How can Kansas retain aviation jobs?
11/15/2012 6:31 AM
11/15/2012 6:31 AM
During the recession, Kansas lost 22 percent of its aerospace employment – the only state with aircraft manufacturing in the country to experience a decline.
Kansas is also the only state concentrated in the business jet manufacturing business, which has taken much longer to recover its market.
At the same time, the aerospace industry has become more global and competitive. Emerging countries and other states are seeking aerospace jobs, which offer better wages and a better standard of living.
To entice employers, those communities are offering aggressive incentives.
The question before a group that met in Wichita this week was: So how does Kansas compete?
Results of a new study on the competitiveness of the state’s aerospace industry was presented to members of the Governor’s Council of Economic Advisors by Wichita State University’s Center for Economic Development and Business Research.
The council, led by Gov. Sam Brownback, met at Spirit AeroSystems Tuesday. Brownback asked the group for suggestions on what the state should be doing to preserve and grow Wichita’s aviation cluster.
Overall, Kansas is a cost-effective place for the industry, said Jeremy Hill, director for the CEDBR, which performed the competitiveness study.
Of the top 14 states with aerospace jobs, Kansas ranks fourth for labor costs, sixth for tax climate, fourth for energy costs, eighth for transportation infrastructure, fourth for construction costs and fifth for ease of doing business, Hill said.
The state’s social indexes rank high as well.
It’s first in cost of living, seventh in education and fifth in income and poverty levels.
Given the results, “we are one of the most competitive states,” Hill said. “Businesses should be lined up to want to come here.”
Wichita’s niche is in airframe and parts production.
“I think we’ve got some real opportunities here,” Brownback said.
More should be done, for example, to promote Wichita’s abilities in aviation design, Brownback said.
And more could be done to recruit and work with Tier 2 and 3 suppliers – companies that supply the direct suppliers to the manufacturers.
“We’re the aerospace engineering capital of the world,” John Tomblin, executive director of the National Institute for Aviation Research, told the group.
NIAR, which has long worked with the aircraft manufacturers, has had a number of inquiries from suppliers for help with research and development. It’s been contacted by lighting, seat and oxygen system suppliers and others for help.
NIAR is working with about six suppliers today — suppliers that have also quietly set up offices in Wichita.
More should be done to recruit suppliers to move or expand into Wichita, aviation leaders in the group said.
Manufacturers aren’t as dependent on Wichita’s suppliers as one would expect, Hill said.
There are opportunities for Wichita as China grows its aviation industry, said Wichita Mayor Carl Brewer, who recently returned from China as part of a delegation exploring business opportunities.
The state should help suppliers take advantage of global opportunities; for example it could help them learn how to outsource securely without infringement of intellectual property, said Karyn Page, president of Kansas Global Trade Services, who was part of the delegation to China.
Wichita and the state are not leveraging its aviation cluster to its advantage, said David Coleal, senior vice president and general manager of Spirit AeroSystems’ fuselage division.
Kansas doesn’t do a good job of marketing its quality of life and low costs, he said.
Wichita also should tout its industry, trained labor, NIAR and the National Center for Aviation Training.
“The image of Kansas is horrible,” he said. “They think nothing is out here.”
The state gave up promoting Kansas at some point, Brownback said.
“I think we’re probably paying a real price for that now,” he said. “We’ve got a lot of things to offer.”
Kansas has been more conservative than some other states on its incentives, Hill said. Large projects have gone to other states willing to offer large incentives to jump-start or grow the industry.
For example, the State of Alabama gave Airbus $158.5 million in incentives to open a plant with 1,000 jobs, Hill noted.
And South Carolina offered Boeing $800 million in incentives for a plant employing 3,800 people.
However, the number of years the states will wait for a return on their investments is high — 18 years and 13 years respectively, Hill said.
In comparison, Kansas incentives to Bombardier Learjet — $43 million in return for 1,050 jobs — will pay off in 2.5 years, he said.
“If you can target one company to move into Kansas to be the case study, then others will follow,” said John O’Leary, vice president of Airbus Americas Engineering in Wichita.