Saturday, March 13, 2010

Defense and Aerospace Jobs in Arizona Are Worth Fighting For

Defense and Aerospace Jobs Are Ones Worth Fighting For, by Glenn Hamer *

With two wars being waged and with an economy struggling to gain strength, perhaps no other industry finds itself in a position of importance like the defense and aerospace industry does right now.

In Arizona, companies like Honeywell, Boeing, General Dynamics and Raytheon are playing a critical role in equipping our nation's men and women who are serving in harm's way. They are also responsible for employing tens of thousands of Arizonans and making significant contributions to the state's economy.

A new policy brief by the Arizona Chamber Foundation looks closely at the importance of defense and aerospace to Arizona and shows why our state's leaders should unite to protect and promote the industry's growth in the state.

According to the analysis, defense and aerospace is responsible for over 35,000 jobs in the state and represents 21% of total manufacturing jobs in Arizona. And defense and aerospace jobs are desirable ones too, paying an average annual salary of $85,000, which is more than double the average Arizona salary across all industries.

But we shouldn't be satisfied with these encouraging statistics. If anything, they should spur us to act to ensure that defense and aerospace companies continue to grow in the state. If we take these jobs for granted, we stand to see them slip away as other states present a united front of a Congressional delegation, governor, legislature and business community committed to attracting these highly sought employers to their state.

Arizona's legislative leaders recognize the challenge ahead of us. Speaker of the House Kirk Adams has made a bold play by introducing a sweeping job-creation bill, HB 2250, which seeks to attract and retain companies like those in the defense and aerospace sector. The bill, which has already passed the House, may be the boldest and most aggressive set of tax reform and economic development tools ever proposed to attract and retain base industries.

The effect defense and aerospace companies can have across numerous industrial sectors cannot be overstated. When a large prime contractor wins a major federal contract, it doesn't only mean increased hiring and growth for the winning company. The prime contractor then connects with a supplier for parts and labor, creating jobs downstream. That supplier then creates demand from yet another supplier for parts and labor, and the process continues.

But the positive economic effect isn't just felt in the defense and aerospace sector. As companies connected to the prime contractor grow, so do other businesses in the community - from homebuilders to drycleaners - to meet the consumption demand of the prime contractor and their suppliers' employees. For example, consumer spending initiated by Boeing employees and the subsequent multiplier effect supported an additional 4,100 jobs and generated $15 million in state and local tax revenue.

We've all seen the push in policymaking and economic development circles to promote the growth of export-based industries in our state. Perhaps no industry fits that bill better than defense and aerospace, which is responsible for attracting millions of dollars from outside the state. Boeing's out-of-state operations alone spent $643 million on products from Arizona suppliers.

All of this affects real companies and real people.

Pivot Manufacturing is a Phoenix-based company with 18 employees headed by Steve Macias, a third-generation Arizonan. Steve's company's annual revenues average over $2.5 million and it counts as its customers respected companies like General Dynamics, Raytheon and BAE Systems.

The fight to keep and attract defense and aerospace companies, ranging from Fortune 500 prime contractors to companies like Pivot, is intense. And it's one that's being waged across the country as states are employing every economic development strategy at their disposal to grow their way out of this Great Recession.

It's a battle that calls for a K-12 system that turns out the best and brightest and a university system that provides a steady flow of qualified workers. These sensitive Defense Department programs can't simply outsource their work overseas or import workers into the U.S. A commitment from state and local government leaders is essential to foster an environment that ensures our state remains a desirable place to set up shop.

If we don't use every tool in our toolbox, from tax reform, to increased education standards, to regulatory reform, we stand to lose companies with a long history of contributing to our economy and our communities. And even worse, we'll fail to create an environment for the next entrepreneur to build a company here in Arizona.

* Glenn Hamer is President and CEO of the The Arizona Chamber of Commerce and Industry, an organization based in Phoenix that is committed to advancing Arizona's competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans

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For more information on Defense and Aerospace in Arizona, read the article: "Industry accounts for over 35,000 jobs, 21% of total manufacturing jobs in state"