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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

State sees less military spending

As wars wind down, Pentagon’s priorities shift

Adam Ashton Tacoma News-Tribune

TACOMA – Washington state military contractors are feeling the pinch as the Defense Department reins in spending after a decade of growth. But industry representatives say they’re positioning themselves to make the most of the Pentagon’s changing priorities.

Defense companies took home $4.9 billion in military contracts for work in the state during the 2010 federal budget year, down from $5.8 billion two years ago, according to an online database that tracks government spending.

They anticipate more competition for defense dollars in the years ahead, even though the Pentagon budget has generally held steady the past two years.

Defense Secretary Robert Gates aims to cut spending by $100 billion over five years, a sum that could eat into local contractors’ bottom lines.

“There’s a lot of speculation” about which programs might be on the chopping block, said Brice Barrett, executive director of the Pacific Northwest Defense Coalition, a Portland-based trade group.

“When we talk about future defense cuts, we sort of say we all know it’s coming, but we don’t know what it’s going to look like,” he said.

Barrett wasn’t surprised to learn that 2008 was the top year in spending on Washington state defense contracts.

At that time, Joint Base Lewis-McChord was operating at a fast tempo, deploying soldiers overseas while the Pentagon was spending heavily to keep two wars supplied.

“Spending got very high, and it definitely makes sense that we would see a return to pre-war spending levels,” he said.

Information available at usaspending.gov, an online database, shows that defense spending hasn’t declined to its pre-war floor. It’s at the same level as 2006.

Lewis-McChord is expected to have its largest stateside population since the wars in Iraq and Afghanistan began. Some 18,000 Lewis-McChord soldiers returned from combat zones in 2010. Most are due to remain home this year.

“If we’re going to start winding down the wars, presumably there will be some adjustments downward, but I understand a lot of soldiers are coming home and staying here,” said Egils Milbergs, executive director of the Washington Economic Development Commission.

Milbergs’ group in September released a study on the state’s defense economy that anticipated cuts in overall military spending but concluded that Washington could emerge with an increase in revenue.

The study pointed to the likelihood that the Defense Department would steer money here to counter threats on the Pacific Rim, invest in sustainable energy, support companies that focus on cyberterrorism and build up contractors working on robotics.

The Boeing Co., Washington’s largest employer, could lose out if Gates succeeds in halting purchases of new C-17 Globemasters, the workhorse cargo plane based at Lewis-McChord that the military uses to deliver materials worldwide.

The Air Force says it has enough with its fleet of 206 C-17s, and it’s struggling to find space for more of the $250 million planes. A cut to that program, however, wouldn’t necessarily hurt Washington’s labor market, because Boeing manufactures the plane in Long Beach, Calif.

Boeing’s defense revenue for work in Washington state bucked the statewide trend and climbed to $2.3 billion in 2010 from $1.8 billion in 2009, according to the government’s spending database.