February 27, 2018
Contact: Amelia Salter
Office: (217) 265-0048
Defense spending an economic driver for Illinois
U of I System study shows industry has nearly $12 billion annual impact
SPRINGFIELD – Though not generally considered a state that is closely tied to military spending, a new study by the University of Illinois System shows that the defense industry has a significant impact on the Illinois economy.
In 2016, the study found that total economic impact of defense spending in Illinois was nearly $12 billion, representing approximately 1.5 percent of the state’s gross domestic product and contributing to more than 136,500 jobs.
Prepared by the Illinois Defense Industry Adjustment (DIA) program, the findings follow more than a year of intense data collection and analysis about the state’s defense supply chain, including identifying which companies and communities are most vulnerable to reductions in federal defense spending.
The U of I System launched the Illinois DIA program in 2015 to help those defense-impacted companies and communities grow, diversify, and ultimately become more resilient amid declines in federal defense spending. The program is funded by a grant from the U.S. Department of Defense (DoD) Office of Economic Adjustment (OEA). The Nathalie P. Voorhees Center for Neighborhood and Community Improvement at the University of Illinois at Chicago leads data collection and analysis for the program.
Illinois is not typically regarded as a defense-connected state, but is home to several active military installations, including the Rock Island Arsenal in the Quad Cities, Scott Air Force Base near Belleville and Naval Station Great Lakes near North Chicago. There also are National Guard units based in Peoria, Springfield and North Riverside. In fiscal year 2015, the state ranked 19th nationally with $7 billion in total defense spending, placing it well above neighboring states including Indiana, Michigan, Iowa and Wisconsin.
The Illinois DIA report provides a clearer picture of the broader impact of defense dollars flowing into the state, including direct and indirect effects. In 2016, about $8 billion in DoD contracts with Illinois firms spurred a combined $6.2 billion in additional economic output through sales involving other businesses in the state. When combined with the economic output of grants and DoD payroll, that number jumps to more than $20 billion in sales spurred by defense.
The study revealed similar impact on employment, estimating that for every 100 jobs attributable to defense spending, an additional 60 jobs are created in the state. The DoD had nearly 55,000 active personnel and civilian employees stationed in Illinois in 2016. When combined with employment from contracts, defense spending contributes to more than 136,500 jobs across the state.
The report also sheds some light on the industries most touched by defense. With nearly $2.4 billion in DoD contracts in 2016, professional, scientific, and technical services firms had the largest total employment effects with an estimated 17,730 jobs. Services provided by these companies include logistics, communications and engineering/technical. Construction activities in the state represented approximately $1.3 billion in defense contract spending in 2016, leading to an estimated total employment impact of 17,570 jobs. Together, these industries accounted for approximately 26 percent of total employment impacts.
Today, the Illinois DIA program also announced a new initiative to leverage the work conducted over the past two years and develop a statewide response strategy for at-risk communities in Illinois.
The new Illinois Defense Network (IDN) will directly connect the Illinois DIA program with defense-impacted communities and build a network of stakeholders from industry, government and academia to develop and implement programs that strengthen Illinois’ defense economy. IDN’s founding regional economic development partners are the Quad Cities Chamber of Commerce, Rockford Area Economic Development Council, Chicago Metro Metals Consortium, and Greater Peoria Economic Development Council.
University of Illinois President Tim Killeen said the insights produced by the program are critical to supporting communities, businesses and workers across the state.
“As the state’s land-grant university, the University of Illinois System is committed to supporting economic development efforts that create an even better tomorrow for the people of Illinois,” Killeen said. “The Illinois DIA program is a great example of the new partnerships we are building with industry and government that leverage our collective strengths to increase Illinois’ economic competitiveness.”
Illinois Lieutenant Governor Evelyn Sanguinetti, who chairs the Military Economic Development Committee (MEDC) to preserve, protect, expand, and attract new military missions, assets, and installations, has been a strong supporter of the Illinois DIA program.
“My office is committed to championing Illinois’ defense industry,” Sanguinetti said. “The insights produced by the Illinois DIA Program will allow us to take a holistic look at the parts of our economy most impacted by defense and support the local companies and workers that are vital to DoD activities across the state.”
The complete Report on the Economic Impact of Defense-Related Spending in Illinois is available on the Illinois DIA Program’s website at www.IllinoisDefense.org.
About the Illinois DIA Program
The Illinois DIA Program supports the state’s defense and manufacturing industries by delivering resources and providing new insights that help companies and communities grow, diversify, and become more resilient. The Illinois DIA Program works with communities across Illinois that have clear links to the defense industry based on the presence of key military assets, a high concentration of manufacturers, or both. These communities include the Quad Cities, Rockford, Northeastern Illinois, Peoria and Southwestern Illinois.
With funding from the U.S. Department of Defense, Office of Economic Adjustment (OEA), the program is executed through a partnership between the University of Illinois System, the Quad Cities Chamber of Commerce, and the Voorhees Center at the University of Illinois at Chicago (UIC). For more information, please visit www.IllinoisDefense.org.
About the University of Illinois System
The University of Illinois System is a world leader in research and discovery, the largest educational institution in the state with more than 83,000 students, nearly 25,000 faculty and staff, and universities in Urbana-Champaign, Chicago and Springfield. The U of I awards more than 22,000 undergraduate, graduate and professional degrees annually.