HONOLULU — The state Department of Business, Economic Development and Tourism has released its Hawai‘i Defense Economy Strengths-Weaknesses-Opportunities-Threats Analysis Report and Action Plan, which identifies the strengths, weaknesses, opportunities and threats to Hawai‘i’s defense sector, and proposes strategic initiatives to expand opportunities for more local businesses and contractors to engage in and benefit from military-contract spending.
“Hawai‘i’s military-defense sector continues to remain strong and is helping to stabilize our economy during this pandemic,” said Mike McCartney, DBEDT director.
“As the second largest sector of the state’s economy, military-procurement spending has generated $4.5 billion in economic impact this year (2020), with $2.3 billion in federal contracts throughout the state, helping to sustain more than 30,000 jobs statewide,” he said.
”Our Hawai‘i Defense Economy project SWOT Analysis Report and Action Plan allows us to identify and determine initiatives that will help us to diversify and strengthen our state’s economic resiliency, which is now more important than ever.”
Major highlights from DBEDT report include:
Strengths and opportunities
• Financial health (overall financial performance) and defense market outlook (market growth potential) received the highest survey ratings, indicating that Hawai‘i’s defense market has been and is expected to continue to be financially rewarding, with more opportunities in the future.
Weaknesses and threats
• Market flexibility received the lowest rating, indicating difficulty for defense firms to serve both public and private (commercial) markets, with the exception of construction, which appeared to be more resilient in its ability to serve both defense and private sectors.
• Department of Defense dependency ranked relatively high (46% among all respondents), indicating a potential threat should there be a downturn in defense spending in Hawai‘i.
• Business climate (of the defense market) and labor market (skilled-labor availability) were considered significant challenges and threats, especially in the professional-services sector, like information technology services and cybersecurity, ship-building and repair, and program/project management across many industries.
Focus areas
The following were identified as sectors with the greatest potential for sustaining Hawai‘i’s defense industry and building economic resiliency. All areas have experienced growth in military contract awards over the past five years:
• Information technology services and cybersecurity is an important industry sector given the size of annual defense spending ($128 million in 2020 contracting awards and $240 million in economic impact); high growth rate (+32% in terms projected from 2018-2028); relatively high-paying occupations; and Department of Defense mandates for cybersecurity;
• Engineering services receives large annual defense spending ($293 million in 2020 contracting awards and $569 million in economic impact), offers high-paying occupations within the state, and opportunities beyond missile defense, including system repair, maintenance and facility construction;.
• Ship-building/repairing plays a vital role in supporting Pearl Harbor Naval Shipyard — the nation’s largest, most-comprehensive fleet-repair and maintenance facility between the U.S. West Coast and Asia, and the state’s largest industrial employer — and provides the opportunity for local workers to work in high-paying trade and technical fields and pursue additional career opportunities.
For more information about DBEDT’s Hawai‘i Defense Economy project, and to access data and information about Hawai‘i’s military defense sector, visit defenseeconomy.hawaii.gov/.
