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| December 2005
"The state's renowned biotechnology industry accounts for about 17,000 jobs, but the defense sector employs between 65,000 and 85,000." — Secretary of Economic Development Ranch Kimball
Global Massachusetts 2015, a two-year effort, will utilize business-government leadership networks and cutting-edge visioning methodology to determine the growth potential of several important sectors of the Massachusetts economy.
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LEAD STORY BRAC a Major Victory for Massachusetts by John MacKenna Mass Insight Corporation, in conjunction with the Massachusetts High Technology Council and its affiliate, the Massachusetts Defense Technology Initiative (MassDTI), hosted a breakfast discussion on November 8th to discuss strategies for effectively integrating defense-related business and technology into the state's economy. Hosted by PricewaterhouseCoopers, the event piggybacked the Commonwealth's recent successes in preserving two military installations critical to the state's economy, Hanscom Air Force Base and Natick Soldier Systems Center. Speakers at the breakfast said the bases were saved due to strong public-private sector cooperation in the face of a review of military facilities conducted during the 2005 Base Realignment and Closure (BRAC) process. A federal commission appointed to study the issue recommended closing 33 facilities nationwide, but spared Hanscom and Natick:
The breakfast featured a panel discussion moderated by Michael Goodman, director of economic and public policy research for the UMass Donahue Institute, that included three defense industry executives: James Regan, chairman and CEO, Dynamics Research Corporation; Robert F. Nesbit, senior vice president and general manager of The MITRE Corporation; and William E. Walsh, vice president and general manager of Lockheed Martin Sippican Inc. Defense Crucial to Massachusetts Economy Secretary Kimball said the state's renowned biotechnology industry accounts for about 17,000 jobs, but the defense sector employs between 65,000 and 85,000, making it the state's largest technology sector. "If you support high tech in Massachusetts, you have to come to terms with support for the defense sector," Kimball said. The industry consists of several large companies and a host of smaller companies with precision manufacturing and other capabilities. In addition to Dynamics Research, MITRE and Lockheed Martin, other major defense contractors here include Raytheon, Textron Inc. and General Dynamics Corporation (see sidebar). The defense industry also supports research at Harvard, MIT and other academic institutions. Reaching Beyond Massachusetts Massachusetts has a deep, diverse range of companies that could serve defense contractors outside the state. Kimball said the Commonwealth has to overcome some unfair perceptions, particularly that we are anti-business and anti-defense. He said it is imperative that leaders in government, industry and academia work together to make it clear to contractors in other states that Massachusetts supports its defense cluster just as much as it supports the biotechnology industry. "We've been historically inward-looking, Kimball said. "There hasn't been much outreach. We should aggressively make connections with Tier 1 and Tier 2 defense manufacturers. We have the great technology base. We need to let people know that what they think they know about Massachusetts is wrong." He said the state is also known for having high housing and energy costs and that is a disadvantage that must be worked on. Walsh, of Lockheed Martin Sippican Inc., said Massachusetts has plenty of talent now, but needs to reach out and get new companies to locate here and take advantage of partnerships with the Commonwealth's existing companies. His company now spends $8 million on contracts with California companies for high-power microwave electronics - products that could be manufactured here. Better Communication within Industry, Collaboration between Industry, Government and Academia One way for Massachusetts to strengthen its position as a technology center and generate more business is by improving communication between large contractors and the smaller companies that could serve as suppliers. As Kimball said, "Partnering is the key." He said the state has both large defense contractors and smaller machine shops that can supply them, and stressed the importance of connecting the supplier base to contractors through events such as supplier fairs. The suppliers are capable, Kimball said, but in many cases they are unfamiliar with the contractors' needs. Regan said that business partnerships with Hanscom and Natick are driven by the facilities' access to what he calls "an intellectual eco-system" of academic institutions, laboratories, technology firms, military and other facilities "all located in proximity to one another with inner workings that have evolved over time and which you could never reconstruct. It cannot be taken apart and reassembled somewhere. And it cannot be virtualized through information technology." Nesbit said Massachusetts has all the technological expertise needed to help government defend against