David Y. Ige | DBEDT NEWS RELEASE: NEW DBEDT REPORT PROVIDES ECONOMIC INSIGHTS AND OUTLOOK FOR HAWAIIS DEFENSE SECTOR

SWOT analysis and action plan identify challenges and opportunities for economic growth

HONOLULU – The Department of Business, Economic Development and Tourism (DBEDT) of the State of Hawaii has released its Strengths-Weaknesses-Opportunities-Threats Analysis Report (SWOT) and Action Plan for the Hawaii Defense Economy (HDE), which outlines the strengths and weaknesses Identifies opportunities and threats to Hawaii’s defense sector and proposes strategic initiatives to expand opportunities for more local businesses and contractors to benefit from military contract spending.

“Hawaii‘s military defense sector remains strong and is helping to stabilize our economy during this pandemic,” said Mike McCartney, director of DBEDT. “As the second largest industry in the state, the military’s procurement spending this year is $ 4.5 billion diversify and strengthen our state’s economic resilience, which is now more important than ever. “

Key highlights from DBEDT’s HDE SWOT Analysis Report include:

Strengths & Opportunities

• Financial health (overall financial performance) and Defense market outlook (Market Growth Potential) received the highest survey ratings, suggesting that Hawaii’s defense market has been successful and is expected to continue to be financially rewarding with further opportunities going forward.

Weaknesses & Threats

• Market flexibility received the lowest rating, suggesting defense companies are struggling to serve both public and private (commercial) markets, with the exception of construction, which is more resilient in its ability to serve both defense and private sectors seemed to be.
• DoD dependency relatively high (46% among all respondents), indicating a potential threat should there be a decline in defense spending in Hawaii.
• Business climate (of the defense market) and labour market (Skill availability) were seen as significant challenges and threats, especially in the professional services sector, such as IT services and cybersecurity, shipbuilding and repair, and program / project management in many industries.

Focus

The following sectors have been identified as having the greatest potential for sustaining Hawaii’s defense industry and building economic resilience. All sectors have seen growth in military contracting over the past five years.

• IT services & cybersecurity is an important industry sector given: the size of annual defense spending ($ 128 million in 2020 procurement and $ 240 million in economic impact); high growth rate (+ 32% forecast from 2018-2028); relatively well paid occupations; and DoD mandates for cybersecurity.
• technical services receives high annual defense spending (€ 293 million)
• Shipbuilding / repair plays an important role in supporting Pearl Harbor Naval Shipyard (PHNSY) – the largest fleet repair and maintenance facility in the country between the US West Coast and Asia and the largest industrial employer in the state – providing local workers with the opportunity to deliver in high quality work in paid commercial and technical professions and pursue additional career opportunities.

The SWOT analysis survey was distributed to 507 military prime and subcontractors in Hawaii. The answers were collected online from February to April 2020. DBEDT received 107 responses (21% response rate) from a variety of industries including small businesses (89%), service providers (84%), DoD companies for more than 10 years (77%), and general contractors (65%). Detailed survey results and the full SWOT analysis report can be found here.

Using data from the SWOT analytical report, the HDE website and additional stakeholder surveys, a comprehensive action plan was developed to propose and guide strategic focus areas for a potential Phase III of the HDE project. The main initiatives proposed in the Action Plan include:

• HDE DoD industry alliance: Establish a Hawaii-focused, industry-specific DoD organization to identify current and future industry challenges and develop solutions and actionable initiatives that may include, but are not limited to: staff / curriculum development; Care and support for small businesses; and regulatory / legislative advocacy to improve the defense business climate.
• Assistance with cybersecurity compliance: Partnership with the state’s NIST Manufacturing Extension Partnership (MEP) National Network Center, INNOVATE Hawaii, to provide contact, assistance, and technical assistance to Hawaii-based DoD contractors and small business owners to ensure they meet the new cybersecurity requirements that for doing business with. the DoD is required.

The DoD Office of Local Defense Community Cooperation (LDCC) funded the previous Phase I and current Phase II of the Hawaii Defense Economy (HDE) project as part of its mission to support the readiness and resilience of states and communities participating in the Defense mission are invested. DBEDT is currently in the process of applying for an OEA grant to support a Phase III of the project to implement proposed initiatives and select outcomes based on the recommendations of the action plan. To access the Action Plan, visit the HDE project website or click here.

For more information on DBEDT’s HDE project, as well as access to data and information on Hawaii’s military defense sector, please visit http://defenseeconomy.hawaii.gov/.

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About the defense economy of Hawaii

The Hawaii Defense Economy project is being developed by the State of Hawaii through the Department of Business, Economic Development and Tourism (DBEDT) with support from the US Department of Defense (DoD) – Office of Local Defense Community Cooperation. The project uses data from DoD contracts and grants awarded to the state of Hawaii to better understand the defense industry’s supply chain and improve the state’s response to future changes in military requirements and spending levels.

About the Department of Economy, Economic Development & Tourism (DBEDT)

DBEDT is Hawaii’s resource center for economic and statistical data, business development opportunities, energy and energy conservation information, and foreign trade benefits. DBEDT’s mission is to achieve a Hawaiian economy that embraces innovation and is globally competitive, dynamic, productive and provides opportunity for all Hawaiian citizens. Through its affiliated agencies, the department promotes planned community development, creates affordable housing units for workers in high quality residential environments, and promotes employment growth in the innovation sector.

Media contacts:

Lea Okudara

[email protected]

808-729-6766

John Greene

Business Development and Support Department

Department of Economics, Economic Development and Tourism

[email protected]

Hawaii Defense Economy