Trump’s plan to boost defense spending could help Mass.
In the competition between states to land billions of dollars in federal contracts, it’s not a stretch to think that Massachusetts might be at a bit of a disadvantage come January. Not only did the state, as expected, glow bright blue in the presidential election, Republican governor Charlie Baker broke ranks and refused to vote for his party’s nominee, while a riled-up Senator Elizabeth Warren tweeted herself into the top 10 of Donald J. Trump’s enemies list.
But despite the state’s political leanings being so out of sync with the president-elect, his plans to increase military spending could be good news for Massachusetts’ robust military supply sector, which includes jet-engine makers, missile manufacturers, and research labs.
“The paradox of a Trump win is that even though the Bay State is very blue, this is going to be quite good news for its economy,” said Loren B. Thompson, chief operating officer of the Lexington Institute, a nonprofit think tank.
Massachusetts’ share of Defense Department and Homeland Security contracts has stayed fairly steady despite changes of partisan control in government or ups and downs in the overall federal budget, ranging between 3.5 and 4.2 percent annually from 2004-2013, a study by the UMass Donahue Institute found.
In the 2016 fiscal year, the Department of Defense awarded contracts in Massachusetts worth $8.6 billion, while the Department of Homeland Security doled out more than $484 million.
Waltham-based Raytheon Co., considered one of the nation’s “big five” military suppliers, has traditionally received the biggest portion of federal defense spending in Massachusetts. For example, it landed $3.7 billion in defense contracts in 2013, representing a third of all such contracts statewide, the Donahue Institute said.
“The bottom line for people in Massachusetts is you’re not going to hear a giant sucking sound of defense dollars from Massachusetts because the Republicans are in charge,” said Robert Levinson, a senior defense analyst for Bloomberg Government.
Raytheon investors are thinking the same way — the company’s share price is up about 6 percent since the election, outstripping the overall market’s performance.
Levinson said Raytheon’s focus on producing weapons and guidance systems that have a wide variety of uses can insulate the company from make-or-break government decisions on which planes and tanks to buy.
Raytheon also is considered relatively aggressive in selling weapons to other governments, Levinson said, noting that the single largest Defense Department purchase in Massachusetts during 2015 was $1.2 billion worth of the company’s Patriot missiles for Qatar.
Contractors will still be affected by big changes in Defense Department priorities, such as the long-developing F-35 fighter jet project spearheaded by Lockheed Martin. General Electric’s jet engine plant in Lynn has produced engines for the older F-18 fighter. But even a switch to the F-35 won’t mean the end of the line for those engines, which are finding a market in other countries, said Branner Stewart, a senior research manager at the Donahue Institute.
Once the F-35 gets up to speed, it should benefit regional suppliers. BAE Systems Inc., just across the border in Nashua, has an exclusive contract to build sophisticated electronics for the new fighter, Thompson said.
“Obama wasn’t all that hard on the military, but he followed the usual Democratic pattern of spending defense money on readiness and people rather than on weapons,” Thompson said. “Trump will be more inclined to spend money on weapons.”
Other top military contractors in the state include General Dynamics Corp. and MIT. Experts pointed to companies like BAE Systems and Pratt & Whitney in Middletown, Conn., as strengths for the broader New England defense industry.
But Joseph M. Donovan, a defense industry lobbyist with Nelson Mullins Riley & Scarborough LLP in Boston, said plenty of smaller high-tech companies in Massachusetts and New England stand to gain if the Pentagon goes on a spending spree. “Massachusetts and the region has thousands of small businesses that focus on particular sectors of the defense industry,” Donovan said. “They’re in every community. . . . They’re in the industrial park down the street, and you’d never even know it.”
Donovan said that even in a Republican administration, Massachusetts still has some influence in Washington on the defense-spending front — Representatives Niki Tsongas and Seth Moulton serve on the House Armed Services Committee, he noted. And Warren and Massachusetts Senator Edward J. Markey have both said they’ll work with the Trump administration to bring more defense dollars to the state.
Still, Sean Bielat, chief executive of Endeavor Robotics, a maker of military robots, said it’s too early to contemplate the effect of a budget boost.
“It’s easy to say we’re going to increase defense spending. What that means, it’s difficult to say at this point,” Bielat said. “At this point, what a Trump administration means is anyone’s guess.”
Mark Aslett, chief executive of Mercury Systems Inc. of Chelmsford, is more optimistic about Trump’s plans for the Pentagon. “From what he’s saying right now, we think it’s a net positive for the industry,” said Aslett, whose company makes advanced computing systems for electronic warfare and radar signal processing.