Innovation and Washington’s Defense Economy

Presentation for:

Tacoma-Pierce County Chamber Military Affairs Forum
Egils Milbergs
Executive Director

Washington Economic Development Commission October 13, 2010

Great Recession

Geography of WA Unemployment (Aug. NSA)

8.9% State-wide

Path to Recovery .


Changing paths to economic recovery 2000s There is no better time like a downturn to innovate. Kauffman Foundation . list began during a recession or bear market. Dane Stangler. Advantage is Innovation 1980s & 1990s Advantage is Quality Strategy is “Make it Better” Strategy is “Make something new” 1960s & 1970s Advantage is Cost Strategy is “Make it Cheaper” Over half of Fortune 500 and just under half of 2008 Inc.

broadband)   Economic Policy (corp. corporate investment.How are we doing?  40 countries/regions  16 Indicators  Economic Structure • Human capital (college education. government R&D. GDP per worker. FDI. researchers) • Innovation capacity (corporate R&D. tax. productivity) . scientific publications) • Entrepreneurship (new firms. venture capital) • IT infrastructure (e-government. ease of doing business) Economic Performance (trade balance.

Score 6 80 70 60 50 40 30 20 10 0 9 .Overall Actually we are No.

France 23. Canada 35.S. United States 10 . Mexico 31. Brazil 40. Netherlands 32. EU-15 30. • • • • • • • • • • • • • • 1. Luxembourg 6. NAFTA 38. Cyprus 10. EU-10 20. Germany 36. Hungary 12. Ireland 19. Australia 33. S. Sweden 22. Malta 25. Poland 28. Austria 17. Lithuania 9. is Behind…. Korea 18. Japan 11. Finland 34. EU-25 27. Slovakia 13.Decade Trend: The U. Russia 8. UK 29. China 2. Italy 37. India 15. Denmark 5. Portugal 24. Czech Republic 14. Belgium 26. Greece 39. Slovenia 7. Estonia 4. Spain 21. Latvia 16. Singapore 3.

72nd in mobile. One in US US ranks 22nd in broadband. 5000 in China 60 nuclear plants being built. 1 exporter Of Wal-Marts 6.Category Five Rising Above the Gathering Storm. Revisited China replaces US as No.000 suppliers. Engineering R&D in US down 51% in 25 years WEF ranks US 48th in science and math education 77% of companies plan R&D facilities in China and India Third of US mfg. companies suffer skills shortages US life expectancy ranks 24th in world US ranks 40th in rate of innovation in past decade .


10.57 .4.

Plan for Washington .

…. 2009 We must look over the horizon and prepare for the new economy that will emerge when this recession passes. Gov. Commerce Secretary Gary Locke March 18. creative. creative and fertile investment environment for innovation in the world. 2009 15 . Chris Gregoire March 10.A Ten Year Vision We should not fear to lead Make Washington State the most attractive. we can’t rest on our laurels. and embrace innovation. so let’s commit today to grooming a workforce and leaders who are agile.

investment and infrastructure will we need to succeed in that world? • Is Washington prepared? • What do we need to do? • How will we pay for it? • How will we know if we are making progress? .What will the World be like in 10 years? “Prediction is difficult – especially when its about the future” • What talent.

Exports. Jobs and Prosperity Policy Environment Gov’t Defense Military Inputs when optimized in a regional innovation ecosystem (cluster) generates results 17 .21st Century “Sputnik” Challenge Education Workforce Research Talent Investment Infrastructure Business Start-ups Innovation Ecosystem Capital Associations NonProfits Regional Growth.

A New Innovation Growth Curve We are here PROSPERITY TIME .

Some Critical Challenges .

Innovation is not just a stand alone place Innovation Increasingly looks like this “Innovation is 99% shared technology and 1% exclusive technology” Phillips CEO The innovation economy is organic. non-hierarchical. . open. distributed.

Global Health IT. Data Centers Medical Devices Environment Remediation State Fair Defense Medical Clean IT New Forestry. Solar. Energy Clean Tech. Biofuels . Smart Grid.Marine Food Tourism Marine “Twilight” Energy Agriculture. Composites World’s Largest Innovation Network Biomedical. Incubators Aerospace Life Sciences. simulation Food Processing Wind. gaming. Green Tech Electric Highway Wine. Water Biotech.

Source: Washington Technologie Industry Association (WTIA) .

Talent Challenge 23 .

What has changed in 700 years? .


Infrastructure Challenge Beyond Oil? Post “ICE” Age? Internal Combustion Engine 26 .

Export Challenge .

Malta. China includes Hong Kong. Philippines. and Vietnam. South Korea. and Slovenia. Singapore. Malaysia. Thailand. Luxembourg. Indonesia. Latvia. EU excludes Cyprus. Lithuania.Trade balance in high-technology goods 1995–2008 NOTES: Asia-9 includes India. Source: NSF Science and Engineering Indicators 2010 . Estonia. Taiwan.

Washington’s Defense Economy .

•Identify emerging opportunities for Washington-based businesses based on trends in defense strategy and mission.PROJECT OBJECTIVES •Economic impact of Washington’s bases and defense-related economy. •Develop recommendations for a statewide economic development strategy and expanding WA share of defense contracting. .

5 billion in labor income $5.000 jobs $12.2 billion in output WA Nat’l Guard $10.Major WA Military Installations Whidbey Island Naval Air Naval Submarine Base Bangor US Coast Guard Spokane Fairchild AFB Puget Sound Naval Shipyard 191.2 billion in defense contracts Joint Base Lewis McChord Madigan Medical Center US Army. Yakima US Marine Corps .



Emerging Trends in National Defense Strategy • Decline in overall defense budget. and Reconnaissance  Special forces and special operations  Network-centric operations  Cyber security  Composite materials  Unmanned systems – both air and sea • A focus on energy efficiency and alternative energy. while West Coast increasingly important strategic location. Surveillance. . • Ongoing role in peacekeeping and nation building. • Caring for veterans and wounded warriors. • Smaller scale threats and responses and on emerging technologies:  Intelligence.

C. Promote the economic benefits of the defense economy into stakeholder groups in the State. Explicitly include defense in the State’s economic development strategy.Promote WA’s Defense Related Economy A. D. Elevate and communicate the State’s commitment through creation of central office focused on the military. and high level participation in trade shows and relationship-building in Washington D. B.C. Communicate what’s happening and elevate the State’s profile nationally .

analysis. Support emerging defense-specific economic development efforts: the Pacific Northwest Defense Coalition and Washington Defense Partnership. Take a proactive approach to growing Washington’s defenserelated economy through cluster-specific initiatives. Raise awareness of business opportunities among Washington’s strong economic clusters. including an immediate pilot effort. B. Support local economic development efforts by sharing information. C. . and opportunities with Associate Development Organizations (ADOs) and other economic development partners.Statewide and Industry-Specific Efforts A. D.

Strengthen Washington’s ability to attract research and development funding .Support Contract Bids and R&D Proposals A. Support the development of online resources and toolkits C. Increase business training and support resources by enhancing funding for Procurement Technical Assistance Centers (PTACs) B.


but the rewards have never been greater. .The risks inherent to starting a thriving business in today’s troubled waters are immense.


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