Tag Archives: Department of Defense

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Goodyear backs additional F-35 squadron at Luke

Goodyear Mayor Georgia Lord was among a number of state-wide officials during the Department of Defense’s announcement of three additional squadrons to the Air Force’s F-35A Lightning II fighter jet program at Luke Air Force Base.

Since the DOD’s initial announcement that Luke AFB will be the training center for the F-35s, cities and community groups throughout the West Valley have voiced their support for the military community and Luke’s mission of remaining the premier base for fighter pilot training.

“We are very pleased that Luke Air Force Base will now be home to three additional squadrons of F-35 Fighter Jets.” Goodyear Mayor Lord said. “The support of Goodyear and the surrounding West Valley communities played a huge role in this decision and we will continue to advocate on behalf of Luke and our military families.”

“Not only is this decision good for the security of our nation, but it will also have a huge economic impact on Goodyear, the West Valley and the State of Arizona.” Mayor Lord added.

The first three F-35A squadrons are scheduled to begin arriving at Luke AFB next year. Over the next several years, Luke will operate 170 aircraft; 144 will be the F-35A while 26 F-16s will remain for foreign military training.

Goodyear is among 13 Valley and West Valley municipalities partnering in the Luke Forward campaign that generated awareness of the positive impacts the Air Force’s next generation strike fighter will bring to the state. Through that community support involving tens of thousands of citizens participating in public hearings, the DOD recognized the importance of keeping Luke as the hub for fighter pilot training.

Two brand new training facilities are currently being constructed at Luke in preparation of receiving the F-35A fighter jets. An operations building will open later this year, while the 145,000 square-foot academic center is planned to open in mid to late 2014.

“This is great news for the region,” Goodyear City Manager Brian Dalke said of the DOD’s announcement on Thursday. “We value Luke Air Force Base as a neighbor as well as the economic support the military community currently provides to our city. We welcome the expansion of F-35 program with open arms. Not only will the program be beneficial for the local economy, it will strengthen national security.”

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GPEC analyzes impact of potential defense cuts

The Greater Phoenix Economic Council today released findings and recommendations from its Aerospace and Defense Market Intelligence Program, a two-phase initiative that took an in-depth look at the region’s aerospace and defense companies to determine their strengths, weaknesses and readiness for the sequestration, federally-mandated automatic spending cuts scheduled to take place on March 1 unless Congress intervenes.

As a result of the sequestration, the Department of Defense (DoD) must cut $1 trillion from its budget. Arizona has the sixth largest share of DoD contracts, and stands to lose as much as $2.3 billion in annual revenue on account of sequestration-based cuts.  Until it happens, however, the size or effects of the cuts in Arizona remain ambiguous.

In anticipation of these massive cuts, the Greater Phoenix Economic Council (GPEC) – along with its Economic Development Directors Team and the Greater Phoenix Chamber of Commerce – last year undertook a major market intelligence initiative to determine the existing strengths and weaknesses of Arizona’s aerospace and defense companies. Based on this data snapshot, the analysis also sought to understand the potential impact of sequestration on our local companies, communities, workforce and innovation base.

“As part of GPEC’s program, I personally sat down with several aerospace and defense companies located in Phoenix. The message I heard from them was resoundingly clear – the uncertainty over the timing and severity of these cuts has many of them paralyzed, and they want guidance,” said Phoenix Mayor Greg Stanton. “With 49,000 Arizona aerospace and defense jobs at stake, it’s critical that our federal leaders work together to avert this crisis or at least provide a strategic direction for where we go on March 2 and beyond.”

“Sequestration is a bad way to budget. Local companies and individuals get caught up in a political game that does little to solve our nation’s long-term financial challenges,” Mesa Mayor Scott Smith said. “Washington should follow the example of cities and make smart cuts to fix the budget rather than making arbitrary cuts that do more harm than good.”

The program consisted of two main components. The first developed an in-depth profile and analysis of 114 local companies identified by GPEC using data from the Office of Management and Budget. The second was an extensive door-to-door outreach effort to these companies, conducted by mayors, local chambers of commerce, GPEC Ambassadors (volunteers from GEC’s member companies) and municipal economic development directors and their teams.

“As a top-ranked defense state, Arizona has much to lose with the budget cuts associated with the 2011 Budget Control Act. The West Valley, proud home to Luke Air Force Base, has worked tirelessly to protect the mission of the base and to secure the F-35 aircraft,” Avondale Mayor Marie Lopez Rogers said. “Sequestration and the drastic budget cuts to defense and aerospace will undermine the efforts of the communities in the West Valley and negatively impact our local economy, which is tied closely to Luke Air Force Base and the defense-related industry.”

