Military Business and

Resource Gap Analysis

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ROLLOUT PRESENTATION

June 2005
The Consulting Team

AngelouEconomics (Lead Consultant)


The largest independent economic
development consulting firm in the US

Experts on Technology Development
Jane’s Information Group

Leading authority on military and
intelligence matters

World’s commercial intelligence Service

Military Business & Resource Gap Analysis 2

Military Business and Resource Gap Analysis

THE PROJECT
 Why this Study?
North Carolina
North Carolina Value Rank
Large, diverse economy Gross State Product $300 billion 12th
Significant research % of workforce in manufacturing 19% 6th
assets Military Personnel 113,000 4th
Major military presence
As a % of Employment 4% 6th
Low comparable levels
of military contracting Total Military Procurement 2004 $2.2 billion 23rd
Goods Procurement 2004 $750 million 28th
Military Procurement as a % of GSP 0.74% 39th
Procurement Growth '01 to '04 49% 25th
SBIRs Awarded $33 million 38th
% of Base Work Performed in State 59% 25th
R&D Performed in State 2004 0.4% 25th
Small Business Procurement 1.7% 18th
University R&D Procurement 1.6% 10th

Military Business & Resource Gap Analysis 4

CORE PROJECT GOALS

1. Identify defense-related companies

that can be recruited to North
Carolina
2. Identify future procurement
opportunities for North Carolina’s
existing businesses
3. Identify strategies to improve North
Carolina’s competitiveness and
success in the defense sector

Military Business & Resource Gap Analysis 5

4-MONTH PROCESS
Input Process
TASK ONE:
Project Set Up  Dozens of focus groups and interviews
 Visited each major military installation
TASK TWO: and multiple regions:
Analyze national and Raleigh, Fayetteville, Piedmont Triad, Charlotte,
North Carolina defense Hickory, Asheville, many more
industry  Online survey of NC businesses
TASK THREE:
Reports
Compare North Carolina
resources to recruitment 1.National Defense Trends
needs 2.NC Resource Analysis
TASK FOUR: 3.Targets & Recommendations
Identify target
audiences for marketing

TASK FIVE:
Create a business
recruitment strategy

Military Business & Resource Gap Analysis 6

Military Business and Resource Gap Analysis

ASSESSMENT &
FINDINGS
Shift in Security Assessment

New global security threats are

causing a major transformation in the
organization and tactics of the U.S.
military.

War on Terrorism and War in Iraq

‘Rapid Decisive Operations’ – fast and
flexible force dependent on precision
weapons and a high-technology network-
centric approach

Base reconfiguration

More bases in non-traditional locations

Restructuring of the Army
Military Business & Resource Gap Analysis 8

More units, more troops, more flexibility
Shift in Future Weapons

Mobile military will require significant

new equipment and systems to
support it. Jane’s identified 5 new
systems that will be the basis for
future weapons procurement:


Network-Centric Communications
Systems

Unmanned Aerial Vehicles

Space Systems

Future Combat Systems

Land Warrior System
Military Business & Resource Gap Analysis 9
Research Funding
R E S E A R C H F U N DI N G
$20
70%Growth
$18
Research funds for $16
advanced weapon $14

systems is a high $12

$10
growth line-item. '01 '02 '03 '04
Source: AngelouEconomics; DIOR; values in billions

DoD Research Funding

Total from 2001 to 2004

U.S. North Carolina % of U.S.

R&D Funding $111,200 $350 0.3%
SBIR Funding $4,800 $33 0.4%
University R&D Funding $3,500 $43 1.2%
Source: AngelouEconomics; DIOR; Values in millions; R&D as classified by the product service description

Military Business & Resource Gap Analysis 10

 More on NC Procurement

North Carolina Procurement Strengths

National North Carolina North Carolina %
NAICS Description Procurement '04 Supplied of Total
316 Leather and Allied Product Manufacturing $384 $91 23.7%
233 Building, Developing, and General Contracting $992 $130 13.1%
722 Food Services and Drinking Places $872 $97 11.2%
314 Textile Product Mills $974 $88 9.0%
315 Apparel Manufacturing $1,249 $60 4.8%
235 Special Trade Contractors $7,496 $338 4.5%
335 Electrical Equipment, Appliance, and Component Manufacturing
$1,745 $77 4.4%
326 Plastics and Rubber Products Manufacturing $365 $16 4.3%
Total $230,657 $2,213 1.0%
Source: DoD; AngelouEconomics; Values In millions

North Carolina’s largest “capture” of

DoD procurement is in apparel and
textiles, construction, food, and
furniture.
Military Business & Resource Gap Analysis 11
Procurement Trends

P R O C U R E M EN T T R E N D S
More than 50% of
$300
Internal DoD
the DoD budget is
Contracted
$209
$231 sourced to private
$200 $171
sector contractors.
$145 This % will expand
to 60% by 2010.
$100
'01 '02 '03 '04
Source: OMB, DIOR; AngelouEconomics; values in billions
Significant
expansion in
outsourcing of non-
core functions and
Military Business & Resource Gap Analysis 12
personnel is
North Carolina Assessment

AngelouEconomics examined 20+ site

selection criteria as they relate to
defense
Workforce
contractors
Business Quality of Life

