By the BF Staff
From the January/February 2021 Issue
Global aerospace and defense industry revenue is expected to begin to recover in 2021 after a difficult year in 2020, according to Deloitte’s aerospace industry outlook. But this recovery will likely be uneven across the two key sectors, commercial aerospace and defense.
The commercial aerospace sector has been significantly affected by the COVID-19 pandemic, which has led to a dramatic reduction in passenger traffic, in turn affecting aircraft demand, the report stated. As a result, the commercial aerospace sector is expected to recover slowly, as travel demand is not expected to return to pre–COVID-19 levels before 2024.
The defense sector is expected to remain stable in 2021, as most countries have not significantly reduced defense budgets and remain committed to sustaining their military capabilities. However, given the disruption in the complex global supply chain, some defense programs could face minor cost increases and schedule delays in 2021, Deloitte said.
Commercial air travel is gradually recovering (at a slow pace), with passenger traffic substantially lower (-73 percent) in September 2020 compared with a year ago. Capacity levels also declined year over year in September 2020 (-63 percent), while load factors decreased to 60 percent, according to the Deloitte report. The report warned that passenger traffic may not return to pre-pandemic levels before 2024.
KENTUCKY: READY TO RISE
While the COVID-19 pandemic stunted a long record of growth in aerospace, the industry stands to bounce back throughout 2021. As that recovery unfolds, Kentucky is poised to see new jobs, investment and corporate interest thanks to its premier manufacturing landscape, ideal geographic location and growing support for innovation.
“I can’t overstate the importance of cultivating the industries of the future right here in Kentucky, and aerospace is certainly one arena in which we plan to make great strides,” said Gov. Andy Beshear.
Gov. Beshear recently proposed the creation of the Emergency Industries Fund, which would provide flexible resources to develop technologies in innovative industries such as aerospace.
Far and away, aerospace-related products and services are Kentucky’s top export. [In 2019, the state’s aerospace exports totaled roughly $14.6 billion, second in the nation]. Some of the biggest names in aerospace manufacturing already operate major facilities in Kentucky, including Raytheon, GE Aviation, Lockheed Martin, UPS and Safran. KY is home to nearly 80 facilities comprising specialty machine shops, aluminum and composites fabrication businesses, R&D, tech and service-related companies. Since 2014, aerospace-related companies announced over $2.7 billion of investment and the creation of more than 4,000 jobs across KY.
Despite 2020’s turmoil, several companies announced investments to facilitate future growth, including Airline Reporting Corp., which offers financial and data assistance to airlines, and manufacturers like voestalpine Roll Forming Corp., which plans to create 50 jobs at its existing Shelbyville, Kentucky, location with a $5.2-million investment.
For businesses that depend on superior logistics, Kentucky’s central geographic location lies within a day’s drive of two-thirds the U.S. population. KY boasts an extensive shipping network of interstates, rail and waterways.
Kentucky is home to three world-class air cargo hubs: UPS Worldport in Louisville, as well as DHL’s Americas hub and the Amazon Air hub, both located in Northern Kentucky. These hubs power KY’s standing as the No. 2 air cargo state in the U.S., offering Kentucky companies the capability to ship products anywhere in the world.
Kentucky is a leader in innovative R&D, with colleges and universities that conduct groundbreaking research and produce aerospace products used globally. One top example is Morehead State University’s Space Science Center, a world leader in nanosatellite technologies used by NASA, the U.S. Department of Defense and aerospace companies globally.
A project underway at Morehead State is working to send a microsatellite to the moon. The CubeSat—microsatellites that compare to a bread loaf in size—will explore the moon’s surface for water, thus its aptly named Lunar IceCube. The NASA-sponsored satellite is expected to head to space in late 2021.
Just over an hour away in Lexington, KY, a program in the University of Kentucky’s Department of Mechanical Engineering has faculty and students studying potential real-time solutions for repairing damages to the International Space Station or other spacecraft. Launched in December, the project was one of 16 flight proposals selected for research to be conducted aboard the ISS as part of NASA’s MaterialsLab program.
To accommodate the rising interest in aerospace, Kentucky’s universities are looking to expand their programs related to the industry. These developments are good news for the continued development of Kentucky’s already highly skilled and diverse workforce.
