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Tucson, Arizona: From black boxes to the boneyard

Tucson’s sunshine and low humidity not only are attractive to tourists and residents. They also are two of the many reasons why Tucson is a key player in the aerospace & defense industry. This white paper written by Commercial Real Estate Group of Tucson identifies a number of reasons why Tucson has been, and continues to be, a hub for aerospace and defense industry leaders and suppliers.

Whether they manufacture black boxes and aviation batteries or help to maintain, revitalize or store thousands of aircraft at what we Tucsonans fondly call The Boneyard, commercial and government-contracted companies find a ready workforce and a supportive business environment. Anyone with plans to start, relocate or expand their Aerospace & Defense business would benefit from knowing what Tucson can offer wherever they are in the supply chain.

Tucson: An enviable location

Tucson is in enviable location for any company involved in the Aerospace & Defense industry. The city’s central southwestern U.S. location provides a number of advantages to companies in the area. Imports and exports are easily handled due to Tucson’s many transportation options. Not only does it sit within easy access of interstates, but this industry, along with many others, also benefits from the Port of Tucson, an inland warehousing, manufacturing and rail distribution hub. This intermodal rail facility, registered as a Foreign Trade Zone, simplifies domestic and international shipping for manufacturers involved in all parts of the supply chain.

Southern Arizona has historically been and continues to be an industry force in support of national security, aerospace and defense. It is particularly strong in cutting-edge optical research and the optics industry that provides critical systems to A&D end users. Statewide, Arizona boasts a strong infrastructure that includes leading military installations and private sector development of new missions and future requirements in areas ranging from unmanned systems to cyber threats to modernization of current assets across the defense spectrum.

Jeff Sales, Executive Director Southern Arizona, Arizona Technology Council

The Boneyard

The dryness of the Sonoran Desert also provides an ideal storage environment for aviation in what residents fondly refer to as The Boneyard.

Tucson’s local Air Force base has been in operation since 1925 and, among many other things, provides initial and ongoing training for all U.S. Air Force A-10, OA-10 and EC-130 pilots and crews, including many military personnel from other countries.

Adjoining Davis-Monthan, the local Air Force base in the southern part of the city, is AMARG (Aerospace Maintenance and Regeneration Group), the largest and most visited “Boneyard” where typically over 4,000 aircraft and other types of military equipment are stored. The aircraft are kept in stable condition with anti-corrosion and preservation processes and all military branches (Air Force, Navy, Marines, Coast Guard and Army), along with other U.S. national agencies, benefit from this center, as do thousands of visitors a year who are able to tour the AMARG space.

Tucson International Airport sees over 3.56 million passengers a year and in 2018 its cargo operations moved almost 65 million pounds of freight. The airport’s location allows easy access to the east-west Interstate 10 and to the international border with Mexico just 60 plus miles away. There are numerous additional airparks in the Tucson region each with a different focus. The Pinal Airpark and Marana Aerospace Solutions located on the northern outskirts of Tucson offer more than 600 acres of secured ramp and storage area for all sizes and types of commercial and military aircraft. Formerly Evergreen Maintenance Center, Marana Aerospace Solutions is internationally recognized and describes itself as one of the world’s most reliable aviation service facilities.

Incentives

In addition to ongoing business and workforce support for the industry, Arizona’s incentives for A&D companies are also impressive.

More than $200 million is available through refundable tax credits, reimbursable grants and property tax reductions. Those incentives include R&D Tax Credits, Quality Jobs Tax Credits and a Qualified Tax Incentive Program. The last one provides up to 10% refundable tax credit for investment in manufacturing facilities.

Tucson is located in a Foreign Trade Zone and businesses located in a zone or sub-zone are eligible for up to 70% reduction in state, real and personal property taxes.

A recent federal tax credit for long-term investors of real estate has created a number of Tucson Opportunity Zones in the Tucson and Pima County region, with many of them straddling the key logistical routes of Interstates 10 and 19. Investors can reduce the amount of their reinvested taxable capital gains by 10% or 15%, depending on the length of the investment. This has created great opportunity for commercial real estate investment.

Universal Avionics and Elbit Systems Company have been headquartered in Tucson for over 30 years. The combination of a collaborative business environment, workforce, excellent University and Community Colleges, and outstanding weather for both living and flying, have made Tucson an outstanding home for our company.

Steve Pagnucco, VP Operations, Universal Avionics

Flying high: Local success stories

Tucson already is home to some of the largest names in the industry. Many companies are headquartered here, as well as B2B firms with supply-chain connections throughout Arizona and around the world.

The 1,200+ companies involved in aerospace and defense are located throughout the city, where there are opportunities to easily connect and partner with other businesses. This map of aerospace and defense companies provides just a glimpse of how prevalent the industry is throughout the Tucson metropolitan area. Nearly every community is touched by people who work in these jobs.

Raytheon is Tucson’s largest private employer with over 9,000 Tucson-area workers. Best known as the world’s leader in the building of missile systems, it will become an aerospace and
defense giant if its merger with United Technologies, announced in June 2019, is approved. In Tucson, engineers and staff work toward providing both defensive and offensive weapons for air, land, sea and space, as well as sensors for the battlefield. In October 2014, Raytheon announced it had won a $149.3 million contract to help build an Israeli rocket-defense system, so it’s good to assume that local and national A&D companies will continue to benefit from that news.

A few other names that might sound familiar to players in the A&D sector, all of whom have a Tucson presence, include Honeywell Aerospace, Bombardier Aerospace and Lockheed Martin. There also are many small- and mid-sized companies that support these companies in a variety of ways and Tucson has some companies in the aerospace & defense sector that maintain a high profile locally, including:

Strong Research & Educational Presence

The University of Arizona’s Department of Aerospace and Mechanical Engineering is in a perfect position to help educate and support the A&D industry. Nineteen research laboratories focus on cutting-edge aerospace research on topics including fluid dynamics, aerodynamics, energy and fuel cell efficiency, mechanical characterization of materials and space engineering.

The university’s Tech Park, The Arizona Center for Innovation (AzCI) and Tech Launch Arizona (TLA) combine resources to help faculty and private companies to commercialize product.

NASA’s $420 million Phoenix Mars Mission was led by University of Arizona researchers and the UA ranks fifth in the number of NASA grants in the country. The university is also a leader in bio-sensing techniques and unmanned aerial vehicles (UAVs).

Pima Community College’s Aviation Technology Program is a great example of workforce development, offering four major program fields of study — structural repair, airframe and power plant, avionics and ground school for professional flight training. PCC offers both certificate and associate degree training in each area of study. The programs are highly regarded in the aerospace industry and the aviation curriculum has been called “one of the best kept secrets among many in the Tucson region.” The college recently gained $15 million in state funding to sharply increase enrollment in its program.

VISIT HERE to view the white paper in its entirety.

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