s Commander in Chief, I will do whatever it takes to defend the American people, which is why we’ve increased funding for the best military in the history of the world. We’ll make new investments in 21st century capabilities to meet new strategic challenges, and we will always give our men and women in uniform the equipment and the support that they need to get the job done.”
These words were spoken by President Barack Obama on March 4th during a session focused on government contracts. They provide a clear indication of the importance and priority of the defense industry to our nation’s security, economy, innovation and job creation. Budget figures, trends and indicators, and actions on a state and local level, back that premise.
The Opportunities
of Military Base Redevelopment
he Brooks Development Authority recently celebrated the seven year anniversary of the U.S. Air Force conveying the Brooks Air Force Base property in San Antonio, Texas, to the Brooks Development Authority (BDA). This unique demonstration project created the nation’s first and only City-Base concept.
A special “Act of Congress” and legislation passed by the state of Texas has enabled Brooks City-Base to undertake the transition of the former military base into an innovative, internationally recognized, research and technology center with more than 2 million square feet of multi-purpose space.
As the president and CEO of the BDA, I know first-hand the tremendous economic opportunities that exist through military base redevelopment. The success we’ve achieved here in San Antonio proves that former military and government owned property can play an important role in bolstering state, regional and local economies.
As the former director of development for the state of Ohio and former president and CEO of the Michigan Economic Development Corporation (MEDC), I was involved with two separate rounds of Base Realignment and Closure (BRAC) deliberations. It was a difficult time working with local community officials who had to deal with the realities of these base closures and what the future would hold for them economically. I learned that BRAC issues affect every community differently, and that a “one size fits all” strategy just doesn’t work. Creative strategic planning and allowing the entire community to be a part of the development process has been the basis for success in all my business experiences, and that was certainly true here in San Antonio.
As the Brooks City-Base project progresses, we continue to measure the full economic impact of our efforts. To date our current tenants employ a total of 3,700 people, and approximately 3,100 of those are still Air Force/DoD employees. As we prepare for the Air Force’s scheduled departure in 2011, Brooks City-Base has created a comprehensive development plan to position our research and technology center as a mixed-use, master-planned campus concentrating on bio-science, bio-medical, pharmaceutical, healthcare and information technology industries.
As the Air Force jobs relocate to other areas (primarily to other San Antonio military installations), our goal is to replace those positions with quality private-sector job opportunities. We have already created 600 non-military jobs in the last 30 months, and we have completed negotiations with the Baptist Hospital System for a 50-acre, world class hospital and medical office complex that is expected to create 300 new jobs and retain 500 jobs. We have also invested over $50 million in new infrastructure improvements on our campus that will allow companies to conduct business on an international basis.
For the city of San Antonio as a whole, the Military Transformation Task Force forecasts that BRAC 2005 will be one of the largest economic development initiatives in the city’s history. Through 2011, BRAC will have an estimated economic impact of $5.7 billion and create 46,000 construction jobs. After 2011, BRAC is projected to create 11,000 additional jobs and provide an additional economic impact of $621 million.
Base closures and realignments are occurring nationwide, and former military bases from coast to coast are being transformed into a variety of new developments. Plans include airports, shipyards, warehouses, manufacturing plants, academic institutions, business and industrial parks, port authorities, medical and biotechnical research centers, master-planned residential communities, parks and recreation, and natural and wildlife sanctuaries. The vision of creative mixed-use development opportunities will hopefully provide the best reuse success.
As I stated before, what makes redevelopment projects interesting is that every base is different, and each one offers its own unique set of challenges and opportunities. It’s up to a community’s development team to analyze its land and facilities, assess options, and work with federal, state, and local government to make the redevelopment initiative a success. I’m proud to say that the City-Base model we’ve designed at Brooks is one of a kind, and represents a “best practice” case study for other military communities on how to encourage successful public/private partnerships.
There are plenty of other examples of successful base redevelopment projects around the country. Another example is the Port of San Antonio. Since it was closed as Kelly Air Force Base, the Port has become a thriving, multi-faceted transportation center that supports 12,000 individuals, employed by 60 companies, which generate an annual economic impact of $2.5 million.
Despite these success stories, base redevelopment isn’t always welcomed with open arms. When bases are first slated to be closed or realigned, communities tend to fear the worst — that their local economy will take a huge hit, that jobs will be lost, that things will never be the same. Please know that you aren’t alone, and there are many organizations out there that will do their best to assist. I can assure you that the Brooks Development Authority is one of those organizations.
By transforming bases from former military operations into successful public and/or private economic development opportunities, we can help communities forego failure and realize prosperity. Base redevelopments are always rife with opportunity. It’s up to us as developers to create long-term, self-sustaining economic impact. Brooks City-Base is a prime example of visionary planning to foster future economic growth.
