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BizDEFENSE

$5 Billion in Local Defense Contracts By Romi Carrell Wittman

Every time you hear the low rumble of a military cargo plane in the sky above you or the rat-tat-tat of a hovering military helicopter, think about the millions of dollars that are pouring into Southern Arizona. It’s easy to see the economic benefit of being home to Davis-Monthan Air Force Base or Fort Huachuca. Each site employs thousands of military and civilian personnel – people who pump money into the economy just going about the daily business of life. But what’s not so easy to see – yet is just as critical to Southern Arizona’s economic viability – is the financial impact of defense and homeland security contractors like Raytheon Missile Systems, Bombardier, Honeywell Aerospace, Lockheed Martin, Sargeant Controls and scores of other local companies, plus Northrop Grumman in Sierra Vista. Combined these companies provide skilled high-wage jobs for tens of thousands of people. The Department of Defense alone employs nearly 40,000 people in Arizona – two-thirds of whom are civilian personnel. “Defense and homeland security is a big focus for Arizona. It’s a huge economic driver,” said Jeffrey Goldberg, dean of the University of Arizona College of Engineering. “It helps drive business development for the entire region.” The Arizona Commerce Authority reports that in fiscal year 2010, Arizona companies captured $10.8 billion in defense contracts – 50 percent of which went to companies in the Tucson area. Statewide the aerospace and defense inwww.BizTucson.com

dustry contributes some $300 million to state and local tax revenues. “The fortunes of these companies go up and down with their ability to get subcontracts from the defense department – and our ability to provide a solid workforce in engineering,” Goldberg said. “All of these depend on the link to the Department of Defense – and that starts with the military.” When you add in the indirect impacts of the defense industry – ancillary jobs

Southern Arizona Aerospace & Defense Contractors

Raytheon Missile Systems is the largest aerospace and defense employer in Arizona with 13,500 employees as of 2014. The Tucson facility, by far, employs the most workers of Raytheon’s three Arizona locations. Bombardier ranks second in Tucson with 1,100 employees. These other defense contractors employ from 200 to 1,000 employees at a single location: Tucson • Honeywell Aerospace – 700 • Tucson Airport Authority – 320 • B/E Aerospace – 700 • Evergreen Air Center – 275 • Universal Avionics Systems Corp. – 250 • National Optical Astronomy Observatory – 200 Sierra Vista • L–3 Command & Control Systems – 300 • General Dynamics Corporation – 250 • Northrop Grumman Aerospace – 220 Sources: Arizona Commerce Authority, Aerospace & Defense in Arizona – A Sector Profile, 2011, and company updates

such as doctors, car dealers, realtors, dry cleaners and grocers that are created in response to the wants and needs of the 40,000 aerospace and defense jobs – the total number of jobs created jumps to more than 90,000. On a 2010 contract basis, Arizona’s most significant defense-related product lines statewide were guided missiles, general healthcare services, basic research and development of missile and space systems, guided missile subsystems and rotary wing aircraft. With the wars in Iraq and Afghanistan coming to a close, defense spending is expected to be cut in some areas. However certain technologies – like unmanned air systems – are expected to expand. Arizona stands to benefit to the tune of more than $12 billion in contracts by 2015, according to the ACA. That represents an increase of $1 billion in federal defense contracts. Unmanned air systems are a natural fit for Arizona and, in particular, the Tucson area. “We have a lot of space, great weather and a great university system, including Embry-Riddle Aeronautical University (in Prescott), that can help move research and tech forward,” said Goldberg. UAS includes a multitude of technologies and systems – including semiconductor manufacturing; search, detection and navigation instruments manufacturing; aircraft manufacturing, and computer systems design services. Goldberg recently assisted the ACA in drafting its proposal to the Federal Aviation Administration to designate Arizona as an unmanned vehicle aircontinued on page 134 >>> Winter 2014

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The Tucson Region's Business Magazine

Biztucsonwinter2014flip  

The Tucson Region's Business Magazine