Civil and Military Industries Find a Thriving Business Climate in the State of Arizona
Aviation Week & Space Technology
First, it has a strong, long-existing business climate friendly to both aerospace and defense industries. Second, there’s an educated workforce with respected university-led research and development efforts. In addition, there is an excellent quality of life for people, and near-perfect weather for the flight testing of fixed- and rotary-wing aircraft.
Obtaining any one or two of those attributes would be reason enough for an industry manufacturer or supplier to relocate. Finding all those attributes in one place is next to impossible, except when that place is the State of Arizona—one of the nation’s fastest growing centers for the aerospace and defense industry. Many of the world’s most respected A&D companies already operate in Arizona, including Boeing, Raytheon, Honeywell, Northrop Grumman, General Dynamics, Goodrich, Lockheed Martin, Bombardier, Hamilton Sundstrand and ATK.
“The Boeing Company has evolved, developed and grown for more than 20 years in Mesa, Arizona,” said Al Winn, vice president of Apache Programs for Boeing. “While continuing to design and assemble the AH-64D Apache Longbow, the site employs lean production practices and a well-trained flexible workforce that also develops advanced computer simulation systems, builds complex electrical subassemblies, provides a wide variety of aerospace support services, and creates cutting-edge technologies—from cognitive decision-aiding software to advanced rotorcraft concepts like the canard rotor wing aircraft.
“Through
continued cooperative efforts with the Arizona Department of Commerce, and working
closely with the High Technology Industry Cluster organization, Boeing envisions
a bright future and a positive outlook for continued growth in the frontier
of the desert southwest.”
The State of Arizona has attributes related to aerospace, defense, and other
military industries that are without equal in the U.S. For example:
- Arizona boasts
sunny weather year round, perfect for flying any type of aircraft
- Arizona has a high concentration of aerospace activity in the maintenance,
repair and overhaul industry—one of aviation’s fastest growing with
annual worldwide revenues of approximately $36 billion
- Arizona is ranked ninth nationally with high technology companies employing
more than 108,000 workers at an average annual wage of $62,946
- Defense electronics manufacturing employs more than 5,000 people, ranking
seventh nationally
- Arizona is a powerhouse in military contracting, ranking fifth in the nation
for Defense Department awards in 2002. More than 1,200 Arizona companies or
agencies benefit from military contracts, with the largest awards going to avionics
or defense-related businesses
- Arizona has 100 researchers developing new and improved materials to advance
technologies in semiconductors, electronics and aerospace
- The combination of astronomy and planetary sciences at the University of Arizona,
Northern Arizona University and Arizona State University makes Arizona a national
leader in space science and engineering
In addition, the political climate in Arizona is pro-aerospace, with the legislature appropriating necessary funds to improve road and utility infrastructures, and supporting laws friendly to the aerospace and defense markets. And with the state’s emphasis on educational excellence, there is a steady stream of young, motivated, educated people that want to move from technical schools and universities to aerospace industry.
“If you look at Phoenix, that area has really grown in aerospace over the last 20 years,” said Bill Lewandowski, vice president of supplier management for the Aerospace Industries Association, who specializes in tracking suppliers with revenues up to $100 million. “Where are they coming from? They are coming from states that were not so aerospace friendly.”
A THRIVING COMMERCIAL AVIATION INFRASTRUCTURE
The largest airport
in Arizona, Phoenix Sky Harbor, is unique in many ways. David Krietor, aviation
director for the City of Phoenix explained.
“We have the only airport in the U.S. that is the number-one station for
two major airlines—Southwest and America West,” he said. “Sky
Harbor is right in the middle of the metropolitan area, and is an incredibly
convenient airport.
“There are 110 non-stop destinations from Phoenix, and pricing out of Phoenix is extraordinary (because of competition). Honeywell, for example, can send people all over the world in a competitively priced environment.”
Phoenix Sky Harbor is on the verge of completing a $500 million investment in the airfield, which includes a new runway and reconstruction of two existing runways. The focus is to create an airport infrastructure, including ground transportation, that can handle 50 million to 60 million passengers annually within 15 years. It is expected that the airport will handle 36 million passengers this year.
The governments of Arizona, Phoenix and other communities throughout the state have supported a vibrant aviation infrastructure through well-designed and easy-to-use airports that are continually modernized. According to Krietor, an aerospace company considering a relocation will not cross the State of Arizona off its list because infrastructure.
Phoenix Sky Harbor is in the midst of three major expansion projects that will continue to give Arizona one of the premier aviation infrastructures. They include a $250 million, 2.5 million-square-foot consolidated car rental facility (Sky Harbor operates the nation’s fourth-largest car rental operation, with 40,000 cars rented annually; as well as a new, $50 million eight-gate concourse at Terminal Four for Southwest Airlines. Also, the airport is spending $80 million to replace its vintage 1975 175-foot control tower with a state-of-the-art 315-foot tower. Planned for the next couple years is groundbreaking on an automated people mover to connect the terminals with parking, car rental and light rail.
