In the US, the aviation and aerospace industry generated $161bn in sales in 2004, up 8% ($12bn) on 2003, reports the Aerospace Industries Association (AIA). Profits rose to an estimated $10bn, their highest level in five years. Contributing to the strong growth is robust US Department of Defense (DOD) spending on military aircraft, engines, parts and services.

Although analysts project that the boom will end due to DOD budgetary shifts, the market for civil aviation is brightening thanks to new orders for Airbus and Boeing aircraft. In 2004, Airbus delivered 340 jets and Boeing delivered 324. Airbus is offering upgrades to its A330 mid-range jetliner, and next year the Airbus mega jumbo liner, the A380, capable of hauling 555 passengers, will take to the skies. How well the upward trend continues depends on how fast commercial airlines recover from their financial woes.


California flyers

Among the most important US locations for aerospace/aviation activities are California, Texas, Florida, Colorado and Washington’s Puget Sound. Home to Boeing’s manufacturing nexus for commercial aircraft, military projects and space initiatives, plus a host of allied suppliers, producers and manufacturers, the Puget Sound region employs nearly 60,000 aerospace workers in dozens of companies

In California, the industry supports 160,000 jobs with most in aerospace manufacturing and non-aerospace services. Add to that 42,000-plus contractors and sub-contractors, many of which are clustered in southern California. Revenues of about $228bn per year are generated from aerospace-related activities.

Nevertheless, the industry has been especially volatile there in recent years, due to shifts in government spending for military and space exploration programmes. Yet, this year, the sector is expected to be among one of California’s key drivers of industrial growth. California’s advantages are that it owns about 50% of the global satellite market and is home to several major satellite producers, including Boeing Satellite Systems in El Segundo, Lockheed Martin Commercial Space Systems in Sunnyvale, and Space Systems/Loral in Palo Alto.

Military influence

The military also plays a major role influencing California’s aerospace economy. Vandenberg Air Force Base (AFB) on California’s central coast is the nation’s main polar launch site. It is home to five launch complexes and one commercial spaceport. Edwards AFB in the Antelope Valley hosts the Air Force Flight Test Centre, which is the US’s premier location for aerospace research and development, test and evaluation, and support of manned and unmanned aerospace vehicles (UAVs). The base also hosts NASA’s Dryden Flight Research Center and the Air Force Research Laboratory’s Propulsion Directorate, which oversees numerous rocket test stands.

Los Angeles Air Force Base (LAAFB) is a $5.5bn operation supporting 1500 military and 2900 civilian jobs locally and more than 4200 military and 2900 civilian jobs worldwide. LAAFB/Space & Missiles Systems Center (SMC) in El Segundo is responsible for the research, development and purchase of military space systems. California is also home to the NASA Ames Research Center, the NASA Center of Excellence on Information Technology and the lead NASA Center on Astrobiology.

Competitive magnets

Colorado and Arizona are successfully luring some California aerospace/ aviation companies away by playing up their lower business costs. In April, GST Industries, which manufactures hydraulic and mechanical components for aerospace and defence uses, announced plans to leave Huntington Beach in southern California for Mesa in Arizona, citing cheaper real estate, labour, taxes and overall operating costs as the reason.

GST will relocate to Williams Gateway Airport, a former military base that is being converted into a secondary airport for Phoenix. The Air Force’s Armstrong Laboratory Aircrew Training Research Facility is located at Williams Gateway Airport, which offers a good draw for aviation and aerospace investment.

The airport (and a US Air Force contract) attracted US Positioning Group to relocate from Albuquerque, New Mexico, to Mesa to develop new control centres for UAV drones there. “We looked at five different locations around the country, including Austin, Texas; Colorado Springs, Colorado; Albuquerque and Santa Fe, New Mexico; and Research Triangle, North Carolina,” says Steve Shope, US Positioning president. “Our goal is to start a non-profit cognitive engineering research institute and this seemed like an ideal place because the Air Force research lab is located here.”

Colorado’s 142,000 space-related jobs and $9.7bn annual payroll makes aerospace among its top two industries. The state is home to four military commands, five big aerospace contractors and 300-plus small aerospace companies that give it the fourth-largest cluster in the country behind California, Texas and Florida.

“Space businesses are attracted to Colorado for several reasons, including a pro-business environment and a highly educated workforce, supported by a strong university community,” says Ralph W Christie Jr, chairman, president and CEO of Merrick & Co and co-chairman of the Colorado Space Coalition. Merrick is a multidisciplinary engineering, architectural, GIS/LIDAR mapping, and construction management firm that established its headquarters in the Denver suburb of Aurora some years ago.

Space imaging has found its niche in metro Denver, giving rise to Colorado‘s reputation as the space imaging capital of the world. Two of the three largest space imaging companies in the US, Digital Globe and Space Imaging, are headquartered in Denver. The Denver operations of Lockheed Martin, Ball Aerospace and Raytheon also have space imaging and mapping components. Overall, roughly 20,000 Coloradoans are employed in this niche sector, which offers growth potential.

