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(NECN: Peter Howe, Waltham/Lynn, Mass.) - Massachusetts and New England are sure to feel an impact -- but just how much and where is still unclear -- after U.S. Defense Secretary Robert Gates announced plans to slash $78 billion in Pentagon spending over the next five years. Gates also wants to shift another $100 billion from cutting overhead costs and waste into boosting military might.
It's the first time since the 1990s that the half-trillion-dollar defense budget has faced any serious threat of being cut. "Not every defense dollar is sacred and well spent, and more of nearly everything is simply not sustainable,'' Gates told reporters as Admiral Mike Mullen, chairman of the Joint Chiefs of Staff, sat at his side. Given the enormous pressures the U.S. government faces to slash runaway spending and debt, and the damage he said the U.S. financial health is increasingly risking to its military and geopolitical power, Gates said that "the pentagon cannot presume to exempt itself from scrutiny that the rest of the government" is undergoing.
One big project being killed is a Raytheon Co. ground-launched missile system, as well as a $13 billion General Dynamics program to build amphibious "expeditionary vehicles" for Marines. The F-35 Joint Strike Fighter project is being slowed way down to conserve money, and any plans to build a vertical-takeoff version for the Marine Corps delayed by two years.
What those cutbacks mean to the large Massachusetts defense sector is not clear -- and early reports were that even while it loses out on the ground launched missile, Ratyehon, for example, may gain from more spending on long-range missile defense and radar.
"The federal government's cutting back in a number of areas, but with these cutbacks come opportunities,'' said Christopher R. Anderson, president of the Massachusetts High Technology Council and its affiliated Defense Technology Initiative. Noting that Massachusetts has many companies that develop technologies that are used across a broad range of defense, military, and homeland-security products -- rather than companies that build fleets of aircraft, ships, or vehicles -- Anderson said that "the key here is to effectively harness the power of our regional technology asset base," making sure local companies keep providing more and more high-tech smarts to soldiers, Marines, sailors and airmen.
As a recent University of Massachusetts Donahue Institute report stressed, defense spending here is huge. In 2009, the Pentagon paid Raytheon $4.58 billion for work in Massachusetts, General Dynamics $2.14 billion (it employs around 1,500 people at a communications division in Needham and Taunton), the Massachusetts Institute of Technology $1.75 billion, and General Electric $1.68 billion, chiefly for its jet-engine plant in Lynn.
In fact, $5 of every $6 in federal contract spending in Massachusetts relates to defense, and the commonwealth ranks fifth in Pentagon contracting, after Virginia, California, Texas, and Maryland.
In all, the Donahue report said, the $15.6 billion worth of federal defense contracts awarded in Massachusetts in 2009 drove a total of $26 billion in economic activity and supported 115,563 jobs. Those numbers have roughly doubled since 2001, when federal defense contracts totalled $5.5 billion, economic activity $10.6 billion, and Pentagon-supported jobs 67,615 in Massachusetts.
Defense contracting is also critical in other New England states, including companies like BAE Systems in New Hampshire, Textron in Rhode Island, and United Technologies' Pratt and Whitney in Connecticut.
Anderson said he hopes leaders in Congress and the Senate will fight to make sure even if the Pentagon's spending somewhat less overall, it's continuing to buy ever more of the high-tech gear that's adding more smarts and more lethality to America's defense capabilities. "The trend is for innovation to become increasingly important and applied to the increasingly technology-oriented war-fighting mission of the future,'' Anderson said. "Connecting innovation with mission will be a critical part of how we move this economy through the defense cutbacks.''
With videographer Kevin Krisak