Labor Force Availability Climate 
Income Level

Educational Attainment Economic
 
Cost of Living

Secondary Education Growth 
Housing
Availability of Technical Labor Costs


Quality of Life
Grads 
Tax Burden 
High Tech
Infrastructure 
Incentives Image

Site and Building

University 
Business
Availability Research Image

Real Estate Costs

Venture 
Economic
Capital development

Transportation

Entrepreneurs efforts

Utilities
hip & Resource Gap Analysis
Military Business 13
 NC Procurement Gap

AngelouEconomics identified
industries that were under-selling to
the military
Strong Withbut show
low U.S. or strength in the
state.
State North Carolina base
Employ procurement
ment Industry STATE OPPORTUNITY

Cluster
NAICS Description
North Cluster Emp %of National %of NC Base %of NC Base
Cluster Procurement Performed NC Performed HQ
233 General Contracting 1.1 13.1% 98% 49%
234 Heavy Construction 1.2 2.0% 97% 7%
235 Special Trade Contractors 1.1 4.5% 96% 37%
311 Food Mftg 1.2 0.0% 68% 59%
314 Textile Product Mills 2.8 9.0% 4% 3%
325 Chemical Mftg 1.8 0.3% 41% 27%
327 Nonmetallic Mineral Product Mftg 1.2 0.1% 28% 27%
332 Fabricated Metal Product Mftg 0.9 0.4% 10% 3%
333 Machinery Mftg 0.9 1.5% 22% 11%
334 Computer and Electronic Product Mftg 1.0 0.7% 8% 4%
335 Electrical Equipment Mftg 2.1 4.4% 17% 15%

Military Business & Resource Gap Analysis 14

Target Selection

Series of 10 filters were used to

identify specific 2- and 3-digit
industries that are good defense
targets for North Carolina:
National State

Competitive bidding 
Industry Clusters

Subcontracting / 
Procurement Gap
small biz 
Assets in Workforce,

Long-term growth Research, Business
Climate, Infrastructure

AngelouEconomics identified both

recruitment and expansion targets for
the state. Military Business & Resource Gap Analysis 15
 Target Selection

333 Machinery Mftg 311 Food Mftg

Defense 334 Computer and Electronic Mftg Defense 312 Beverage Product Mftg

Technologies 335
336
Electrical Equipment Mftg
Transportation Equipment Mftg
Consumables 313
314
Textile Mills
Textile Product Mills
541 Technical Svcs 315 Apparel Mftg
(Manufacturing, Textiles, Food,
927 Space Research 316 Leather and Allied Product Mftg
Research, and Services) 541 Professional and Technical Svcs
Printing, & 323 Printing
551 Management Svcs Distribution 493 Warehousing and Storage

233 General Contracting 561 Administrative and Support Svcs

Base 234 Heavy Construction BaseSupport 722 Food Svcs

Construction 235 Special Trade Contractors

Services 811
812
Repair and Maintenance
Personal and Laundry Svcs

Military Business & Resource Gap Analysis 16

Recommendations

AngelouEconomics has prepared 23

specific recommendations for North
Carolina in support of this Plan.
5 main headings:
1. Information
2. Marketing
3. Entrepreneurship /
Research
4. Infrastructure
5. Organization
Military Business & Resource Gap Analysis 17
1. INFORMATION

1. The NCMBC should develop an

information portal
2. Create and support a defense
enterprise team within the
Department of Commerce
3. Establish an annual defense
contracting conference
4. Perform a State Defense Asset
Inventory
Military Business & Resource Gap Analysis 18
 2. MARKETING

1. Expand external marketing

campaigns
2. Make marketing website
improvements to the Commerce
website
3. Attend national defense
conferences
4. Marketing and informational
visits to defense clusters
19
Military Business & Resource Gap Analysis
5. Market development trips to
3. Entrepreneurs / Research

1. Launch an annual North

Carolina SBIR conference
2. Create an SBIR matching
fund
3. Create a North Carolina
defense technology fund
4. Fund a defense technology
commercialization fellowship
programMilitary Business & Resource Gap Analysis 20
4. INFRASTRUCTURE

Support existing state

1.
defense assets
1. Army Research Office
2. Centennial Campus
Research Park
3. Military Business Center
4. Global Transpark
5. Institute of Aeronautical
Tech Military Business & Resource Gap Analysis 21
 5. ORGANIZATION

1. Designate “Defense” as an NC
target industry Integrate this
study into the ED plan for the
State
2. Designate a defense cluster
specialist
3. Integrate local economic
development efforts
4. Existing state contractor annual
visits 22
Military Business & Resource Gap Analysis
Key to Success

North Carolina has a clear opportunity

to “close the gap” between the
defense industry and its military
assets.
1. A new official focus
This effort will require:
2. Collaboration between state, local
e.d & federal representatives
3. Marketing Investment
4. Staff time
5. University participation
Each is critical to the success of this effort.
23
Military Business & Resource Gap Analysis
Economic Impact of Success

Success will come from expansion of

DoD procurement by existing or
relocating
 companies.
New Jobs, New Income, New Tax
Revenue
What does $100 million in new DoD contracts for NC
mean?
1,800 new jobs, $70 million in new payroll, $14 million in
new If
state/local tax revenue
North Carolina can grow its defense capture from 1%
today to 1.5% in 2010, the state would gain $1.7
billion in new annual DoD contracts by 2010.

30,000 more jobs in 2010 …and about $150

…than you would have had at a 1% DoD capture
million more in annual state and local tax revenue…
Military Business & Resource Gap Analysis 24
Thanks!

Find out more at

the NCMBC
website!

www.ncmbc.us
Military Business & Resource Gap Analysis 25