Texas space business

The aerospace industry is big in Texas, where it accounts for 10% of gross state product. In 2001, the industry was already employing about 184,000 workers, second only to California. Almost 20 out of every 1000 workers are employed in the aerospace and aviation business. Thanks to the NASA/Johnson Space Center in Houston, Texas is a leader in space research.

Texas politicians are keen on retaining the state’s position in the industry. When Vought Aircraft Industries, the largest aerospace subcontractor in the world, was planning to consolidate its Texas, Florida, Tennessee, Georgia and California operations in 2004, Vought CEO Tom Risley contacted the governor’s office to explore options for consolidating all five in Texas. What followed was a model of public/private partnership and co-operative efforts between government entities.

To clinch the deal, Texas offered Vought a $35m grant from the Texas Enterprise Fund. In addition, several institutions joined together to make Vought an offer it could not refuse. The offer included tax exemptions and abatements, land purchase and leaseback, infrastructure improvements, cash grants, workforce development services, worker training, manufacturing process assistance, and professional education partnerships.

The institutions were: the Grand Prairie Independent School District, the City of Dallas, Dallas County, the University of Texas at Arlington, the Texas Manufacturing Assistance Center, the Texas Department of Transportation, the Texas Workforce Commission, the local workforce development boards in Tarrant and Dallas counties, the Texas Comptroller of Public Accounts, the Governor’s Office of Economic Development and Tourism, the Texas Commission on Environmental Quality and the state’s General Land Office. With all the government agencies involved, it was not a simple deal to negotiate. Even the US Navy eventually played a major role in the final execution of the agreement. But Vought took the bait.

NASA lynchpin

Florida is an important location for space technologies. The lynchpin is NASA’s Kennedy Space Center (KSC), which is home to several commercial launch and payload processing operators, as well as NASA and the US Air Force launch and Spaceport technology development efforts. Not just a home to launch and launch-related activities, Cape Canaveral Spaceport’s surrounding area is bustling with providers of software, ground systems and space-enabled services.

As NASA continues to commercialise its operations, industry partnerships and interdisciplinary research opportunities are being identified. Among them is the Space Life Sciences (SLS) Lab, a joint initiative by KSC and Spaceport Florida Authority. The new, world-class laboratory will have the capability and systems necessary to host International Space Station experiment processing as well as associated biological and life sciences research. The SLS Lab will be the magnet facility in the new 400-acre Space Station Commerce Park, providing an ideal opportunity for collaboration between government, academia and private industry.

To develop the state’s aerospace potential, Florida’s Technological Research and Development Authority (a NASA-KSC/Florida Dual-Use Technology partnership) identifies companies with the interest and capability to co-develop selected technologies into manufactured products. In turn, these products are made available to NASA and the commercial market. This boosts viable technology transfer and commercialisation projects.

The aerospace industry even extends to Jacksonville. Brazilian jet-maker Embraer opened an aircraft production facility last autumn at Cecil Commerce Center. Embraer chose to locate its 71,000-square-foot plant at the centre, which was formerly the 17,200-acre site of Cecil Field Naval Air Station, for logistical reasons. The strong military presence in Jacksonville offered a source of highly-skilled labour; and nearby is Embry-Riddle Aeronautical University in Daytona Beach, which graduates more aerospace engineers and professional pilots than any school in the nation.

Across the US

Other locations across the US – Ohio, Kansas, Washington, Connecticut, Arizona, Virginia and Alabama – are also important aerospace/aviation locations.

Huntsville, Alabama’s Redstone Arsenal places that city at the forefront of the US Army and NASA aerospace developments. The arsenal is home to Marshall Space Flight Center, the US Army Aviation and Missile Command, and the US Army Space and Missile Defense Command.

BAE Systems is one of several top aerospace companies in Huntsville.The company is involved in science work for NASA, associated with the micro-gravity environments found on the space station. “We are here because BAE Systems bought the company that myself and others re-founded out of another, years ago,” explains Tom Houser, vice-president and chief operating officer of analytical ordinance solutions at BAE. “BAE Systems wanted a presence here. They saw Huntsville as a place with a lot of opportunities in aerospace and defence.”

Dayton in Ohio, the historic site of the Wright brothers’ flight tests, is home to Wright-Patterson AFB, the state’s largest single-site employer. The area hosts numerous groups, among them the Dayton Area Graduate Studies Institute, which is a collaborative effort between the Air Force Institute of Technology, the Air Force Research Laboratory, University of Dayton, Ohio State University, University of Cincinnati and Wright State University.

Wichita in Kansas is home to Boeing, Cessna, Raytheon, Bombardier/Learjet and Airbus. Boeing Wichita was selected to build the flight deck of forward fuselage of Boeing’s next generation aeroplane, the 787.

The Wichita area has a dense concentration of aerospace manufacturing. About 56% of its manufacturing workforce (33,800) is employed in aerospace production. The National Institute for Aviation Research at Wichita State University supports the aviation industry through R&D, testing, certification and technology transfer.

North Dakota has a notable aerospace/aviation industry thanks largely to defence contracts. Putting the state on the map is the University of North Dakota Aerospace – John D Odegard School of Aerospace Sciences, which is nationally acclaimed for achievements in collegiate aviation education, atmospheric research, space studies and computer science applications.


Part Two