The state’s outsized manufacturing presence—which accounts for roughly 13 percent of the state’s workforce compared to about 8.5 percent nationally—provides plenty of talent for aviation and aerospace companies.
Kentucky’s workers craft products ranging from satellites to aircraft engines and brakes, while related industries provide engineering services, maintenance, ground support and repair and logistics assistance.
While many challenges lie ahead in the road to recovery, so does an abundance of opportunity. Given Kentucky’s growing investment in aerospace and other industries of the future, the sky’s the limit.
MISSISSIPPI: DIVERSE PIPELINE OF TALENT
Industry-leading companies around the world consistently cite Mississippi’s talented and diverse pipeline of workers as a primary reason for locating or expanding operations in the state.
Every day, Mississippians are engaged in the production of some of the most sophisticated products on the planet, including unmanned aerial systems, 3D-printed rockets and other advanced aerial systems and components for space exploration, warships for the U.S. Navy and some of the world’s most recognized and sought-after automobiles.
Mississippi’s economic development partners, which include the state’s commended research universities, take proactive measures to develop a diverse workforce prepared to tackle the in-demand, high-tech careers of the future. With a strategic focus on STEM initiatives, the state remains steadfast in its efforts to evolve workforce training programs—as times change, so do the needs of industry. Mississippi is focused on growing partnerships between industry and the state’s universities and nationally recognized community college network. The state’s 15 community colleges offer more than 26,000 training classes and provide hundreds of companies throughout the state with training programs tailored to their individual needs. Mississippi also is home to eight public universities, four of which are research universities, and each plays a critical role in building Mississippi’s talented workforce through in-depth, hands-on training programs.
At the University of Mississippi, a Carnegie-designated institution, students are engaged in a variety of initiatives through the school’s nationally recognized research facilities.
- The Center for Manufacturing Excellence offers a degree in engineering that prepares students for careers in manufacturing. The CME is advised by industry executives from companies such as GE Aviation and Toyota Mississippi, both of which are located nearby.
- The Composite Materials Research Group is highly involved in composite materials research and has developed a program in pultrusion research.
Mississippi State University is the state’s flagship research university, preparing the next generation of leaders in STEM industries.
- The Center for Advanced Vehicular Systems helps businesses improve their engineering, manufacturing and design technologies and includes a department focusing solely on the simulation and experimentation of aerospace materials.
- The Raspet Flight Research Laboratory specializes in the design and testing of materials to support rapid prototyping for lighter-weight aircraft. The business incubator at the facility also offers technical training, manufacturing space and other assets to support various aerospace industries.
- The FAA Center of Excellence for UAS Research – Alliance for System Safety of UAS through Research Excellence focuses on research, education and training in areas that are critical to the safe integration of UAS into national airspace.
The University of Southern Mississippi also is an exceptional research university with concentrations in the key areas of biological sciences, coastal sciences, education and psychology, polymers and high-performing materials.
- The Mississippi Polymer Institute at USM is a national leader in the study of composites, advanced materials, polymers and plastics. The Institute helps companies in the plastics/polymers industry, such as GE Aviation, find solutions, train employees and improve processes and products. MPI has one of the most advanced rapid prototyping systems in the world.
Jackson State University, also designated as a high-research-activity university, enhances the state, nation and world through comprehensive economic development, health care, technological and educational initiatives.
According to the Mississippi e-Center at JSU’s website, the Center is “a cutting-edge facility that demonstrates JSU’s commitment to cyber technologies. The e-center is a novel, state-of-the-art complex with the computing and network infrastructure and the IT faculty and staff to support a wide range of activities, including: electronics-based teaching and learning, research and community outreach and service.”
Mississippi offers a robust portfolio of incentives, including the Mississippi Works Fund, which allows the state’s community colleges to enhance their training programs by allocating more than $50 million over 10 years to assist companies that locate or expand in the state with their unique training needs. Seventy-five percent of the funds are allocated to new job creation, while 25 percent is used for training an existing workforce and workforce certification.
