defense work. These companies are an important element to many different supply chains.

  4. The lack of supply chain readiness by the region’s SMEs also is considered a weakness as buyers become increasingly sophisticated in their requirements.


These strengths and weaknesses help shape opportunities that could deliver business growth and a greater competitive advantage for North Carolina. Some of the opportunities include the following.


  1. Improving supply chain competitiveness would better position all regional manufacturers to compete in the global marketplace. By enhancing capabilities that include the seamless exchange of data, increased visibility to lower-tier suppliers and better management of supply chain risk, the region’s suppliers become more desirable supply chain partners.

  2. Cultivating the textile industry could have significant potential. These products accounted for the largest group of DOD purchases in FY17. Leveraging involvement in organizations like the Advanced Functional Fabrics of America Institute and the Manufacturing Solutions Center could help better position the state as a leader in advanced fabrics.

  3. Helping the North Carolina DOD contracting offices source more of their services from companies in the state could have an impact. Recapturing just some of the $900 million that left the state in FY17 could yield substantial results.


There is a growing emphasis on the role of manufacturers and service providers in global supply chains. Companies and regions must look beyond the traditional single buyer-to-supplier relationship to prepare for and capitalize on this opportunity. The work in this report should help in that transition so that the state and its companies can grow and prosper.



With 75% of business professionals reporting a lack of visibility into their supply chains, NC DIDI has coordinated the development of a comprehensive survey of North Carolina defense contractors. The purpose of this survey was to gather insights that wold help NC better understand the unique challenges facing our defense companies as well as how we can identify new opportunities for them to grow, diversify, and enter new markets.

The Analysis of North Carolina's Defense Supply Chain included:

  • A review of the supply chain survey;

  • Interviews;

  • An analysis of data a state and regional level field data;

  • An analysis of defense contractor supply chains;

  • A review of trends, opportunities and risks; and

  • An identification of roles for IES, NCDMVA and other partner organizations.

Mapping Research Methodology Included

Secondary Data:

  • USA Spending - Federal Database

  • Haystack Gold

  • D&B Hoovers

  • System for Awards Management (SAM)

  • US Cluster Mapping Project

  • Quarterly Survey of Employment and Wages (US Department of Labor)

Primary Research:

  • Online Survey

  • Interviews

  • Facilitated focus group discussions

Identify the scope and nature of all DoD economic activity in North Carolina  relating to contract awards;

  • Quantify the vulnerability of DoD activities in relation to potential changes in DoD spending, from program reductions, issues with the procurement process, reconfigurations, or expansions; and

  • Populate a data bank to facilitate continued economic impact analysis of DoD budgetary changes.


What is the composition of the North Carolina defense industrial base?

As of February 1, 2018, there are 12,637 for-profit companies in North Carolina that have a Commercial and Government Entity (CAGE) code, which means that they are registered in SAM to do business with the government. Of those companies, 1,470 did business with the DOD as a prime contractor in 2017. The remaining 11,167 were not DOD prime contractors in 2017 but may have been in other years or may have been subcontractors to a prime DOD contractor.