The U.S. Defense Department’s $100 billion missile defense program is paying major economic dividends to Arizona, according to a five-month study commissioned by The Boeing Co., a major contractor working on the system.
Any spending cuts, as may be contemplated by the incoming Barack Obama administration, would have a major impact on jobs here, according to a Boeing official.
Greg Hyslop, Boeing’s vice president and program director of the Ground-based Midcourse Defense System, a key component of the overall system, said company officials are worried about comments from the incoming administration that indicate less than full support for the program.
“It’s a significant concern,” he said following a meeting at the Phoenix Convention Center where economists, business leaders and program officials unveiled the economic impact analysis. “Dollars cut usually translate directly into jobs that are lost in a program like this.”
The system is intended to protect U.S. soil and citizen from a ballistic missile attack by a foreign rogue state. GMD is designed to knock out incoming missiles by firing interceptor missiles that crash into them in mid-flight.
The report, conducted by the L. William Seidman Research Institute at Arizona State University’s W.P. Carey School of Business, said the program’s total economic impact on Arizona in 2007 was equal to $193 million in gross state product. That includes payroll, supplier purchases and spending multiplier effects.
It employs 729 workers at a payroll cost of $94 million, but when the study includes the myriad industries that support GMD development in the state, the number of jobs rises to 1,936 with $137 million in earnings.
The study also says the average yearly compensation for GMD workers was $128,260, more than three times that of the average earnings of workers in the state.
Arizona’s contribution to the missile defense program comes mainly from Orbital Sciences Corp. in Chandler, a subcontractor providing the booster rocket, and Raytheon Missile Systems in Tucson, which provides the system’s kill vehicle and radars. However the program indirectly uses services and products from an additional 104 vendors in the state.
Ron Grabe, Orbital launch system group’s executive vice president and general manager, said the program is vital to the state’s economy and uses services and supplies from small machine shops to aerospace giant Honeywell International.
About 90 percent of Raytheon’s workers on the program have four-year college degrees, and about 35 percent of those have advanced degrees, said Joe Maggio, deputy vice president of the company’s kill vehicle program.
Lee McPheters, an ASU economist, said Boeing commissioned the school to conduct study in July, and he said it was an unbiased assessment based on facts provided by the company, its supporting businesses and the state.
“It was reviewed by Boeing, but it was in fact a completely independent study,” he said.
He called the GMD program was “a jewel among aerospace programs,” and the jobs it provides are “the best of the best.”
During the election campaign, President-elect Obama said the technology is unproven, but he also said he would support the system if it worked. Hyslop said the system has been successful in tests although he added there’s still a lot of work to be done.
He said Boeing officials didn’t commission the study in response to Obama’s comments, but it’s part of an effort by the company to illustrate the program’s benefits militarily and economically to the public.