Bring it on: N.H. defense firms like what they see in new budget priorities.

[ILLUSTRATION OMITTED]

While defense contractors and politicians in other states Are already taking their battle stations over the Obama Administration's proposed cuts in their favorite defense Programs, the attitude in New Hampshire is: Yes we can.

Rather than complain about a shift in Pentagon priorities--aimed at fighting a different sort of war and scrapping outdated weaponry--contractors contacted in New Hampshire said they're ready, willing and able to switch gears and create what Secretary of Defense Robert Gates says he needs.

And that is likely a good thing when it comes to jobs in this state, for the defense industry is one of the few sections of the economy that is still going strong.

In 2007--the latest year with full data available from OMB Watch, a federal spending watchdog that uses information obtained through the Federal Procurement Data System--the Pentagon let out $312.5 billion in defense contracts. That's nearly three times as much as all other federal contracts combined.

In New Hampshire, the discrepancy is even more overwhelming. Of the $1.72 billion of direct federal contracts in New Hampshire, $1.59 billion comes from the Defense Department. In terms of the work performed here, the total is $1.4 billion. (This figure doesn't even include many subcontracts, which make up the bulk of most small military contractor sales in New Hampshire.)

Any way you look at it, the Pentagon doles out five times the amount of money to Granite State contractors than all other the federal agencies put together.

It's twice as much as the $750 million the state hopes to get in federal stimulus funds--that includes money to the public sector, not just private contracts.

And defense money is pumped into the New Hampshire economy every year. While the rate of growth in defense spending may fall off, the proposed $534 billion base operating budget for fiscal 2010 represents a 4 percent increase in spending in 2008.

If New Hampshire contractors simply receive their current share of that increase--based on their 2007 share--they would be getting more than $55 million more in direct contracts. If it were based on 2008 figures, the amount would be higher still.

And there is a good chance that it will be even more.

In Connecticut, for instance, U.S. Sen. Joe Lieberman, treated the building of the F-22 jet fighter as a jobs program, arguing that contractors in his state might not be able to ramp up to build its replacement--the F-35 fighter--in time to avoid some lay offs.

But BAE Systems Electronic & Integrated Solutions Division, based in Nashua, isn't complaining, even though 1,400 of its 3,400 person workforce is currently working on F22-related contracts.

"In the spirit of Easter, we didn't put all our eggs in one basket," said Matthew Bates, a BAE spokesperson.

BAE will be working on existing contracts until well into next year, just about the time it will be gearing up for the F-35, for which it already has contracts on hand.

In addition the new fighter won't just be for the Air Force, but the Marine Corps, Navy and NATO.

BAE also has anticipated other changes in the defense budget, so Gates' proposal "is pretty good news for us," said Bates.

Bates does acknowledge that it may not be good news to others. Not all of the 60 suppliers for the F-22 will be able to win contracts on the F-35.

Several BAE Systems subcontractors contacted by NHBR weren't too worried, however.

"Obviously, it might create a near-term gap," said Bill Tufts, director of sales at LNX in Salem.

Tufts, without going into details, said his company does significant assembly for the war-fighting capabilities of the F-22, worth about $1 million a year in business. But he said the company has already positioned itself for changes--"because we don't take anything for granted"--and it planned a continued slow expansion of its 50-plus workforce.

"We are not going to let this affect us," he said.

Dan Davis, quality manager of United Machine in Fremont, said that the firm works so closely with BAE Systems that it doesn't expect much to change, whether it machines parts for the F-22 or the F-35.

"It's a good-sized package we are being quoted on that will keep us busy for quite some time," he said.

Add that to a possible contract from MIT, and the company might have to add another shift--offering workers overtime--and maybe even increase its workforce of 30 by three or four people.

Not all of the contractors might be doing as well as BAE. Londonderry-based Insight Technology, for instance--the No. 2 New Hampshire defense contractor, with a quarter-billion dollars in federal contracts in 2007--wouldn't comment for this story. Whether that is became the company didn't have any good news to report or whether--as a private company--it simply exercised its right to remain silent is uncertain.

Other top contractors--Kollsman of Merrimack (now under the umbrella of Elbit Systems of America) and ITI Corp. in Nashua--each with more than $60 million in Pentagon contracts in 2007 did not return phone calls by deadline.

But John Moore, chief executive of Cobham Defense Electronic Systems in Exeter (formerly Continental Microwave, but it was bought out by Cobham PLC, a British firm) was willing to go on record.

Cobham only had $1.67 million in direct Pentagon contracts in 2007, but--as it is with many local defense firms--direct contracts are only a fraction of the military subcontractor work it engages in.

In 2009, for instance, the company--which specializes in radar equipment--has contracts in hand worth more than $200 million, Moore said.

Cobham, with its 330 employees, is not only holding its own, it's building a new facility. Yes, it expects to take a hit on the F-22, if and when the program is eliminated. And it is involved on the high-tech Zumwalt class destroyer, another casualty in Gates' budget proposal (though the last three ships would be consolidated in the Bath shipyard in Maine, which could help in the short run).

But the Navy does plan to start up the DDG51, "and that's a big plus--a big product," Moore said.

So when you add it all up, "the net affect is positive, despite the loss of F22," he said, adding: "Of course, we want it all."

New Hampshire's largest
defense contractors

DEFENSE CONTRACTOR                 LOCATION       2007 CONTRACTS

BAE SYSTEMS                        NASHUA           $788,939,516

INSIGHT TECHNOLOGY INC.            LONDONDERRY      $226,374,088

KOLLSMAN INC.                      MERRIMACK         $62,085,549

ITT CORPORATION                    NASHUA            $61,469,597

SOLID STATE SCIENTIFIC CO.         NASHUA            $10,724,912

TIMKEN CO.                         KEENE             $10,547,150

RACAL ACOUSTICS INCORPORATED       MANCHESTER        $10,161,632

RED RIVER COMPUTER COMPANY         LEBANON            $9,064,818

DEKA RESEARCH & DEVELOPMENT CO.    MANCHESTER         $9,041,594

AVIATION TECHNOLOGY INC.           MANCHESTER         $8,907,235