There is also another important aerospace trend in Arizona, that being the large number of general aviation and business aircraft that operate throughout the state. Also a function of Arizona’s excellent weather, the GA market in the state has always been one of the nation’s most vibrant. “The attractiveness of the state has not fallen off for the recreational flyer,” said Ray Boucher, aviation program analyst with the Arizona Department of Transportation Aeronautics Div. “There is a very active (GA) community here in Arizona, mainly because of the weather.”
One of the fastest-growing areas within Phoenix is the North Black Canyon Corridor, which includes the Deer Valley Airport—the third busiest general aviation airport in the country.
Box 1—Arizona’s Extensive Airport Infrastructure
724,895 passengers departed Arizona for international destinations in 2002.
21,407,053 passengers departed Arizona for domestic destinations in 2002.
In 2002, Arizona airports exported 158,102 tons of freight.
In 2002, Arizona airports imported 174,631 tons of freight.
Total cargo imported and exported in 2002 for Arizona airports was 365,829 tons.
Phoenix Sky Harbor International Airport saw 296,000 tons of cargo in 2002.
Tucson International Airport saw 61 million pounds of cargo in 2002.
10 Direct international flights leaving Arizona: Europe (2). Mexico (6). Canada (2).
Sierra Vista/Ft Huachuca maintains one of the longest runways in the state of over 12000 ft.
The U.S. Customs Service recently opened an office at Williams Gateway Airport, which will allow international goods to go in and out of the Mesa facility.
A STRONG MILITARY BASE
The State of Arizona has been on a strong growth curve that wasn’t slowed too greatly after Sept. 11, and has recovered faster than many other states. Arizona’s defense-related sectors, in particular, have rebounded quickly because they are in areas that the military needs, such as unmanned aerial vehicles.
“The military portion of the state is very large, and we’ve seen that the military has not diminished its extensive use of (Arizona) airspace, and it has, in fact, picked up,” said Boucher. He believes test flying in Arizona will only increase with the U.S. military’s increased emphasis on night fighting and the government’s increased homeland security needs.
Said Mary Baldwin, community and government relations manager for Boeing Mesa, speaking of the State of Arizona, “There is a very positive business climate, and a positive tax structure.”
Boeing moved its military helicopter business from California to Arizona about 20 years ago for a variety of reasons, according to Baldwin. They include: clear overflight areas, isolated and unrestricted airspace, zoning compatible with aerospace manufacturing, an educated workforce, and low business costs. Those positive attributes continue today, 20 years later, with Baldwin adding: “We would welcome more suppliers to relocated to our area.”
One of the fastest growing aspects of military aviation is surveillance, and the importance of the State of Arizona to development of unmanned aerial vehicles can’t be over-exaggerated.
“Every UAV pilot in the U.S. is taught at Ft. Huachuca,” said Barry Albrecht, executive director of the Sierra Vista Economic Development Foundation, referring to the military base in Southern Arizona that is home to intelligence and testing activities for the joint services. Ft. Huachuca and surrounding region will only gain in nationwide importance as homeland security efforts expand.
Located one hour southeast from Tucson, Ft. Huachuca is strategically located in southern Arizona and is at an elevation of 4,600 feet. Its UAV flight test ranges are unique in America in that they are the only ranges where UAVs can fly without the presence of a chase plane. Sierra Vista/Ft. Huachuca borders on Tucson’s “optics valley”, and is home to some of the largest employers in southern Arizona including Fort Huachuca, Northrop Grumman, Raytheon, Lockheed Martin, and AAI.
Some of the most advanced UAV technologies in the world today are being developed in the greater Sierra Vista area. For example, Northrop Grumman (in partnership with Israeli Aircraft Industries) developed the Hunter tactical UAV in southern Arizona. The Hunter TUAV is a multi-role tactical UAV that allows commanders to look deep into enemy territory by relaying real-time reconnaissance, surveillance and target acquisition information to ground control and mission monitoring stations. The U.S. Army has been deployed the Hunter on a worldwide basis, and the air vehicle has flown more than 5,000 hours during the past four years.
UAV technologies developed by companies and military branches operating in Arizona have multiple applications for homeland security, low intensity conflict and the latest in battlefield surveillance.
Southern Arizona’s unique capabilities for the UAV industry has also resulted in an aggressive local effort to development a civilian UAV R&D, Testing and Training Center and is projected to open in 2004.
“The concentration of well-paying jobs in these sectors fits well with our commitment to grow the industries of the future,” said Arizona Governor Janet Napolitano. “The City of Sierra Vista in partnership with the Department of Commerce has designed customized incentive and grant programs that significantly reduce operating and overhead costs for UAV industries.”
These incentive programs include: incentive lease rates on built-to-suit facilities; Arizona job training grants that support the design and delivery of training that meet UAV industry standards and challenges; county-wide enterprise zone tax benefits that reimburse company employment taxes; research and development income tax credit is a state income tax credit for qualified UAV research and development done in Arizona; and information technology training tax credits program to reimburse companies, thru state tax credits, for training in high tech programs.
