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Defense Industry: Innovation, Technology and Talent Position Michigan for Success

By Sandy K. BaruahPage 5

At the 2011 Mackinac Policy Conference, Harvard Professor Michael Porter, the father of the international competitiveness movement, presented an important observation to Conference attendees. In discussing the keys to economic development, he explained that industry clusters do not just develop randomly. Rather, one cluster gives rise to another and so on, which leads to economic growth.

There are few finer examples of this principle than the relationship between Michigan’s automotive and defense industries. The innovation, technology and talent that make Michigan the global epicenter of the automotive world are the same assets that helped the defense industry flourish in Southeast Michigan. It was no coincidence that when the United States needed innovation during World War II they turned to Michigan.

It rightly serves as a point of pride locally that during World War II, Detroit and Southeast Michigan became known as the Arsenal of Democracy. But what cannot be lost in honoring that iconic legacy is that our region is still a hotbed of innovation in the defense industry. It is no coincidence that the military continues to look to Southeast Michigan for the latest research, technology and products.

That level of innovation leaves a major economic footprint. There are more than 3,656 businesses in the Detroit region serving the defense industry and in 2011, approximately $3.7 billion in defense contracts were awarded to businesses in the region. That same year, businesses serving the defense industry in the Detroit region earned revenue of $14.9 billion.

Those numbers, along with assets like TACOM LCMC, TARDEC, Selfridge Air National Guard Base and major global players like Oshkosh, BAE Systems and General Dynamics Land Systems demonstrate that Southeast Michigan is still providing the nation an arsenal of innovation, more than 50 years after World War II ended.

The brave men and women who serve in the armed forces are also a crucial component to Michigan maintaining and expanding its productivity. The Detroit Regional Chamber has been working with Governor Rick Snyder on veterans issues, and is fully committed when it comes to supporting veterans for two primary reasons:

1) It is the right thing to do. We owe it to those who risked their lives protecting our freedoms to support them as they look for careers after their service.

2) Integrating veterans into Michigan’s workforce will send a wave of highly talented and skilled individuals into the state’s economy.

This issue of the Detroiter is an acknowledgement of that continued innovation and the economic footprint of one of the region’s most dynamic industries. It comes, however, at a time when an uncertain national economy and growing national debt will most certainly impact the defense business in Southeast Michigan.

While that can be disheartening, remembering a simple lesson of the global economy is important. It takes adaptation and collaboration to keep industries thriving in the global economy. Hurdles for all industries, including defense, will continue to emerge. The needs of the nation and the military will change. National and global politics will change. Despite the fact that the region and state have a proven track record of ingenuity and innovation, it is going to take collectively leveraging all our assets to drive economic prosperity.

Moving forward, integrating veterans in the workforce and the performance of the defense industry will be two indicators of Michigan’s economic performance.  Professor Porter challenged the Mackinac Policy Conference attendees to continue to make the region and state a productive location. Southeast Michigan has a legacy of unrivaled productivity and innovation.  The trick now is to continue to adapt and to keep Michigan’s place as a capital of innovation, and in doing so, a capital of the nation’s defense.

Sandy K. Baruah is the president and CEO of the Detroit Regional Chamber.