As dozens of on-watchers took photos and “selfies” around a prototype of Lockheed Martin’s new Joint Light Tactical Vehicle (JLTV) parked at the steps of the State Capitol, Gov. Asa Hutchinson gave a last-minute pep rally ahead of Tuesday’s special session to consider an $87.1 million bond issue to build the next generation military vehicle in South Arkansas.
“This is a golden opportunity for the state of Arkansas,” Hutchinson told a crowd of more than 100 people gathered at the news conference before lawmakers convened at 3 p.m. for the First Extraordinary Session of the 90th General Assembly.
Gov. Hutchinson was joined at the capitol news event by Republican Sens. John Boozman and Tom Cotton and Rep. Bruce Westerman, R-Hot Springs, to discuss the much-talked about JLTV project that the Pentagon will announce in July.
Also on the platform with the governor were several Lockheed Martin executives, House Speaker Jeremy Gillam & Senate President Jonathan Dismang, and Mike Preston, the newly hired executive director of the Arkansas Economic Development Commission.
The JLTV will replace the Humvee, which has been used by the military since 1985. Should Lockheed Martin win the contract, the company plans to invest more than $125 million in the East Camden facility. Approximately 600 new full-time positions will be created at the facility and as many as 655 indirect jobs will be created in South Arkansas as a result of this project.
At an average wage of $57,000, the direct jobs will result in an added payroll in the South Arkansas economy of nearly $34.2 million annually, or $855 million over the next 25 years.
During the capitol press conference, Gov. Hutchinson gave an enthusiastic speech in support of the project, acknowledging that the general obligation bonds “would open up windows of new opportunity for the state of Arkansas.”
“I think this is exactly the type of project Arkansas voters had in mind when they approved Amendment 82,” he said. “If East Camden is ultimately chosen as the site for this new facility, South Arkansas will experience a tremendous economic impact for years to come. We need to make this happen, which is why I have chosen to call the General Assembly into special session.”
Despite the governor’s enthusiasm, the bond financing is just the first step in a highly competitive process to help Lockheed Martin build the next-generation of tactical vehicles for the U.S. Army and Marine Corps in Highland Industrial Park in East Camden
The DOD is expected to decide later this summer on the award of the final contract for the $30 billion JLTV project, which will replace the current “Humvee” military version of the all-terrain armored vehicle used by the U.S. Army and Marines.
If Lockheed Martin wins the contract against rivals Oshkosh and AM General, the Maryland-based defense giant will begin the process of its operations in Camden to begin rolling the first of nearly 55,000 off the assembly line by 2018.
Last week, Hutchinson outlined the details of the bond financing package. Nearly $83 million from the bond financing will be handed over to Lockheed Martin for assistance in retaining its current 530-person workforce. Those funds will also be used to assist the company in expanding its current facility, and it will allow the Maryland-based defense giant to double its labor pool to handle the Pentagon’s award that will last through 2040.
The bond financing will also pay for an additional $1.6 million training grant to be used for construction and equipping of training facilities at Southern Arkansas University Tech in Camden. The remaining $2.5 million will pay for expenses related to bond issuance costs, debt service reserves, and other eligible financing costs incurred or paid by the state, officials said.
A legislative study of the $87 million bond proposal shows that the state would easily recover its investment and an additional $16.3 million in added economic benefits.
If the project falls through or if Lockheed Martin is not awarded the project, the deal is dead and Arkansas is off the hook for the money, said Hutchinson spokesman J.R. Davis. The payback of bonds for the state, which will be somewhere between 15 and 20 years, is dependent upon market conditions at that time.
Hutchinson also specified on Tuesday that if Lockheed Martin wins the contract, the East Camden, Arkansas manufacturing facility will be the first original equipment manufacturer (OEM) in the state. He also noted that the project would be the first “vehicle manufacturing plant” in Arkansas, a goal of state lawmakers since the state’s losing bid in 2003 for the $800 million Toyota Tundra that went to Texas.
While Hutchinson focused on the economic development benefits to the state, Arkansas congressional delegation played up the important role the JLTV would have in modernizing U.S. armed forces.
Republican Sen. Tom Cotton noted that as a former Army infantry he actually has driven the aging Humvee, calling it an “old and venerable vehicle.” He said JLTV upgrade was crucial to the “survivability, mobility and reliability” of U.S. troops.
“This project is critical to our next generation of soldiers and Marines,” Cotton said. “I am confident that this program will be awarded on the best vehicle criteria and the best value to taxpayers.”
Cotton also called Lockheed Martin’s industrial site in East Camden “a jewel” for the state’s growing defense contracting sector, adding that he believes this project will be the first of many defense awards the state will land in the future.
Both Boozman and Westerman echoed Cotton’s comments highlighting the projects importance to the state’s economy and the nation’s military.
“As home to businesses that contribute to our nation’s defense, East Camden would be a perfect fit for this facility,” Boozman said. “The potential for attracting hundreds of highly skilled, quality jobs that will strengthen our national defense and protect our nation’s service members is well deserving of the attention of our state lawmakers.”
After the press conference, Lockheed Martin officials gave additional details on the Pentagon’s JLTV contract. Overall, the program is projected to bring an estimated $3.4 billion to the state’s economy should the nation’s largest defense contract win the high stakes bidding contest.
In addition, Lockheed Martin executives said the company plans to bolster the state’s $87.1 million bond financing with a total investment of more than $125 million for infrastructure improvements in Camden, as well as to reach job-creation and wage milestones set by the state over the next 25 years.
Lockheed officials also said that the current estimate of 55,000 vehicles is a conservative estimated. They said that tally could easily increase depending on the needs of the U.S. Army and Marine Corps. Also, several U.S. allies have express interest in purchasing a version of the new JLTV vehicle, which would push orders up well above the current purchase order.