“Such individually customized incentive programs result in a true low-cost manufacturing and operations environment,” said Arizona Department of Commerce director Gilbert Jimenez “This combined with the unique training ranges of Southern Arizona gives the area UAV operating capabilities that cannot be duplicated anywhere else in the world today.”
Box 2—Strong Support for Arizona’s Infrastructure
Arizona’s five active military installations support private investment ranging from research, manufacturing and testing of military weaponry and vehicles to the construction of barricades on and off installation grounds. Arizona’s military industry is responsible for creating 83,506 jobs and $5.7 billion in economic output in 2002.
The following are the state’s major military installations:
Davis-Monthan Air Force Base - Employs 6,000 military and 1,700 civilian workers, a key Air Combat Command installation.
Luke Air Force Base - Trains the world's finest F-16 pilots and crew chiefs while providing agile combat support for aerospace expeditionary forces.
Fort Huachuca – Serves as a Training and Doctrine Command installation for the U.S. Army Intelligence Center and School, Electronic Proving Grounds and the Joint Interoperability Test Center.
Yuma Marine Corps Air Station – Provides services and materials support operations to the Marine Aircraft Wing and its subordinate units.
Yuma Proving Ground - Tests medium and long range artillery, aircraft target acquisition equipment and armament, armored and wheeled vehicles, a variety of munitions, and personnel and supply parachute systems. Testing programs are conducted for all United States military services.
A SUPERIOR EDUCATIONAL ENVIRONMENT
“The climate within the state has been positive; there has been a real trend in better the climate for high-tech industry in general, and the aerospace industry in particular,” said Joseph Coltman, executive vice president and chief development officer for Simula, which began as a one-person start-up in 1975 in Phoenix, and is now a 250-person-strong company with $80 million in revenue, and distinction as the military’s largest supplier of body armor.
A significant part of that positive climate is due to the State of Arizona’s educational infrastructure, which provides aerospace and defense companies with ability to license university-developed technologies, as well as a steady stream of educated engineers, technicians and others.
“In the area of research and development, there is a rich relationship with Arizona State University,” said Ron Taylor, senior vice president and general manager of the Information Systems & Technology division within General Dynamics Decision Systems (a former division of Motorola purchased by General Dynamics two years ago), referring to one of the many educational institutions within Arizona with strong ties to aerospace and defense.
It is also not uncommon for industry executives to teach special programs at both the university level and in the K-through-12 educational system, the goal of the latter being to interest young kids in pursing aerospace careers. And at the university level, for example, General Dynamics worked with Arizona State University to develop a “black-belt” program in the area of quality.
“The main benefits for our company is the rich engineering base available to us,” said Taylor.
And the relationship between the aerospace and defense industries and the educational system isn’t just one way. Universities depend upon industry to help keep them on track regarding curriculum and the skills that are necessary to remain competitive.
Explained Dan Carrell, chancellor of Embry-Riddle Aeronautical University’s Prescott campus in Northern Arizona: “We participate in industry advisory boards with representatives from the aerospace companies in order to make sure our curriculum is contemporary, and that our degrees meet their needs. There is a lot of interplay there.”
In addition, Arizona universities are leaders in recruiting and retaining top-flight women and minorities in engineering. For instance, since 1993 underrepresented minority undergraduate enrollment has grown more than 55 percent at ASU, compared to only nine percent in the U.S. as a whole.
Box 3—Arizona’s Aerospace-Oriented Educational Institutions
Arizona is home to two Research I Universities offering world-class research programs and facilities, both in industry and academic settings. Arizona universities lead the development of new technologies and methods not only in business, science and engineering, but also in support systems and infrastructure. More than 100,000 jobs with an average annual salary of $63,000 make up Arizona’s high technology foundation.
Arizona State University (ASU) provides specialized laboratory facilities for combustion, design automation, fluid dynamics, integrated manufacturing engineering, integrated mechanical testing, material-wave interaction, and novel materials. Facilities include subsonic and supersonic wind tunnels. Research programs include: mechanical and aerospace engineering, chemical and materials engineering, computer science, electrical engineering, industrial engineering, civil and environmental engineering, and bioengineering.
The University of Arizona (UA) is actively involved in partnerships with industry, and works for NASA on shielding for a space-based nuclear reactor and with Boeing on the V22. Research programs include: aerospace and mechanical engineering; biosystems engineering; chemical and environmental engineering; civil engineering and engineering mechanics; electrical and computer engineering; engineering physics; hydrology and water resources; materials sciences; geological engineering; optical sciences; and systems and industrial engineering.
ASU, UA, Northern Arizona University, and Embry Riddle offer degrees in various technology-related fields, developing a highly skilled workforce for businesses to draw upon. Arizona universities conduct sponsored research for a number of government departments and agencies, including NASA, the Air Force Office of Scientific Research and the Department of Defense. Aerospace research areas include aerodynamics, propulsion, space technologies, advanced computing, aerospace structures, communications, avionics, embedded systems and nanotechnology.