Project: Military Business & Resource Gap Analysis "Funded, in part, by a grant from the Nevada Commission on Economic Development." www.angeloueconomics.com Prepared for: The 7-County Northern Nevada Region October 2007
AGENDA ONE: The Project TWO: Assessment and Findings THREE: Target Recommendations FOUR: Strategic Priorities & Marketing Military Business & Resource Gap Analysis 2
Military Business and Resource Gap Analysis THE PROJECT
Our Team Ben Loftsgaarden, Project Manager Main contact for this project � Have managed two other projects in northern NV (EDAWN and NNDA) � Daniel Kah, VP of Site Selection and Research Originator of the Military Gap project � Heads up our Site selection and Real Estate services � And our partners: Shelley Hartmann, Exec. Director of Mineral County EDA Juliette Taylor, Exec. Director of Churchill County EDA The Nevada Commission on Economic Development (NCED) Military Business & Resource Gap Analysis 4
PROJECT PROCESS Input Process TASK ONE: � ~20 interviews : Project Set Up Both Base commanding officers, � TASK TWO: Major defense contractors in both Fallon Analyze national and regional � defense industry and Hawthorne, Community leaders Report 1: Defense Industry Demand Analysis � � Visited each military installation: TASK THREE: Identify target audiences for NAS Fallon, Hawthorne Army Depot marketing TASK FOUR: Reports Create a defense industry growth strategy 1. Defense Industry Demand Analysis Report 2: Defense Industry Growth Strategy 2. Defense Industry Growth Strategy Military Business & Resource Gap Analysis 5
W hy this Study? Nevada D O D C O N T R A C T I N G C O M P A R I S O N � Good military State of Nevada compared to U.S. NV ranks 31 st in presence GDP, but 42 nd in 0.9% 1.0% DoD Contracting 0.8% � Large federal 0.8% 0.6% presence (BLM 0.6% lands, Test site, 0.4% Yucca Mtn.) 0.2% 0.2% � Low comparable levels of military 0.0% NV % of US GDP NV % of US NV % of US NV % of Priv ate contracting Population Employment DoD Contracts Source: DOD; AngelouEconomics Military Business & Resource Gap Analysis 6
Opportunity If Nevada could increase its share of DoD contracting to match its share of national GDP… This would result in an additional $1.6 Billion dollars flowing into the Nevada economy. This could mean over 15,000 new (high paying) jobs for the state. Military Business & Resource Gap Analysis 7
CORE PROJECT GOALS 1. Identify defense-related sectors that can be recruited to Northern Nevada 2. Identify future procurement opportunities for Northern Nevada’s existing businesses 3. Identify strategies to increase the number of companies that supply the region’s military installations or national DoD (now or in the future). Military Business & Resource Gap Analysis 8
Military Business and Resource Gap Analysis ASSESSMENT & FINDINGS
Shift in Security Assessm ent New global security threats are causing a major transformation in the organization and tactics of the U.S. military. � Wars in Iraq and Afghanistan (initial combat) ‘Rapid Decisive Operations’ – fast and flexible force dependent on precision � weapons and a high-technology network-centric approach � Global War on Terrorism � New enemy, non-state terror networks � Base reconfiguration � More bases in non-traditional locations � Restructuring of the Army � More units, more troops, more flexibility Military Business & Resource Gap Analysis 10
Shift in Future W eapons This new, mobile military will require significant new equipment and systems to support it. We’ve 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 11
Defense Spending Trends The military is a major D O D B U D G E T T R E N D S consumer of $600 manufactured goods and $546 high tech services: ($ Billions) $527 $550 $511 $481 $500 � MFG currently accounts for 41% $432 $450 of procurement ($121 billion) $400 $400 $364 � Professional, Scientific, and $350 Tech Services accounts for 25% ($72 billion) '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Source: OMB, DOD; AngelouEconomics Military Business & Resource Gap Analysis 12
