Despite the recent surge in military contracts scored by firms in Rhode Island, many people familiar with the local defense industry say it faces long-term obstacles that could harm the industry.
Counter-intuitively, a drawn-out war in Iraq or future military actions could hurt many of the 40 defense-related companies doing business on Aquidneck Island, say insiders, because a majority of them specialize in research and development for the Navy. Federal allocations for research could fall off if America becomes increasingly engaged in military conflicts during a time of national recession.
“Typically, everybody thinks that there’s going to be a lot of money flowing out to the defense industry down here. But in reality it’s the big hardware makers building new Tomahawk missiles and other weapons – the Raytheons in the industry – that are going to profit. For the most part, a lot of this really hurts smaller companies because dollars are reallocated to replacing hardware,” said Eric Hovermale of McLaughlin Research Corp., which provides engineering research services to the Naval Undersea Warfare Center on Aquidneck Island. “R and D suffers, to pay for day-to-day operations. We don’t see this as necessarily good, or a windfall situation at all.”
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The Rhode Island defense industry faces an even more ominous challenge in 2005, when Congress and the Department of Defense will convene a Base Realignment and Closure Commission to close many of the military facilities.
Defense experts in Rhode Island fear that the U.S. Naval Station in Newport could be closed – eliminating thousands of local jobs and imperiling the future of the Aquidneck research firms that work closely with the Navy there.
The Naval Station is Newport County’s largest single employer in terms of both personnel and payroll. Eleven thousand people work in the defense industry on Aquidneck Island alone, which carries a collective payroll of $812 million, according to the trade group Rhode Island Manufacturers Extension Services, RIMES.
Statewide, between 15,000 and 17,000 employees work in defense jobs. In terms of payroll, more than $1 billion is earned at defense-related companies, according to RIMES.
On April 1, state Rep. Gordon D. Fox, the House majority leader, introduced legislation that would create a Special House Defense Planning Commission. The 17-member temporary commission would study ways to bolster the state’s defense economy and keep the naval base open.
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