Report reveals prosperous past decade for state, county defense contracts

During the past decade, the importance of growth in defense spending in Indiana has been one of the untold stories about the state’s economy, according to a report by the Indiana Business Research Center.

Defense Department contracts in Indiana increased from $1.8 billion in 2001 to $4 billion in 2010, the most recent year complete data was available. Defense contracts in Indiana peaked at $7.8 billion in 2008, more than four times the 2001 level.

Even though the contracts have fallen by roughly half since the 2008 peak with decreasing demand for military equipment overseas, the report indicated that Indiana’s defense contracts remained at historically high levels in 2010.

These contracts account for about 2 percent of Indiana’s GDP. While that might not seem like a large portion, it is roughly equivalent to the entire agriculture sector’s portion of Indiana’s GDP, or about what Connecticut adds to the U.S. economy.

Until the 2010 drop-off in contracts, the rate of growth in Defense Department contracts in Indiana was much faster than it was in the rest of the country.

The majority of the contracts went to manufacturing transportation equipment, the report found. A significant portion of the money went to companies in South Bend and Indianapolis.

But $388 million found its way to companies in southern Indiana’s 9th congressional district from 2000 to 2012, according to USAspending.gov, the federal government’s official website for monitoring and tracking federal contracts.

The IBRC found that between $10 million and $40 million of that ended up in Monroe County.

While the report predicted the decrease in Indiana’s defense contracts would continue because of a fundamental shift in the nation’s defense spending needs, Indiana took a prominent place in defense spending during the past decade that went unnoticed.

— Zach Ammerman