The U.S. Department of Defense’s base budget for 2009 rose to $515 billion, and for 2010, the President has requested $563 billion. In addition, the Heritage Foundation projects that funding for the core defense budget will increase by an average of about $10 billion per year between 2011 and 2014. To put that in some global perspective, the U.S. military budget back in 2005 accounted for almost as much as the rest of the world’s defense spending combined. The United States and its close allies are responsible for about two-thirds of the world’s military spending (of which, in turn, the U.S. is responsible for the majority). In 2007, U.S. military spending was above one-quarter of combined industrial and agricultural production in the country.
Specifically, military-related research and development spending – currently at about $80 billion (representing more than half of all federal R&D spending) – is an important component of defense spending overall, especially because of its positive economic impact across the country. Most defense research and development work is performed in the private sector by defense contractors, and substantial R&D work also is being performed by federally-funded research and development centers, defense laboratories, and colleges and universities. In fact, the Department of Defense is the third largest federal sponsor of academic research, behind the National Institutes of Health (NIH) and the National Science Foundation (NSF).
If you’ve been following the national discourse on defense over the past several months, you know there has been significant debate on topics such as spending emphasis overall; troop pull-out and re-assignment overseas; investing in technologies to combat new and emerging threats; increasing the size of the Army and Marine Corps; reducing cost overruns and delays; and more. Yet while there are differing opinions, important issues to address, and natural questions and concerns that come with change, one thing holds true – the defense industry is entering a new era of innovation that will result in both enhancing the security of the country and boosting our economy.
That innovation is gleaming in states and communities with inherent defense assets and ones likely to generate more defense contracts. Major defense contractors from the likes of Lockheed Martin down to small businesses (to which the DoD awards about $55 billion) have not been immune to the challenging economy, but seem to be holding steady. They, and the industries they represent – from software and communications to engineering and even video-gaming – are innovating, generating new applications and continuing to commercialize military technologies. They’re partnering with other organizations and universities to bring new defense technologies to life. And that ultimately creates the high wage jobs everyone wants.
In Florida, and specifically Orlando, that’s a cycle we continue to see happening. In 2006, Florida companies generated nearly $11 billion in Department of Defense Prime Contract awards, ranking?the state?4th in the nation. In fiscal year 2005, defense-related spending was responsible for $52 billion in output, or GSP, in Florida and accounted for 732,300 jobs. It’s projected that by 2010 the defense industry impact in the state will approach $59.5 billion.?Orlando, long known as the having the largest simulation and training cluster in the country, is home to more than 100 related companies employing nearly 17,000 people.
Those numbers drive home the fact that defense contractors cluster around military activity centers, especially around centers of acquisition and R&D activities. The strongest technology communities around the country tend to be those where the three components of defense, industry and academia are closely associated. A good example of this synergy and the resulting clustering effect can be seen in the Orlando simulation and training technology “center of excellence,” also referred to by the military as “Team Orlando.” The Team Orlando military commands are represented by all of the military services, working together to support the services’ simulation and training technology requirements; researchers at the University of Central Florida (now the fifth largest university in the country); and public and private entities.
A further look at Florida shows that the state is home to one of the nation’s largest defense and homeland security clusters, which encompasses everything from the manufacture of satellites, tanks, and biometrics to the development of vaccines. The convergence of related industries, such as information technology, photonics, modeling, simulation?&?training (MST), aerospace and life sciences, is fueling growth in defense. And Florida continues to be a hotbed for that convergence with Orlando serving as the hub for that activity.
These are all things that will be critical for future industry site selection decisions – from existing cluster locations, to the importance of partner universities for related research and development, to the fact that training and related technologies that support it remain top priority for the industry; to the convergence potential. And we cannot overlook the importance of two other important factors for the defense industry: a skilled work force that will continue to fuel the industry, as well as the spin-off, cross-over potential and further applications of the technology itself. The latter has proved to have significant impacts in Orlando as core defense simulation technology used to train our military is now driving advancements in medical simulation, for example, with immense growth potential.
As President Obama said on March 4th, increased investments in our military will result in new technologies and capabilities that will enhance our national security and will drive innovation and economic opportunities – from weaponry, infrastructure and training, to intelligence gathering and surveillance, to many new applications that cross multiple industries. It’s a time of transition and change ? one that the industry will seize upon to advance our position as the mightiest force and technological leader in the world.
Russ Hauck is the executive director of the National Center for Simulation (NCS) in Orlando, Fla., which serves as the link among the defense industry, government and academia on behalf of the entire simulation, training and modeling community. The NCS mission is to serve as an information resource and to facilitate networking among its growing local, national and international membership and potential partners and customers in government, industry, education, and commerce.