09.29.2014 AEROSPACE GROWTH ACCELERATES IN SOUTHEAST USA: Gulfstream, Boeing, Rolls Royce, AIRBUS and more
Since November 2012 we have regularly presented information on aerospace developments in the Southeast USA to such groups as Aerospace Valley in Toulouse and the BavAIRia Aerospace Cluster in Munich. See for example: http://www.slideshare.net/eliotnorman/airbus-boeing-rolls-royce-the-new-us-southeast-aerospace-cluster-march-2013-22025069.
Attention to the South East began with AIRBUS’s announcement in 2012 that it would begin assembly of the A320 in Mobile, Alabama. However, the Southeast has attracted all the major OEMs: Boeing with the 787 in South Carolina; Rolls Royce with what will become its largest facility in North America in Virginia; and major expansions of Gulfstream, Dassault, Embraer, Honda Jet and Lockheed Martin. We believe that opportunities will continue to grow for European first tier and second tier suppliers of components, engineering and assembly services for both the commercial and defense aviation and space markets. Below is our summary of recent news—business and legal:
- Honda Aircraft Co.(North Carolina) expects by the end of 2015 to add more than 400 new jobs at its R&D facility in Greensboro, N.C., which currently employs more than 750.
- Dassault Falcon Jet Corp. (Arkansas) recently announced plans to expand its "completion" center in Little Rock, Ark., that could add 300 jobs to the estimated 1,800 workers there.
- AIRBUS (Alabama): On June 24, 2014 AIRBUS opened its new new Alabama Aviation Training Center to support assembly of the A320, scheduled to begin in 2015.
- AIRBUS. July 16, 2014 announced that it would join CCAM, an advanced manufacturing research consortium based in Virginia that includes Rolls Royce, Siemens, NASA and Canon among its members. http://www.ccam-va.com/2014/07/16/global-aeronautics-leader-joins-forces-with-commonwealth-center-for-advanced-manufacturing/.
- CCAM (Virginia): In August 2014, CCAM announced that EOS, its first additive manufacturing (AM) OEM had been invited to join CCAM. CCAM’s 21 industry and government members include Aerojet Rocketdyne, Airbus, Canon Virginia Inc., Chromalloy, Newport News Shipbuilding, Oerlikon Metco, Rolls-Royce, Sandvik Coromant, Siemens, Blaser Swisslube, EOS, Hermle Machine Co., Mitutoyo, Paradigm Precision, Buehler, Cool Clean Technologies, GF AgieCharmilles, Mechdyne, National Instruments, SIS and the NASA Langley Research Center. Academic partners are the University of Virginia, Virginia State University, Virginia Tech and Old Dominion University. http://www.ccam-va.com/2014/09/10/additive-manufacturing-expert-eos-joins-commonwealth-center-for-advanced-manufacturing/
- BOEING (South Carolina): “Dreamliner” 787 production and assembly in South Carolina continues at record levels. On the defense side, Boeing won the bid for the new P-8A spy aircraft to replace the P-3, originally manufactured more than 40 years ago by Lockheed Martin. The 2014 Defense contract issued in Virgnia for the new P-8A will be worth $1.5 billion for the first series of airplanes. For news about the latest $300 million addition to the contract on August 14, 2014 see http://uk.reuters.com/article/2014/08/14/us-boeing-p-idUKKBN0GE2BE20140814 . Suppliers in the Southeast can target defense and commercial markets, given the easy proximity to the Pentagon in Washington DC and the first tier defense contractors with headquarters in the Washington D.C. area.
- Gulfstream (Georgia): In 2014 Gulfstream Aerospace Corp. announced it will build a new 400,000-square-foot product support distribution center in NorthPort Industrial Park near the junction of Interstate 95 and Ga. 21 in Savannah, Georgia. Site work is scheduled to begin in 2014 with construction slated for completion in early 2015. The center will accommodate more than 300 employees and approximately $900 million in parts and materials.
- Georgia: The state published in August 2014 its summary of new projects and expansions in the aerospace field, large and small and covering many sectors, which include foreign and domestic manufacturers. More than 15 companies have located or expanded operations since 2010, creating more than 2900 jobs. http://selectgeorgia.com/publications/Aerospace-Industry-Report.pdf
- Georgia Aerospace exports now account for 25% of total Georgia exports, surpassing the agricultural and automotive sectors. Aircraft, aircraft parts, and aircraft engines remained the #1 export of the State of Georgia in 2013 at $7.8 billion, up from $6.7 billion in 2012 (16% increase). Aerospace products account for 42% of the state’s increase in exports in 2013.
- IC-Disc. foreign manufacturers can benefit from establishing operations in the South East both to supply U.S. customers and to export a signficant percentage of their production to other markets. Substantial tax incentives under the IC-Disc Program are available to encourage such exports. See here.
- German and U.S. companies attended the Bavarian American Aerospace Symposium held at the Georgia Tech Research Institute on June 3, 2014 in Atlanta, Georgia. For other key information on the market in Georgia and conference results see http://www.georgia.org/2014/06/03/georgias-aerospace-industry-soaring-new-heights/
- Aerospace Legal Developments: Compliance, Export Controls, IC Disc and More: We see more OEMs and their first tier suppliers emphasizing the requirement of compliance with government regulations and codes of conduct in their foreign commercial contracts. This is a carryover from the defense sector and reflects concern about the reach of U.S. Department of Justice enforcement of Foreign Corrupt Practices Act and other U.S. laws. Link to compliance Reforms in Export Control continue that will make it more practical for foreign aerospace suppliers to locate in the United States and export technologies without concerns about ITAR. For information on Southeast State & Local Tax Developments, see http://www.williamsmullen.com/sesalt-news. State economic incentives continue to be awarded in the form of cash grants, tax exemptions and workforce training money for new foreign projects. Williams Mullen is active in negotiating them for a wide range of foreign manufacturing and engineering services firms locating in the South East USA. Use of Joint Ventures (JV) is still a popular alternative to making direct investments to start up a new facility. The JV seems to facilitate transfer of personnel, allowing easy use of L-1 and E-2 visas. We recently helped two foreign aerospace suppliers co-locate in another state using a JV to supply a major U.S. helicopter manufacturer.