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Aerospace and Defense Investment Projects Take the Long View

Understanding and reducing the potential risks of a generational location project involving very large land parcels and investment.

Q2 2019
Von Hatley, Managing Director at Jones Walker Consulting, spoke with Area Development about the state of site selection and strategic planning within the aerospace and defense industry after his presentation at our Miami Consultants Forum on the same subject. Interview conducted by Margy Sweeney, Founder and CEO, Akrete, Inc. and Area Development Editorial Board member.Akrete, Inc. and Area Development Editorial Board member
If your industry is aerospace or defense, finding locations for new or expanded facilities is becoming an ever-critical aspect of your business. Not surprisingly, economic development organizations (EDOs) are eager to do business with the aerospace and defense companies—but not all are equipped to respond to the distinct requirements of these sectors.

Between 2009 to 2017, more than 500 aerospace and defense projects were announced, totaling more than $11 billion in investment and more than 50,000 jobs. Civilian aviation is a major force in the global economy, too, with 57 million jobs supported by aviation worldwide.

Demand for single-aisle regional jets, in particular, is very strong. Excluding defense transport, the aerospace industry is expected to require 37,000 planes by 2033. North America, Greater China and Europe will lead the way in aircraft deliveries over the next 20 years.

The global defense industry also is poised for future growth. The U.S. defense budget alone grew from $606 billion to $681 billion in 2019—more than the combined budgets of China, Russia, Germany, the UK, Japan and France.

Because of this sustained growth, aerospace and defense projects are among the most desirable to EDOs. Delivering an average of 100 jobs and $120 million in investment, aerospace and defense projects bring many benefits to communities that are up to the challenge of hosting an aerospace or defense firm.

What should you expect of your EDOs?
With projected growth in mind, are economic development organizations (EDOs) keeping up? For aerospace and defense organizations, what’s needed most are EDOs that understand the unique requirements and long-term perspective of these sectors, where site selection and relocation may be a five- to 10-year process. If you look at the [a & d] industry as a whole, over the last ten years, there's been about five hundred projects in total across the US, roughly fifty a year or one a week…I think that those numbers will continue and will be maybe even stronger in the next two or three years…

Defense companies, in particular, have some unique requirements that make locations in industry clusters particular desirable. For many, that means regions around the edges of the United States, like the West Coast, Texas, the Southeast and the Northeast. Those areas have already developed the ecosystem for civilian aviation or defense sector manufacturing, encompassing complex supply chains and vendors providing essential support elements for major defense systems.

Talent recruitment and retention is, of course, a major issue for aerospace and defense companies that seek a wide range of skill sets. Your EDOs should be able to proactively address how they will help build a pipeline for talent for your company, whether that means a community college program or engagement with high schools or even middle schools. For defense companies, an EDO also should be able to discuss the availability of talent that already has the security clearances typically required.

The defense industry has often been at the forefront of exploring new, disruptive technologies such as hypersonic jet engines, unmanned drones and next-generation aircraft for space exploration and earth-bound travel. An EDO should be willing and able to foster university connections to provide your company with access to R&D talent able to apply new innovations in aerospace and defense that are critical to the sector.

Another important area that an EDO should address for defense companies in particular is community engagement and corporate social responsibility. A knowledgeable EDO can help your company identify channels and organizations that will welcome your support and engagement, and facilitate introductions.

Above all, an EDO should be willing and able to address the detailed questions associated with long-term, generational location investments. Ideally, your EDOs will understand your desire to reduce the risk of a major project investment involving potentially very large land parcels. Whether your project concerns civilian or defense operations, your location analyses will need to anticipate every potential risk to ensure a successful project—and a strong EDO will partner with you to address your concerns.

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