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Defense and aerospace remain an economic driver for Pikes Peak region

$10 billion annual Gross Domestic Product gain for our region
Posted at 7:22 AM, Sep 07, 2023

COLORADO SPRING — The impact of the military, defense, and aerospace complex in the Pikes Peak region is unmatched. All told the Colorado Springs Chamber of Commerce and Economic Development Corporation reports that some 125,000 active duty, reserve, National Guard, veterans, and their families live and work in our region.

Consider that the estimated gross domestic product, the net worth of all goods and services in the Pikes Peak region, is about $10 billion annually by the most recent estimates. Forty percent of that comes from our military installations, aerospace industry, cybersecurity, and second and third-tier employers tied to those industries. That's a huge piece of the local economic pie, and with the decision to keep U.S. Space Command here permanently, the prospects for even more growth are even better.

As we look to the future of the military-industrial complex locally, the trajectory is straight up. Perhaps no other location in the country can boast of what the military economy has meant to a particular region and the sky is the limit for years to come.

When the decision was ultimately made recently by the Biden administration to keep U.S. Space Command in Colorado Springs permanently, it created a region and statewide celebration. It's a decision that will provide confidence and consistency to those companies and military service men and women who are a part of its creation and growth.

At a celebration in downtown Colorado Springs, U.S. Senator John Hickenlooper told News5 the economic impact is immediate and long-term. He said, "This matters, these are going to be the jobs that attract small businesses here, those small businesses will attract more small businesses, these are the kinds of successes that lead to hundreds and thousands of more successes down the road".

When I recently interviewed Jessie Kimber, Vice President of Defense Development for the Colorado Springs Chamber Of Commerce and EDC, she added, "It's not just the defense sector that brings revenue to the region but it's the military families that come out of the installations and visit small businesses, use all the wonderful things that are available to families for quality of life right here in Colorado Springs"

Military/Defense Job Creation

And the numbers back it up. The Chamber/EDC provided me with data that shows aerospace and defense gross regional product in the Pikes Peak region grew from just over $6 billion annually in 2007 to more than $10 billion in 2022.

As for defense/military-related job creation, equally impressive. While the national average in 2017 was just shy of 20,000, we had more than 50,000 jobs tied to this sector.

Nationally, that number has remained relatively constant and will remain so for the next four years.

Here, it grew to more than 60,000 this year and is projected to top 65,000 in four years. Kimber told me, "So military spouses are getting jobs right here in Colorado Springs and that is empowering all of us around with that workforce as well, so it's just such a neat ecosystem to see with our defense industry both the secondary and third order effects of the missions that are brought here".

Aerospace/Defense Gross Regional Product

A prime example of what defense and aerospace industry growth will look like in the future is at Delta Solutions and Strategies in Colorado Springs, which employs hundreds of workers, provides very competitive, high-paying salaries, and currently has a long-term contract with U.S. Space Command tied to operations, logistics, planning and execution of the command's mission.

But as optimistic as the U.S. Space Command's decision to stay here is for the company, it also comes with questions about the growth of the space-based defense industry locally in the years to come, including housing, overall affordability, child care, and education as it relates to training the next generation of aerospace employees.

So I spoke with the company's chief operating officer, Scott Anible recently who told me it's a good problem to have and that the market is adapting, he says he is confident expectations for his company and others will be met for his employees and their families, "What we're seeing out of UCCS and other educational institutions, we're seeing an emphasis on space because we know that's an opportunity for those students and of course, the military services that we have and all the bases that we have with those folks that have the skill set and experience we can really utilize to support the mission is quite an advantage for us".

But there's no getting around the reality of living here, finding an affordable place to live. UCCS economic professor Joe Craig told me that while higher paying jobs are a good outcome for the defense and aerospace sectors moving forward, which should provide more competitive salaries overall, that will drive home prices locally even higher.

And those second and third-tier jobs tied to the defense industry don't pay as well, so there will always be a wage gap, and despite more construction, affordable housing will remain a very serious concern. Overall, however, Craig concedes the upside of growth in the years to come, saying, "Whenever you have more money coming into an economy you're going to have people spending more, more consumables, especially when you have high-income earners they spend more of their salary on consumer goods, experiences, food, out things like that and that trickles through the rest of the economy".

And to put an exclamation point on the space command decision, the Chamber/EDC folks told me it will employ some 1,400 people overall, add $ 450 million dollars a year to the region's economy, and funding for a new building to accommodate full command readiness will pump between $500 million and $1 billion into military construction.

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