As economic development agencies around the world increase in number, and competition for investment projects grows, many economic promotion agencies are attempting to stand out by focusing on their regions' core assets. Many locations are focusing on their unique selling propositions and working to secure jobs and investment by passing legislation that adds additional value to their existing economic assets.
One such location is Oklahoma, which is leveraging its assets and building infrastructure and value-added programmes to ensure its core aviation industry sector thrives in this competitive economic climate, ensuring that the southern US state has sector propositions that can compete on a global scale.
Oklahoma is already known as home to both the largest military and commercial aircraft maintenance repair and overhaul (MRO) centres in the world. Its aerospace industry employs about 143,000 people in more than 350 companies.
In an attempt to enhance its reputation, the state government has partnered with aerospace companies and local universities to form a research airport for unmanned aerial systems (UAS).
Located on the edge of the US Army’s Fort Sill, the project is owned and operated by Oklahoma State University Multispectral Laboratories (UML), a public-private partnership between the university and Oklahoma-based research company Triton Scientific. The UAS research airport involves two paved UAS 670-metre by 21-metre runways that can accommodate unmanned aerial vehicles weighing up to 135 kilogrammes.
“We have access to 200 square miles [530 square kilometres] and from the ground to 40,000 feet [12,200 metres] up,” says Dr D Webster Keogh, a director at UML.
Of particular note is UML's agreement with the US Army and Fort Sill to utilise their airspace on a 'not-to-interfere' basis. This means it has access to restricted airspace for commercial UAS testing – the only such access in the US.
A rich history
Oklahoma's secretary of commerce and tourism, Natalie Shirley, sees the UAS research airport as an extension to Oklahoma’s already rich pioneering spirit in aerospace. “It is simply the next generation for Oklahoma’s aerospace industry – a natural progression for us,” she says. “Already about 10% of Oklahomans get their income from the aerospace sector."
Ms Shirley believes the industry can play an even bigger role in job creation and economic development by leveraging government, corporate, and academic assets through partnerships such as the UAS project. “I look at the UAS research park as marrying all of our assets together,” she says.
While the UAS market is small by comparison to the MRO market, the project does add one more element to Oklahoma’s arsenal. According to a study by the Oklahoma Aerospace Industry Partners, the global MRO market is projected to grow from $45bn in 2009 to more than $68bn in 2019. With Oklahoma one of the seven centres in the world for MRO, state officials expect to capture a large share of the growing MRO market in the coming years.
A 2009 study by the Teal Group put the current UAS global market size at $4.4bn and predicts it will rise to $8.7bn in 10 years, totaling $62bn in the decade. Worldwide, Teal projects that countries will spend another $20.8bn on research and development by 2017.
UAS production will exceed 7000 units in 2009-13, according to the Teal Group study, largely due to the purchase of man-portable systems. The US will represent 61% of the purchases and more than 70% of the development in this market, with most of the impetus coming from the US Department of Defense.
A united voice
While it took Oklahoma some three years for academia, private industry and government to agree on a unified UAS programme, all are now in agreement to the importance of its research element. “From an academic side we want to do fundamental research that leads towards innovation, and produce the next generation of UAS scientists and operators,” says Mr Keogh.
Training is also a critical element, as another goal is to teach personnel how to operate new unmanned systems. Consequently, Oklahoma State University now offers the first graduate-level degree in UAV systems in the US. The programme is believed to be the first of its kind outside of the military. “Already this programme has received unprecedented levels of interest,” says Mr Keogh.
The goal over the next five years is to create 600 new jobs specially related to unmanned systems. “Of course, there will be a lot of indirect jobs,” says Mr Keogh. Officials estimate salaries would range between $50,000 and $135,000, with an average about $85,000. UML alone directly supports 60 full-time jobs.
To encourage companies to locate in Oklahoma for this and other aviation-related opportunities, the state offers incentives such as the Aerospace Engineer Tax Credit and PrimeWIN. This provides a $5000 a year tax credit to engineers hired into the aerospace industry as well as gives the companies that hire them a 10% credit for hiring in-state graduates and a 5% credit for hiring from other states.
Oklahoma is also the first state in the US to increase a prime contractor’s overall profitability by incentivising them to subcontract work to Oklahoma businesses. Meanwhile, to build the UAS programme, UML is proactively working with the Federal Aviation Administration to identify ways that unmanned systems can fly into US air space, thereby increasing commercial opportunities. At present the military is showing the greatest interest in unmanned aerial systems, but Ms Shirley says the project will expand be used in agriculture, weather forecasting and the scouting of minerals.
Louisiana makes history
Louisiana is also hot on the trail to promote its key industry sectors. In September the state landed what officials claim could be one of the largest industrial projects in its history.
US-based Nucor Corporation announced a multiphase iron and steel production facility in St James Parish along the Mississippi River that could create 1250 jobs and $3.4bn in capital investment. The company had evaluated several sites in the US and Brazil. The long-term plan for the plant, which is expected to have an annual capacity of 2.5 million tonnes, is to make its own pig iron to help control supply and prices.
Now that it has chosen St James Parish, Nucor also plans to build a new high-capacity port on the Mississippi that will be capable of handling ocean vessels as well as barges of coal and pig iron. This will expand the impact of the Nucor complex because it would be able to feed steel product makers who might choose to establish plants in the region.
To secure the project, Louisiana Economic Development (LED) offered a customised incentive package to Nucor, including $160m in performance-based financial assistance over about six years provided that all five project phases are initiated as scheduled in the company's co-operative endeavour agreement with LED. Nucor is also expected to apply for a Gulf Opportunity Zone bond allocation of $600m and the state's 'Quality Jobs' programme. Subject to final approval of a proposed state incentive package, Nucor will begin construction of the first plant as soon as possible after completion of related environmental permitting.