terrorists, but added, "We're dealing with disparate parties that don't play well together. If we could get everyone together, that would be the real killer app." Mass Insight President William H. Guenther added, "We have breadth and depth, but we need to do a better job of connecting the dots." Kimball said, "The BRAC process taught the importance of working together. Now we need to focus more on how to play this winning hand." Christopher Anderson of the Massachusetts High Technology Council sounded a similar theme, saying collaboration among business, government and academia is critical for creating an environment that supports technological development. Anderson specifically cited education as an area in which collaboration can lead to necessary changes, including K-12 educational reform and better integration with higher education institutions to create a "pipeline" for skills that will support growth industries. Anderson said California has already developed a collaborative approach to support its life science industries. Massachusetts should do the same thing with its technical specialties and develop a long-range view of how to support companies so they re-invest here. Education is the Key to Talent Industry is in search of talent, and jobs go where the talent is. That was the message from William H. Guenther. The Commonwealth faces stiff competition, including from countries India and China, where educated workers are far cheaper than American workers. Massachusetts cannot reduce its costs to those levels, "so we have to do the intellectual work at the top of the food chain," Guenther said. Massachusetts needs to form global partnerships and be prepared for the growth occurring in China and India. At home, industry and government leaders should work with their counterparts in academia on large-scale ideas to attract talent. Talent is the focus of Mass Insight's ambitious new initiative, Global Massachusetts 2015. The two-year effort will utilize business-government leadership networks and cutting-edge visioning methodology to determine the growth potential of several important sectors of the Massachusetts economy. It will recommend talent-friendly policy decisions and workforce strategies aimed at achievement of each sector's potential. Kimball added that industry needs to coordinate effectively to give academic institutions a clearer sense of the kinds of skills their students will need in order to succeed in the technology jobs that are here. Christopher Anderson said coordination should begin with K-12 schools to help create a pipeline for the kind of skills Massachusetts needs to thrive. The MITRE Corporation's Nesbit said his company has trouble finding the engineering talent it needs inside the state. All the panelists agreed on the value of internships and co-op programs. Walsh said his company generally has six-to-eight co-op students from UMass Dartmouth at any given time. Regan added that the dropoff in basic research at universities has been a problem. Defense Budget a Moving Target Several breakfast speakers noted that the Department of Defense budget evolves over time, with older programs being scaled back or eliminated as new ones emerge. Walsh said his company has done the bulk of its defense work for the U.S. Navy and in recent years he has watched the role of the Navy shrink relative to the roles the Army and Air Force play in combat. He pointed out that all the military services are facing substantial cutbacks, "and we may already have hit the high-water mark." It is good to try to grow the state's share of military spending," Walsh added, but "the first imperative is to preserve what we have." To do that in this competitive environment, "We're going to have to eat someone else's lunch." Regan said modern warfare utilizes all-new technology. "Dynamics Research Corporation's longest-standing customer is the Navy's Trident submarines, and that work is going away," he said. "The Army's Future Combat Systems is huge for us now." Regan said that as the military downsizes, the technology content only increases, and he noted that there are great opportunities for Massachusetts to score contracts for space missile guidance and homeland security. Part of the challenge going forward is anticipating the Pentagon's priorities and "moving around to be ready to go where the money is going." As the armed forces rely increasingly on robotics, Massachusetts needs to be prepared. "As we used to say in Vermont, if you want to hit the rabbit, you should shoot ahead," said Regan. "Otherwise the work migrates away, and we're left wondering what happened." Nesbit cited defense against weapons of mass destruction as another area where Massachusetts can win defense contracts by piggybacking on the expertise and the procurement programs at Hanscom. Mass Insight's Guenther also mentioned bioterrorism prevention as a potential focus for the state, bringing together our strengths in life sciences and defense. "We have the expertise to do that, but I'm not sure we're fully realizing all the interconnections." He recommended organizing a marketing effort and aggressively pitching Massachusetts to decision makers in Washington, D.C. |
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