1. www.angeloueconomics.com ROLLOUT PRESENTATION June 2005 Military Business and Resource Gap Analysis

2. Military Business & Resource Gap Analysis 2 The Consulting Team AngelouEconomics (Lead Consultant)  The largest independent economic development consulting firm in the US  Experts on Technology Development Jane’s Information Group  Leading authority on military and intelligence matters  World’s commercial intelligence Service

3. THE PROJECT Military Business and Resource Gap Analysis

4. Military Business & Resource Gap Analysis 4 Why this Study? North Carolina  Large, diverse economy  Significant research assets  Major military presence  Low comparable levels of military contracting

5. Military Business & Resource Gap Analysis 5 CORE PROJECT GOALS 1.Identify defense-related companies that can be recruited to North Carolina 2.Identify future procurement opportunities for North Carolina’s existing businesses 3.Identify strategies to improve North Carolina’s competitiveness and success in the defense sector

6. Military Business & Resource Gap Analysis 6 4-MONTH PROCESS TASK ONE: Project Set Up TASK TWO: Analyze national and North Carolina defense industry TASK THREE: Compare North Carolina resources to recruitment needs TASK FOUR: Identify target audiences for marketing TASK FIVE: Create a business recruitment strategy Input Process  Dozens of focus groups and interviews  Visited each major military installation and multiple regions: Raleigh, Fayetteville, Piedmont Triad, Charlotte, Hickory, Asheville, many more  Online survey of NC businesses Reports 1. National Defense Trends 2. NC Resource Analysis 3. Targets & Recommendations

7. ASSESSMENT & FINDINGS Military Business and Resource Gap Analysis

8. Military Business & Resource Gap Analysis 8 Shift in Security Assessment New global security threats are causing a major transformation in the organization and tactics of the U.S. military. War on Terrorism and War in Iraq  ‘Rapid Decisive Operations’ – fast and flexible force dependent on precision weapons and a high-technology network-centric approach Base reconfiguration  More bases in non-traditional locations Restructuring of the Army  More units, more troops, more flexibility

9. Military Business & Resource Gap Analysis 9 Shift in Future Weapons Mobile military will require significant new equipment and systems to support it. Jane’s identified 5 new systems that will be the basis for future weapons procurement: Network-Centric Communications Systems Unmanned Aerial Vehicles Space Systems Future Combat Systems Land Warrior System

10. Military Business & Resource Gap Analysis 10 Research Funding Research funds for advanced weapon systems is a high growth line-item.

11. Military Business & Resource Gap Analysis 11 More on NC Procurement North Carolina’s largest “capture” of DoD procurement is in apparel and textiles, construction, food, and furniture.

12. Military Business & Resource Gap Analysis 12 Procurement Trends More than 50% of the DoD budget is sourced to private sector contractors. This % will expand to 60% by 2010. Significant expansion in outsourcing of non-core functions and personnel is planned for 2006 to 2009.

13. Military Business & Resource Gap Analysis 13 North Carolina Assessment AngelouEconomics examined 20+ site selection criteria as they relate to defense contractors Workforce Labor Force Availability Educational Attainment Secondary Education Availability of Technical Grads Infrastructure Site and Building Availability Real Estate Costs Transportation Utilities Business Climate Economic Growth Labor Costs Tax Burden Incentives University Research Venture Capital Entrepreneurship Quality of Life Income Level Cost of Living Housing Quality of Life High Tech Image Business Image Economic development efforts

14. Military Business & Resource Gap Analysis 14 NC Procurement Gap AngelouEconomics identified industries that were under- selling to the military but show strength in the state. Strong State Employment Cluster With low U.S. or North Carolina base procurement

15. Military Business & Resource Gap Analysis 15 Target Selection Series of 10 filters were used to identify specific 2- and 3- digit industries that are good defense targets for North Carolina: AngelouEconomics identified both recruitment and expansion targets for the state. National Competitive bidding Subcontracting / small biz Long-term growth State Industry Clusters Procurement Gap Assets in Workforce, Research, Business Climate, Infrastructure

16. Military Business & Resource Gap Analysis 16 Target Selection

17. Military Business & Resource Gap Analysis 17 Recommendations AngelouEconomics has prepared 23 specific recommendations for North Carolina in support of this Plan. 5 main headings: 1. Information 2. Marketing 3. Entrepreneurship / Research 4. Infrastructure 5. Organization

18. Military Business & Resource Gap Analysis 18 1. INFORMATION 1. The NCMBC should develop an information portal 2. Create and support a defense enterprise team within the Department of Commerce 3. Establish an annual defense contracting conference 4. Perform a State Defense Asset Inventory

19. Military Business & Resource Gap Analysis 19 2. MARKETING 1. Expand external marketing campaigns 2. Make marketing website improvements to the Commerce website 3. Attend national defense conferences 4. Marketing and informational visits to defense clusters 5. Market development trips to defense contractors 6. Include foreign defense companies as top targets

20. Military Business & Resource Gap Analysis 20 3. Entrepreneurs / Research 1. Launch an annual North Carolina SBIR conference 2. Create an SBIR matching fund 3. Create a North Carolina defense technology fund 4. Fund a defense technology commercialization fellowship program

21. Military Business & Resource Gap Analysis 21 4. INFRASTRUCTURE 1. Support existing state defense assets 1. Army Research Office 2. Centennial Campus Research Park 3. Military Business Center 4. Global Transpark 5. Institute of Aeronautical Tech

22. Military Business & Resource Gap Analysis 22 5. ORGANIZATION 1. Designate “Defense” as an NC target industry Integrate this study into the ED plan for the State 2. Designate a defense cluster specialist 3. Integrate local economic development efforts 4. Existing state contractor annual visits 5. Create targeted incentives for defense contractors 6. Create a marketing funds 401c6 for NCMBC 7. Expand and coordinate federal lobbying efforts

23. Military Business & Resource Gap Analysis 23 Key to Success North Carolina has a clear opportunity to “close the gap” between the defense industry and its military assets. This effort will require: 1. A new official focus 2. Collaboration between state, local e.d & federal 3. Marketing Investment 4. Staff time 5. University participation Each is critical to the success of this effort. representatives

24. Military Business & Resource Gap Analysis 24 Economic Impact of Success Success will come from expansion of DoD procurement by existing or relocating companies.  New Jobs, New Income, New Tax Revenue What does $100 million in new DoD contracts for NC mean? 1,800 new jobs, $70 million in new payroll, $14 million in new state/local tax revenue 30,000 more jobs in 2010 …and about $150 million more in annual state and local tax revenue… …than you would have had at a 1% DoD capture If North Carolina can grow its defense capture from 1% today to 1.5% in 2010, the state would gain $1.7 billion in new annual DoD contracts by 2010.

25. Military Business & Resource Gap Analysis 25 Thanks! Find out more at the NCMBC website! www.ncmbc.us