AEROSPACE IS BOOMING IN UTAH
Northrop Grumman is constructing four new, state-of-the-art buildings in Northern Utah as part of its recently announced expansion in the state. This $380 million capital investment will be accompanied by the creation of over 3,000 new jobs. The Northrop Grumman expansion is projected to have an economic impact in the state of $1.2 billion annually. It is on track to grow aerospace and defense employment in Utah by about nine percent.
“Northern Utah is an attractive location for aerospace and defense companies due to its trained workforce, critical infrastructure and broad-based community support,” said Chris Roybal, president & CEO of the Northern Utah Economic Alliance. “With an employee base of more than 32,000 people, Utah is one of the top states in the nation for aerospace and defense employment.”
Northrop Grumman’s expansion in Utah is directly tied to its U.S. Air Force contract win. In September 2020, Northrop Grumman landed the nine-year, $13.3 billion contract to engineer and manufacture a replacement for the land-based component of the U.S. nuclear triad, called Minuteman III. The effort to replace this weapon system is called the Ground Based Strategic Deterrent (GBSD) program.
The nuclear triad—a formidable trifecta of nuclear land, sea and air systems—is often referred to as the backbone of America’s national security.
The two final contenders for the GBSD contract were Boeing and Northrop Grumman. Ultimately, the Northrop Grumman team demonstrated innovation and agility by applying a digital engineering approach, an innovative solution with utmost affordability to be selected by the USAF to modernize the nation’s aging intercontinental ballistic missile (ICBM).
Beginning in 2029, GBSD will start replacing the LGM-30G Minuteman III ICBMs, which were fielded in 1970, Northrop said in a statement. According to the Air Force, GBSD “will have increased accuracy, enhanced security and improved reliability to provide the United States with an upgraded and broader array of strategic nuclear options to address the threats of today and the future.”
Northrop was the sole bidder for the engineering, manufacturing and development contract after Boeing dropped out from the competition in July 2019 after Northrop’s acquisition of solid rocket motor manufacturer Orbital ATK, now known as Northrop Grumman Innovation Systems.
Northrop Grumman and its heritage companies have supported, sustained and modernized the U.S. Air Force’s ICBM systems since the beginning (1950s). A lot of this work happens at its Utah facilities. This was an advantage for Utah in the long run.
“The primes competing for the GBSD contract could ultimately place the program headquarters where they saw fit since the Department of Defense was location neutral,” said Colby Cooley, vice president of business development for the Economic Development Corporation of Utah. “Our state strategy was to develop incentives that any company competing for the contract could utilize. Fortunately, this aligned well with Northrop Grumman’s approach, which was focused on Utah to begin with.”
Utah’s collaborative government and business friendliness won the day.
“As the division leader that includes GBSD, I can’t think of a better place for our headquarters for this important mission than Roy, Utah. It is up the street from our Air Force customer and strategically located near our existing Northrop Grumman Utah facilities,” said Greg Manuel, Northrop Grumman vice president and general manager of the Strategic Deterrent Systems division.
The state’s burgeoning aerospace and defense industry would not be possible without the presence of Hill Air Force Base (HAFB) in Northern Utah. Being close to the base was a draw for Northrop Grumman during the site selection process.
HAFB, the second largest air force base in the nation by population and geographical size, represents over 50 percent of Utah’s defense sector and contributes nearly $4 billion to UT’s GDP annually. It’s the largest single-site employer in Utah.
Now, thanks to the Falcon Hill Development, companies like Northrop Grumman are able to strategically locate next to the base in the city of Roy. The 550-acre Falcon Hill Aerospace Research Park is the largest Enhanced Use Lease (EUL) in the U.S. Air Force. With almost five miles of interstate freeway frontage near the base, Falcon Hill has over 1 million square feet of commercial space completed and under development.
“This influential work is having a ripple effect across the state as Northrop Grumman’s sizable growth supports existing companies in the region and encourages new businesses to set up shop in Utah where business is booming,” said Roybal.
Utah is one of the top states in the nation for aerospace and defense with an employment base of more than 32,000 people. In addition to Northrop Grumman, Boeing, L3 Harris, Parker Hannifin, Hexcel and others call Utah home. Seven higher education institutions in Utah offer specialized programs in aerospace, resulting in a high concentration of aerospace engineers.
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