Sarah Prall / Staff Aerospace cluster pilot: Steve Pagnucco, co-chair of the local aerospace cluster and general manager of the manufacturing division at Universal Avionics Systems Corp., wants to get local firms to fill the needs of the area's aviation industry.

By Alan D. Fischer
ARIZONA DAILY STAR

Increased national defense spending and strong demand for small aircraft should mean a high-flying future for local aerospace companies.

President George W. Bush has pledged support for a national missile defense system.

And despite a waning economy, sales of private and regional aircraft remain strong as more companies buy private jets and more commercial airlines buy smaller planes.

Both those factors spell good news for Tucson companies such as Raytheon Missile Systems, which manufactures weapons for the U.S. government and other clients and is a key player in developing a national missile defense program; Bombardier Aerospace, where local workers finish the interiors of business jets; and CO Guardian LLC, which manufactures cockpit carbon-monoxide detectors.

Factor in Tucson's reputation within the industry as a business-friendly city, its pleasant weather and its many programs to train skilled aerospace workers, and local aerospace companies are poised for growth, said Tony Velocci, senior business editor at Aviation Week & Space Technology magazine.

"In my mind, that would position Tucson, Arizona, as a place to attract additional investment by the aerospace industry," Velocci said.

That growth - fueled in part by a challenge from Tucson Mayor Bob Walkup to create 10,000 new jobs in the next seven years - would build on an already strong local industry.

The Tucson area boasts 80 local aerospace firms with 21,126 employees, according to the 2000 Aerospace Directory published by the state Department of Commerce. The directory lists 206 Arizona companies.

Local industry revenues topped $1.1 billion last year, up 53 percent from 1999. Add in the 45 local companies that offer support services such as software design and precision machining, and total annual sales soar to more than $4 billion, with a payroll of nearly $1 billion, said Steve Pagnucco, co-chair of the local aerospace cluster and general manager of the manufacturing division at Universal Avionics Systems Corp.

Sarah Prall / Staff Black box: Universal Avionics manufactures many types of electronic devices for aircraft, including the "black box," above.

Workers for those companies earned an average of $57,476 in 1999 - 82 percent higher than the state's average wage, said Sally Spray, director of the Arizona Department of Commerce's international trade and investment division.

Arizona aerospace companies produced $7.5 billion in products and parts in 1999. And the state's international aerospace exports of $1.1 billion last year ranked seventh among U.S. states. Washington - home of Boeing Co., which may soon leave the state for a new corporate home in Denver, Dallas or Chicago - led the way with $19.8 billion, followed by California, Texas, New York, Florida and Kansas.

"In terms of hard dollars and economic impact, they lead the way," said John Grabo, interim president of the Greater Tucson Economic Council.

Major industry players here

Metro Tucson is home to about half the state's aerospace workers, many of them working for major industry players such as Raytheon, Bombardier, Honeywell, Sargent Controls & Aerospace and Universal Avionics. Combined, those five companies account for 13,643 local jobs, according to the 2000 Star 200 listing of area employers.

Also important are the smaller local firms providing components, services and technologies for the giants.

"You have a number of large firms at the top, and many suppliers supporting them," said GTEC's Grabo.

"One of our big focuses is the local supply-chain development: understanding what is needed by our aerospace companies and filling those needs locally," Pagnucco said.

Mayor Walkup, a retired executive from Hughes Missile Systems Co., now part of Raytheon, has made aerospace a top priority. Just days after taking office, he told industry officials he wanted more activity here.

"I laid down an objective: 'I challenge you guys to come up with 10,000 new aerospace
jobs,' " said Walkup, former chairman of the local aerospace cluster and past chairman of the Greater Tucson Economic Council. "We're looking for the future strategic relocation of major aerospace companies."

Walkup said he believes his goal of adding 10,000 aerospace jobs is attainable through continued expansion at existing companies and the attraction of new operations here.

"The aerospace industry is an enormous wealth producer to a community because of high wages and high values," Walkup said. "It can have a dramatic change on the economic prosperity of a community."

Working together for growth

Local groups are working to promote and grow the local aerospace industry.

GTEC's Grabo said his agency is actively recruiting new companies.

The state Commerce Department will take local firms to exhibit at the Paris Air Show June 17-24, Spray said. Participants will be able to connect with new international business partners and customers.

Tucson's aerospace cluster has been around for about a decade, but is ramping up efforts to ensure the business climate helps the industry thrive and grow.

"It's a rapidly maturing cluster, the one that's come together as fast or faster than any in recent memory," Grabo said. "It's going to help us attract companies, it's going to help us start companies, and it's going to help us grow companies already here."

Walkup said the aerospace cluster focused early on retaining and growing companies already here. That came to light in the early 1990s when Hughes acquired General Dynamics' missile systems division, giving the company the option of consolidating operations in Tucson or in California.

The cluster helped draft legislation for a state income-tax credit for new job creation that helped sway the decision to move California operations here, Walkup said. That resulted in 6,000 new jobs that boosted Tucson's economy, he said.

Aerospace helps economy soar

Through the various efforts to grow the local industry, aerospace seems poise

Number of local companies:
Primary: 80
Supporting firms: 45

Number of local employees: 21,126

Revenues: $1.1 billion last year