Indiana’s defense industry is considering how to adapt to major cuts in the federal budget for the armed forces. One strategy for current military contractors is to turn their skill toward the civilian market.
It is unclear exactly how much money the government will trim from the military budget over the next ten years.
Legislators who are working to avoid the so-called “fiscal cliff” looming before Congress in January might head off the $500 billion defense spending cut that is part of the package. But they will probably leave the $478 billion reduction set out by the Budget Control Act of 2011 in place.
DePauw University economist Kellin Stanfield says military contractors in Indiana to cut jobs or at least workers’ pay. That could lead to a rippling of economic loss through the communities that host contractors like Raytheon, Rolls-Royce and AM General. Stanfield says those companies might find a new path toward growth by turning toward other markets.
“If the machinery for producing, say for example aircraft or guided missiles, is very similar to the machinery needed to produce manufactured goods that go into automobiles, then it might not be that big of a transition,” he says.
Executive Director of the National Center for Complex Operations Matt Konkler says his company has a similar idea. He thinks the robotics they develop, including for the unmanned aircraft known as drones, could be applied outside the military, in areas like farming or law enforcement or even medicine. He says it’s also going to try “sell low” when funding goes down.
“We are looking to offer the federal government the same type of service, whether it’s a training mission or a testing mission or simply evaluation, for a lower cost,” he says. “It’s a very simple method, it’s what business people do, entrepreneurs do each and every day.
Stanfield says Americans might benefit overall from a reduced military budget if the resources created by the boom in defense spending that peaked in 2008 can be redirected toward other areas of the economy.