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Indiana’s Defense Industry Braces For ‘Fiscal Cliff’

A soldier inspects a small drone at the Mid America Defense Conference in Scottsburg.

As Indiana’s defense industry considers how to adapt to potential federal budget cuts, some military contractors have already been marketing their skills to civilian businesses.

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” that would cut defense spending by $500,000 if Congress does not act before the end of the year.

But even if Congress does pass new legislation, it will likely still reduce military spending by several hundred billion dollars.

DePauw University economist Kellin Stanfield says military contractors in Indiana would then be forced to cut jobs or at least workers’ pay, and that could lead to economic losses through the communities where the contractors are based. But Stanfield also says those companies could find new revenue sources by turning to 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 organization has a similar idea. They market the state’s military bases and resources to private companies as well as the federal government.

“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.”

For example, he says, the group is promoting the state’s military bases as places where companies that develop unmanned drones can test their new products. Konkler says if Indiana can partner with private companies its bases will have a stable revenue stream despite federal budget cuts.

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