NEWS | July 7, 2021

Pearl Harbor Naval Shipyard: An Economic Pillar for Hawaii

By PHNSY & IMF Public Affairs

Although the youngest state in the union, the Hawaiian Islands have a strong, long-standing relationship with our nation’s armed forces with the U.S. Navy establishing a coaling station in Pearl Harbor in 1887. Often called the Crossroads of the Pacific, Hawaii is one of the only locations in the United States that houses all branches of the U.S. military, including the Army, Navy, Air Force, Marine Corps, Coast Guard, Space Force and National Guard with more than 146,000 military members and their families scattered throughout the islands.

From jobs for federal civilian workers and contracts for local businesses to infrastructure investments and spending by military families stationed in Hawaii, the U.S. Department of Defense (DOD) is the second largest economic driver benefiting all four counties, outpaced only by tourism during pre-COVID-19 times. With the onset of the COVID-19 pandemic, defense spending has provided a critical anchor for the state’s economy during tumultuous times.

Defense spending in Hawaii totals more than $7.5 billion, accounting for 7.7% of Hawaii’s gross domestic product (GDP), number two in the United States for the highest defense spending as a share of a state’s GDP. Of that $7.5 billion, $5 billion is allocated to payroll, while an additional $2.5 billion is used for contract spending. The Department of the Navy accounts for 52% of the $2.3 billion in contract spending in Hawaii, and in 2020, more than half of all contract funds went to businesses located in Hawaii.

“The defense industry is extremely important for Hawaii and our economy,” said Sherry Menor-McNamara, president of the Chamber of Commerce Hawaii. “It is the second-largest economic driver for the state and generates millions of dollars in contracts for local businesses. We are proud to support the military through the Military Affairs Council.”

Pearl Harbor Naval Shipyard and Intermediate Maintenance Facility (PHNSY & IMF), as the largest industrial employer in Hawaii with more than 7,100 civilian, military and contractor employees, has an economic impact of approximately $1 billion, accounting for more than 13% of defense spending in the state. About $731 million of the shipyard’s total spending funds workforce salaries. The primarily-civilian workforce is largely comprised of long-term residents of Oahu compared to military members who typically relocate every few years.

Additionally, PHNSY & IMF’s surface ship maintenance efforts are primarily accomplished through private sector contracts. Across fiscal years 2020 and 2021, the shipyard will spend more than $250 million in support of surface ship maintenance.

With continued threats and hostility in the Indo-Pacific region, U.S. Indo-Pacific Command, headquartered in Honolulu and encompassing the U.S. military’s largest theater of operations, does not expect the DOD presence in Hawaii to decrease anytime soon due to the state’s strategic geographical position, which is critical to the national security mission.

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PHNSY & IMF is a field activity of NAVSEA and a one-stop regional maintenance center for the Navy’s surface ships and submarines. It is the largest industrial employer in the state of Hawaii, with a combined civilian, military and contractor workforce of approximately 7,100. It is the most comprehensive fleet repair and maintenance facility between the U.S. West Coast and the Far East, strategically located in the heart of the Pacific, being about a week’s steaming time closer to potential regional contingencies in the Indo-Pacific.

For more news from Pearl Harbor Naval Shipyard & IMF, visit navsea.navy.mil/Home/Shipyards/PHNS-IMF or facebook.com/PearlHarborNavalShipyard.