Aerospace, defense industries fast-growing in Oklahoma

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  • Aerospace, defense industries
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OKLAHOMA CITY – With more than 1,100 aerospace business entities, as well as the largest commercial and military maintenance, repair and overhaul depots in the world, Aerospace and Defense (A&D) is Oklahoma’s fastest-growing industry sector and second in size to only the energy sector.

The state Commerce Department hosted an hour-long webinar recently to discuss supply chain opportunities, access to capital, the contributions of NOR- DAM and Boeing to Oklahome's economy, and why companies are moving to the Sooner State.

“We have 116 companies looking at relocating to Oklahoma,” said Sean Kouplen, state Secretary of Workforce Development.

Oklahoma is attractive to aerospace and defense companies for a variety of reasons, Kouplen said:

• Its Career and Technology Education job training programs. There are 12 Oklahoma colleges and universities that have aerospace programs, including aerospace research programs at the University of Oklahoma and Oklahoma State University;

• This state’s natural resources and renewable energy sources such as wind and solar;

• The quality of life in the state;

• Three interstate highways (I-35, I-40 and I-44) and the inland Port of Catoosa;

• Labor costs in Oklahoma, which according to the Commerce Department are 25% below the national average;

• Business incentives, such as the aerospace engineer tax credit the Legislature created last year,

• The 21st Century Quality Jobs Program; and the Aerospace Commerce Economic Services (ACES) program, which promotes coordination in Oklahoma aerospace resources and strengthens collaboration among businesses, aviation, aerospace and defense interests, and enhances Oklahoma’s supply chain utilization.

• Tinker Air Force Base in the Oklahoma City metro area is the Defense Department’s largest maintenance, repair and overhaul (MRO) facility; Tulsa has the world’s largest commercial airline (American Airlines) MRO; and Google has a massive data center at Pryor.

• Oklahoma has five military installations, and more than 120,000 Oklahomans are employed by companies in the aerospace and defense industry. Major private-sector aerospace companies in this state are Boeing, American Airlines, Lockheed Martin, Northrop Grumman, NORDAM, Pratt & Whitney, and General Electric.

• Oklahoma also has quite a lot of influence in the na- nation's capital: senior U.S. Senator Jim Inhofe is chairman of the Senate’s Armed Services Committee; NASA Administrator Jim Bridenstine is from Tulsa; Congressman Tom Cole of Moore serves on the House Appropriations Committee; U.S. Rep. Kendra Horn of Oklahoma City serves on the House Armed Services Committee; and U.S. Senator James Lankford of Edmond is a member of the Senate Appropriations Committee.

• Oklahoma also has access to venture capital, equity for expansion and growth, for buyouts, and rescue/turn around capital.

CAPITAL AVAILABLE FOR A&D FIRMS

Rick Nagel, managing partner at Acorn Growth Companies, said during the webinar that Acorn is a middle market private equity firm focused exclusively on aerospace, defense and intelligence-gathering technology opportunities. Acorn has offices in 13 states and 35 countries, Nagel said.

Acorn has invested in companies involved in air logistics, MRO, distribution, missile defense, counter-unmanned systems, defense electronics, advanced mate- rials, component production, radar support and operations, defense information technology, and cyber security.

The commercial market worldwide also has experienced long-term demand for safe, efficient and cost-effective air travel “to bring individuals from around the world closer together,” Nagel said.

Meanwhile, he said, national security, ongoing global conflicts and instability demand increased defense spending and innovations in next-generation military technology. Globally, defense spending has reached $1.78 trillion, Nagel said.

The U.S. accounts for 36% of that; 24 other countries collectively account for 53%; and the rest of the world contributes the other 11%.

The aerospace and defense industry combined generated $151 billion in exports in 2018, resulting in a trade surplus of $86 billion that year, records indicate. The U.S. is the world’s largest exporter of A&D products, Nagel said, and, at $20 billion, leads the way in spending on space exploration.

A&D “has been a cornerstone of the U.S. economy for decades, and a critical anchor to the global economy, Nagel said.

Three of the top five single-site employers in Oklahoma – Tinker AFB,

American Airlines’ North American maintenance base in Tulsa, and NORDAM – are engaged in A&D, he said. “We’re an aerospace state.”

Aerospace has a $43.7 billion economic impact in Oklahoma, Nagel said.

However, Kouplen noted that the commercial airline sector has been “struggling” since the coronavirus outbreak caused a catastrophic loss of passengers.

Air traffic across the U.S. typically averages about 5,500 departures per day, but now “we’re down to about 1,500,” Kouplen said. As a direct consequence, American Airlines has announced that 1,003 employees at its maintenance facility in Tulsa will be temporarily furloughed in October and 114 workers will lose their jobs permanently.

NORDAM, BOEING EMPLOY 5,000 IN OKLAHOMA

NORDAM is a family-owned/operated aerospace company based in Tulsa. From its start as a small machine shop in 1969, today the company employs approximately 2,500 people – about 1,800 of them in Oklahoma – at nine facilities on three continents.

“We spend over $20 million with our supplier base,” said Bailey Siegfried, NORDAM’s vice president of culture, communication, information technology, human resources, and corporate responsibility. Almost $15 million of that is devoted to fabrications, he said.

NORDAM services Air Force bombers, fighters, tankers, and commercial passenger aircraft.

Boeing’s “vast footprint” in Oklahoma was described by Nancy Anderson, vice president of aircraft modernization and modification.

The company came to Oklahoma in 1953, Anderson said. Today the company has 3,400 employees in Oklahoma City, 77% of whom are engineers, she said. Approximately 655 Boeing OKC employees are military veterans.

The Boeing Co. occupies almost a million square feet of building space in Oklahoma City. Its campus in OKC encompasses 873,000 square feet and it occupies 86,400 square feet at Tinker AFB.

“We house more than 75 labs that support our customers,” Anderson said.

A $20 million, 60,770 square-foot addition soon will be built at the Boeing campus in OKC, and will house a wing and fuselage from a retired Air Force B-52. It will enable the company’s engineers to perform hands-on form, fit and function testing.

One of the company’s ma- jor projects now is upgrading the radar and engines of the U.S. Air Force fleet of nearly 70-year-old B-52 long-range heavy bombers.

The B-52’s eight engines will be replaced with engines that feature operational, economic and environmental improvements, and the Radar Modernization Program will enhance navigation reliability of the aircraft’s radar to support nuclear and conventional missions. Both programs will “ensure the aircraft remains relevant and mission-ready through 2050 and beyond,” Boeing said.

Also, under a contract awarded to Boeing last year, all B-52s can be equipped with two electro-optical viewing sensors, a forward-looking infrared and advanced targeting pods to augment targeting, battle assessment and flight safety, thus further im- proving its combat ability.

“Our services are able to keep U.S. warfighters updated,” Anderson said.

These upgrades and others will create openings for more than 300 engineers this year, she added.

Boeing OKC has an economic impact estimated at $2.9 billion. It has 113 suppliers whose purchases total $728 million. Boeing OKC supports more than 25,000 direct and indirect jobs in Oklahoma, Anderson said.

Oklahoma City has more than 230 aerospace firms that employ more than 36,000 people, according to the Greater Oklahoma City Chamber.

Boeing supports commercial passenger jets as well as military aircraft, including bombers, tankers, airborne early warning and control planes, and transport aircraft.