Spending cuts challenge industry
Questions loom for sector reliant on U.S. contracts
Arizona’s $15 billion aerospace and defense industry has long been a cornerstone of the state’s economy.
It directly employs 42,500 and indirectly employs another 110,000 people, according to the Arizona Commerce Authority.
Aircraft are designed, built, tested, repaired, stored in the dry desert air and sold as scrap metal here.
Arizona is also a major hub for pilot training and aviation. Luke Air Force Base, starting next year, will train its F-35 Lightning II fighter jet pilots in the West Valley. Lufthansa Airlines trains between 180 and 300 commercial pilots annually at Phoenix-Goodyear Airport. And Phoenix Sky Harbor International Airport is the nation’s 10th busiest with 40 million passengers annually.
But as federal spending cuts roll out, the future direction of Arizona’s aerospace sector is in question.
About 2,000 companies statewide are involved in manufacturing for the aerospace and defense industry. Raytheon, Boeing, Honeywell and General Dynamics get the biggest share of the federal dollars that go to contractors.
But even small machining businesses like Nichols Precision in Tempe, which make com- ponents for larger contractors, benefit from federal expenditures.
About 85 percent of that federal spending, $12.9 billion in 2012, comes from the U.S. Department of Defense, primarily for military bases, aircraft and weapons.
“The Department of Defense is arguably our largest and most important employer,” said Dennis Hoffman, an economics professor in the W.P. Carey School of Business at Arizona State University.
Federal defense spending accounted for 6.7 percent of Arizona’s gross domestic product last year, according to a Pew Center on the States study.
That reliance on government from airport gates under electric power. The jet engines would start just before for takeoffs and shut down after landings.
In Mesa, Boeing continues its work on unmanned aerial vehicles, or UAVs, for military and civilian uses.
UAVs, often called drones, are likely to play a significant role in the state’s aerospace future as civilian use of the technology is developed.
Brent Bowen, dean of aviation at Embry-Riddle Aeronautical University, said UAV development here would get a boost if the Federal Aviation Administration chooses Arizona for one of six planned test sites for drones.
That decision is expected by the end of the year as the FAA reviews applications from 24 states to host the testing.
A key element of maintaining aerospace jobs and attracting more of them is ensuring that Arizona has a well-trained workforce, Bowen said.
That includes training engineers at the state’s universities and skilled labor at technical schools and community colleges, he said.
ASU’s Hoffman said the state’s aerospace industry needs to be strategic in planning for its future. As defense spending declines for aircraft and missiles, the industry here must “leverage off what we currently have” to develop technology for things like border- and cybersecurity, he said.
“That’s going to be a tough game,” Hoffman said. “Everybody nationwide will be trying to play that same game.”