Procurem ent Trends ( National) D O D C O N T R A C T I N G More than 60% of the DoD budget is sourced 80% % of DoD Budget Spent Internally to private sector % of DoD Budget Contracted Out contractors. This trend 64% 59% 57% 56% will continue. 60% 50% 51% Significant expansion in 40% outsourcing of non-core functions and personnel is planned for 2006 to 20% '01 '02 '03 '04 '05 '06 2009. Source: DOD; AngelouEconomics Military Business & Resource Gap Analysis 13
Northern Nevada Procurem ent 7-COUNTY* DOD PROCUREMENT The 7-County* Northern Nevada region received $202 million in DoD spending in $250 ($ Millions) 51% Growth 2006, up 51% since 2001. $200 $150 � Churchill County ($108M) and Mineral County ($61M) are the largest $100 recipients $50 '01 '02 '03 '04 '05 '06 The State of Nevada received $750 million in DoD spending in 2006, up 132% since 2001. STATE OF NEVADA DOD PROCUREMENT 132% Growth $800 NV DoD is captured by three areas: ($ Millions) $700 � Clark County $364M (40%) $600 � 7-County region $202M (27%) $500 $400 � Washoe County $183M (24%) $300 $200 Military Business & Resource Gap Analysis 14 *7-County: Carson City, Churchill, Douglas, Lyon, '01 '02 '03 '04 '05 '06 Mineral, Pershing, and Storey
NV Procurem ent Grow th D O D C O N T R A C T I N G C O M P A R I S O N Average Annual Growth in DOD Contracting from 2001-2006 38.4% 40.0% 30.0% 18.9% 18.3% 20.0% 12.0% 8.6% 10.0% 0.0% 7-County Clark County Washoe Total State of US Total Northern NV County NV Military Business & Resource Gap Analysis 15
Northern NV by County NORTHERN NEVADA CONTRACTING BY COUNTY 2001 - 2006 2001 2006 Dollar Growth % Growth Carson City $17,741,950 $14,009,010 $3,732,940 -21% Churchill $80,534,923 $108,154,008 $27,619,085 34% Douglas $1,459,513 $8,692,128 $7,232,615 496% Lyon $252,450 $8,711,794 $8,459,344 3351% Mineral $33,430,472 $61,785,158 $28,354,686 85% Pershing $0 $285,445 $285,445 NA Storey $31,503 $292,058 $260,555 827% Total $133,450,811 $201,929,601 $68,478,790 51% Military Business & Resource Gap Analysis 16
Military Business and Resource Gap Analysis TARGET RECOMMENDATIONS
Target Selection Series of 8 filters were used to identify specific 2- and 3- digit industries that are good defense targets for Northern Nevada: National Regional � Industry Size and Growth � Industry Clusters � Procurement Strength � Competitive bidding � Subcontracting / small biz � Assets in Workforce, Business Climate, Infrastructure � Best Value Contracting AngelouEconomics identified both recruitment and expansion targets for the state. Military Business & Resource Gap Analysis 18
Target Selection Process Start by Looking Step 1: At key defense industries Determine defense industries with national growth Industry 1 opportunities Step 2: 2 Identify defense 2 industries that make the Step 4: 3 3 Step 3a: most sense for Northern Identify niche sectors within 6 Identify Macro Nevada based on each target cluster and best 4 Defense Industries of 10 limiting DoD factors counties in Northern NV for strength in Northern likely development 5 6 Nevada 13 10 6 10a 6 17 10b 22 10 Asset Asset Targets Are 7 22 10c 24 7 Analysis Analysis 22 Selected 10 24 32 28a 28 22 8 32 32 7 32a Step 3b: 34 9 14 Analyze micro-level 34b 32b 34a 1 28 industries 10 4 34 34d 34c 5 1 Next Phase: 11 28 Strategies 4 32 7 12 34 8 8 Recommendations: 9 … 9 • Marketing 11 • Organizational 65 12 • Recruit/Expand • Etc. Military Business & Resource Gap Analysis 19 Defense Trends Analysis Local Trends and Assets Analysis Final Target List Niche Sector List
Target Selection Defense Target Niche Sectors Defense Target Niche Sectors Fabricated Metal Product 332 488 Support Activities for Transportation Manufacturing Defense Defense 333 Machinery Mfg 493 Warehousing and Storage Consumables Publishing Industries (except Technologies (Food, Printing, & 334 Computer and Electronic Product Mfg 511 Internet) Distribution) (Manufacturing, Elec. Equip., App., and Component 335 722 Food Services and Drinking Places Mfg Research, and Tech Transportation Equipment Services) 336 Manufacturing Professional, Scientific, and Technical 541 Svcs 236 Construction of Buildings 561 Administrative and Support Services Base Base Support Heavy and Civil Engineering Waste Mgmt and Remediation 237 562 Construct. Services Construction Services Performing Arts, Spectator Sports, 238 711 Specialty Trade Contractors etc. Military Business & Resource Gap Analysis 20
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