MOREHEAD CITY — Industry leaders, contractors and others gathered in Joslyn Hall on the campus of Carteret Community College recently to learn about growth opportunities for companies involved in the state’s military supply chain.

Representatives from the N.C. Defense Industry Diversification Initiative, the N.C. Military Business Center, the U.S. Small Business Administration and other organizations were on hand to talk about their efforts to grow economic opportunities in North Carolina and answer attendees’ questions about those efforts.

As NCDIDI Director Michael Mullins explained, the initiative was created as a way to analyze the state’s defense supply chain and help contractors grow their business by leveraging resources available in the state. It is a partnership between the N.C. State University Industry Expansion Solutions and the N.C. Department of Military and Veterans Affairs, funded by a grant from the U.S. Department of Defense Office of Economic Adjustment.

“The two purposes of the grant are No. 1 to do a supply chain mapping analysis of the defense industry, going back to the fact we really didn’t have any clarity on the defense industry in North Carolina when it has such a significant impact on our economy,” Mr. Mullins said. “The second thing we did is we did a pilot company with 10 companies.”

North Carolina is one of the country’s top military states, with the nation’s third largest active duty presence spread between six active military installations. However, the state is ranked around 23rd in total defense contracts spending, so one of NCDIDI’s major goals is to help North Carolina-based contractors land more defense contracts and grow the state’s economy.

“The downside of being so high in those rankings is that when defense budgets are cut … things can get pretty ugly,” Mr. Mullins said. “I think we can do a little bit better than (23rd) as a state and maybe bring in a few more billion dollars into North Carolina.”

The comprehensive supply chain mapping study revealed new findings about the state’s defense industry, including which industry sectors are most prevalent and how companies work in tandem with each other. Some key findings of the study report are that the largest defense industry sector in North Carolina by number of companies is professional, scientific and technical services with 2,284 firms. The second largest sector is manufacturing with 1,719 companies.

In addition, the report shows the largest group of products purchased by the DoD from North Carolina companies was textiles, with more than $142 million in goods bought. The next largest group of products relates to firefighting, rescue and safety equipment with purchases slightly over $140 million. While those areas represent some of the state’s strengths in the military supply chain, the analysis revealed a major weakness is the small number of machine shops participating in defense work. There is also an apparent lack of supply chain readiness by the region’s small- to medium-sized enterprises.

Nimasheena Burns with NCDIDI said the findings of the data can be used to help identify which sectors are at risk of decline and which are poised to grow and to help shape policy in North Carolina moving forward.

“We want to help people, that’s why we did this. One of the big issues we had is economic developers in counties a lot of times did not know about all the companies in their counties, and if they knew about all the companies in their counties, they might not know about all the companies in adjacent counties,” she said.

The military supply chain has a strong presence in Carteret County and nearby areas, Ms. Burns said. The state’s eastern region, including Bladen, Brunswick, Carteret, Columbus, Craven, Duplin, Greene, Jones, Lenoir, New Hanover, Onslow, Pamlico, Pender, Robeson and Wayne counties, ranks third in the state for amount of DoD awards and second for number of DoD contractor establishments. More than 760 defense contractors support nearly 24,000 jobs in the region, representing $1.7 billion in contracts.

Locally, companies in Beaufort and Morehead City each had about $8 million in defense contracts in 2017, an increase over previous years.

Aside from the supply chain analysis, NCDIDI also worked initially with 10 military contractors throughout the state as part of a pilot program to assess their needs and help them grow their business. The initiative focused especially on smaller companies that have struggled to survive, and Mr. Mullins said NCDIDI is trying to help them diversify and find new markets to work in, whether that means remaining exclusively in the military sector or extending into the commercial sector.

“A lot of people don’t know about these companies and the impact they’re having on the supply chain for the Department of Defense, but … a lot of small defense contractors have gone out of business in the past five, 10 years because they’ve put all their eggs in one basket,” Mr. Mullins said. “…The Department of Defense would like us to assess these companies that have applied for this program, help them grow and diversify more in the commercial sector and make them more resilient to those ups and downs, the roller coaster of the defense budgets.”

After helping the 10 pilot companies, NCDIDI is now working with 20 additional contractors for phase two of the program. In the long term, Mr. Mullins said NCDIDI hopes to secure additional funding for phase three and beyond so they can continue to be a resource for North Carolina military contractors.   

Contact Elise Clouser at; by phone at 252-726-7081 ext. 229; or follow on Twitter @eliseccnt.

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