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Military Spending

The reach of military dollars in Hawaii is far greater than you think. But can it protect us from a recession?

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Earmark This

Many credit the seniority of our congressional delegation for securing defense appropriations for the state. Just look at their committee assignments. Abercrombie, a member of the U.S. Congress since 1991, is a member of the House Armed Forces Committee and chairs its Air and Land Forces Subcommittee. U.S. Sen. Daniel K. Akaka, a member of Congress since 1976, is the chairman of the Senate Veterans’ Affairs Committee and member of the Senate Armed Forces Committee. U.S. Sen. Daniel K. Inouye, a member of Congress since statehood in 1959, is a member of the Senate Committee on Appropriations and chairman of its subcommittee on defense appropriations.

“There’s good news and bad news about seniority,” Abercrombie says. “The good news is that you have it and the bad news is that you have it, because it disappears at some point.”

But Abercrombie stresses the current delegation works together to bring federal dollars to more than just the defense sector. For example, he says, U.S. Congresswoman Mazie Hirono is a member of the House Transportation and Infrastructure Committee, meaning she will play a role in Honolulu’s transit project.

 “We’re trying to look long term and make sure we put into place in an institutional way, with federal dollars and federal support, projects and programs that will be able to sustain themselves and attract funding and support, regardless of who’s in the delegation,” Abercrombie says.

That said, long term support on the military component in Hawaii could be aided by clear data on the military’s positive economic impact on Hawaii. While public sentiment is mixed at best about increased activity here, with cultural and environmental concerns paramount, some economists believe people would think differently about the military if the true benefits of it here were understood.

Problem is, no one really knows for sure because there is no state agency specifically tasked to the industry. “Tourism has the Hawaii Tourism Authority and they have HVCB that provide responsibility of providing oversight. For the defense industry, we’re it,” says Ota of the Chamber of Commerce. “This has to do with ensuring that the military is provided with whatever they need so they can remain here in Hawaii.”

“There is currently no comprehensive data and information on that, and that’s everything from economic impact to social impact and environmental impact,” says Bill Kaneko, president and CEO of the Hawaii Institute for Public Affairs (HIPA). “You get all these press releases from Inouye and Abercrombie and they’ve got Department of Defense Appropriations for this and that, but there’s not a book or a study that can paint an accurate picture on the second largest sector in the state.”

HIPA is working with the Military Affairs Council to do such a study. A proposal is being shopped around to find a source for funding, but Kaneko hopes to get the study started in 2009. Kaneko wants to at least get some baseline information, “But what I think is more important and what’s going to be useful of the study is that how does the state align its federal expenditures with state and community goals? Because we really don’t know what’s coming in, how can we plan for strategically positioning the state?”

For reference, HIPA recently released a report on Hawaii’s dual-use technology sector, for which the military provides a good deal of funding. The study found that most people are not aware of the true value of technology in Hawaii and the role it has in diversifying the economy because there are no hard statistics. “From our standpoint, if you don’t measure or you don’t have data and information, you can’t really come to any conclusions,” Kaneko says. “Dual use is important because they’re using federal dollars to help diversify the economy, which is crucial.”

For dual-use technology companies like Oceanit, federal seed money is critical, as startup companies have difficulty attracting investment in the early stages. “Federal funding is great, it’s beautiful. It provides funding to develop new technology,” says Ian Kitajima, marketing manager for Oceanit. With the initial funding, Oceanit was able to get venture capitalists interested in the product and move it to commercialization.

Oceanit currently has another research contract with the DoD on its Sense-Through-The-Wall (STTW) technology. Using a hand-held device, it can detect if someone is in a building or a room by detecting heart rate and breathing. For the military, soldiers can detect enemy presence before entering a room. In the end, firefighters and first responders could benefit the most. Today, firefighters enter burning buildings and can only guess at how many people may be trapped in a room, if there are any at all. With STTW, they’ll know exactly where to go, saving more lives in the process.

STTW and its military backing will also go a long way to making Oceanit much stronger as a company. With continued military spending in Hawaii, quite a few new companies and some old ones will likely be a lot healthier, too.

Not to mention our economy.  

Can Hawaii Gain from Guam's Buildup?

In 2006, Japan and the U.S. reached an agreement to move 8,000 U.S. Marines and their dependents from Okinawa to Guam. The first Marines will arrive in Guam in 2014. With a population of 170,000, Guam currently hosts around 12,000 military personnel and their dependents.

The U.S. Congress authorized $244 million in military construction for FY 2008. That’s up from $193 million in 2007, $162 million in 2006 and $81.9 million in 2005.

Companies including First Hawaiian Bank and the Bank of Hawaii have established a Guam presence as the Marine arrival nears. Hawaii-based contractors, such as Watts Constructors, already have done military work on the island.

“The buildup of Guam is going to be a minimum $14 billion, and it’s only going to increase,” says Charlie Ota of the Chamber of Commerce. “The services of our companies here in Hawaii are going to be needed because there isn’t enough on Guam to do it.”

Hawaii Business magazine invites you to comment on our articles and the issues they raise. Comments are moderated for offensive language, commercial messages and off-topic posts and may be deleted. Some comments may be chosen for inclusion in the magazine on the Feedback page.

Old to new | New to old
Jun 5, 2008 09:45 pm
 Posted by  gmathol

I don't think that the military bacon works as described in this articles. Think what you have to spent on infrastructure such as streets and also schools.
Most of the contracts go to the mainland anyway.

This has been flagged
Oct 12, 2008 03:56 am
 Posted by  mktggurl

anyone check to see Hoana Medical's revenue per year? or is it an idea that sounds good? When will they raise Series F of private funding under Act 221?

Come on IPO for hospital sensing that revenue ramp possible.....:)

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