Opportunities, problems noted with Arkansas aerospace and defense sector

One of the things learned during the recent Arkansas Aerospace and Defense Summit is that Arkansas could be a big winner in a more than $30 billion deal to build new military vehicles.

There were more than 250 registered attendees this week at the Arkansas Aerospace and Defense Summit, where officials were able to spotlight the state’s rapidly expanding aerospace and defense sector before an audience of local, regional and national leaders, organizers said.

The two-day conference, held Tuesday and Wednesday at the Crowne Plaza Hotel in west Little Rock, included a job fair and tradeshow, panel discussions, networking opportunities, and a keynote luncheon presentation that included several high-ranking military commanders.

Chad Causey, executive director Arkansas Aerospace and Defense Alliance, said there were more than 30 companies represented at the conference where industry representatives came together to discuss important issues and challenges, conduct business, and create awareness on how important the sector is to Arkansas’ growth and future economic development.

“Arkansas is a place where we sometimes like to keep ‘big things’ secret,” Causey said, citing Wal-Mart, Tyson Foods and the state’s vibrant steel producing industry in northeast Arkansas. He said the aerospace industry’s impact on the Arkansas economy is just as important.

“Arkansas’ No. 1 export to the world is aerospace goods,” Causey said. “That is saying something considering the amount of agriculture commodities we have in the state and presence we have there.”

Causey continued: “It is important that we highlight that and give the industry a (chance) to come together to work on common goals and challenges, including the workforce and education aspect and (goal) to attract the next generation of our workforce.”

According to the alliance, Arkansas’s aerospace industry adds for more than $1.8 billion in export trade to the economy through the nearly 180 aviation and aerospace-related companies in the state. Commercial airports generate $2 billion to Arkansas’ economy each year, officials say, while general aviation creates an almost $500 million in annual growth.

Additionally, there are 91 publicly-owned or publicly-used general aviation and community airports within the state, eight of which have airline services. Altogether, the industry employs nearly 10,000 jobs, providing wages that are well above the state average.

$30 BILLION HUMVEE CONTRACT
Going forward, Causey said one of the biggest events on the horizon for the state’s aerospace and defense sector is the highly-awaited decision by the Pentagon’s to replace the military’s aging Humvee vehicles. Lockheed Martin, current Humvee maker AM General LLC and Oshkosh Corp., were selected finalists in 2012 to build the iconic armored vehicle.

According to industry reports, that contract could be worth more than $30 billion by 2040. At an estimated cost of between $250,000 and $400,000 per vehicle, the Army has said that it wants to buy 49,000 of the vehicles, and the Marine Corps need about 5,500.

If Lockheed wins the bidding war, the Bethesda, Md.-based defense contractor has said it would build the next-generation “joint light tactical vehicles,” or JLTV, at its huge manufacturing facility in Camden.

Already, each JLTV finalists has delivered prototypes and six trailers to the military for testing and evaluation. The testing phase is scheduled to be completed in the first quarter of fiscal 2015, which begins in October. The Pentagon plans to make a low-rate initial production decision in late fiscal 2015, according to the JLTV Joint Program Office.

“Lockheed Martin has expanded their facility there (in Camden), and they are working vigorously to secure that contact,” Causey said. “That would be a huge impact for the state of Arkansas and the defense sector here.”

WORKFORCE ISSUES
But Causey also added the burgeoning sector has some challenges, including the industry’s high employment attrition and turnover rates at between 8% and 10%. Although the aerospace industry has good-paying jobs, Causey said, the high so-called “churn” rate makes it difficult to find and keep enough workers to fill those jobs.

“Arkansas is a small state,” Causey said of the growing workforce challenge. “That is why we bring everybody together in this trade association and speak collective so we have a louder voice and take those issues forward.”

To help meet that challenge, the alliance invited more than a dozen students from the engineering program at Sylvan Hills High School in North Little Rock to attend the two-day conference. Those students participated in a Thursday morning panel discussion that allowed the students to speak with employers and get more information on how to enter the industry.

“Arkansas is full of qualified and talented individuals, and we have a number of employers with great paying jobs,” Causey said. “We just need to connect them and make sure they are getting the education and tools they need to enter this workforce, and enter it successfully.”