It’s also important to note that nearly 75 percent of the state’s research and development expenditures are housed within Arizona’s corporate infrastructure – companies like Intel, Boeing, Raytheon and Honeywell. As such, drastic reductions in their DoD contracts could result in losses in some of the state’s most significant research programs, which affect Arizona’s science position, its universities, and opportunities for increased investments and exports.

“These looming cuts represent a crossroads for our region,” GPEC President and CEO Barry Broome said. “The region’s corporate, science, civic and government partners must convene to not only mitigate job loss but also to support and protect the region’s physical assets, workforce talent and innovation from being moved out of the market.”

The findings represent a snapshot of the Greater Phoenix region’s aerospace and defense industry for a specific period of time, from May through December 2012 when the data was collected. During this time period, sequestration was considered more of a threat and less of a reality.

Top-line analysis revealed that 76 percent of the companies reported to be either stable (52 percent) or expanding (24 percent). Twenty-six percent reported that their businesses were contracting – primarily companies and operations where DoD contracts represent the largest share of their revenue base. Those that were expanding focused on diversification, including commercial and international markets, or DoD growth areas like intelligence, surveillance and reconnaissance, cyber technology, space technology and counterterrorism.

Because 2,000 companies throughout Arizona were awarded $13 billion in defense contacts in 2012 – and the industry represents 43,000 direct jobs – even a 25 percent contraction could be detrimental to one of the state’s major employment bases. For larger, Tier 1 companies, the short-term outlook is more stable as many have expanded products and services in anticipation of the cuts. However, Tier 2 companies that generally represent the industry’s supply chain are less likely to withstand the cuts due to their reliance on Tier 1 companies for contracts and subcontracts. Some of these companies have neither the access to capital or the working capital to wait it out – meaning they could be forced to lay off workers or cease operations.

Based on the program’s findings, GPEC’s five recommendations include:

1. A federal-level strategy from Arizona’s congressional leadership to either fully reverse sequestration or provide a “go forward” strategy to ensure Arizona’s aerospace and defense assets – including R&D and skilled workforce – are retained and redeployed.
2. Public and bilateral support for Governor Brewer and the Arizona Commerce Authority in their efforts to secure an FAA-designated test site.
3. A major commitment to science and technology to ensure the aerospace and defense industry’s existing knowledge and technology assets are leveraged to generate new and higher-value economic growth opportunities for our existing workforce talent while also attracting new, skill ed workers to Greater Phoenix.
4. Increased support for regional export opportunities from state and regional leaders.
5. An ongoing commitment to business retention and expansion, particularly with regards to sequestration.

To view the Aerospace and Defense Market Intelligence Report in its entirety, as well as all five recommendations, please visit http://www.gpec.org/aerospace.

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How could budget cuts impact Arizona?

The White House released a list of impacts to Arizona from automatic budget cuts that are set to take hold this week.

The White House compiled the numbers from federal agencies and its own budget office. The numbers reflect the impact of the cuts this year. Unless Congress acts by Friday, $85 billion in cuts are set to take effect from March-September.

As to whether states could move money around to cover shortfalls, the White House said that depends on state budget structures and the specific programs. The White House didn’t have a list of which states or programs might have flexibility.

The White House says the losses that Arizona would incur as a result of the automatic budget cuts include:

EDUCATION: $17.7 million in lost funding for K-12 schools. The lost funding could result in about 240 teaching and aide jobs being put at risk. Additionally, Arizona would lose about $10 million for 120 teachers and staff who help children with disabilities.

— Head Start services would be eliminated for about 1,000 children in Arizona.

— About 2,300 fewer low-income students in Arizona would receive aid to help them finance the costs of college and around 330 fewer students will get work-study jobs that help them pay for college.

ENVIRONMENT: Arizona would lose $2.1 million in funding for efforts to protect air and water and guard against pollution from pesticides and hazardous waste.

MILITARY: About 10,000 civilian employees for the Department of Defense would be furloughed. That would reduce gross pay by $52 million.

LAW ENFORCEMENT: Arizona would lose $298,000 in grants for law enforcement.

JOBS: Arizona would lose $781,000 in funding for job-search assistance. That translates to 26,000 fewer people getting help to find jobs.

CHILDREN: Up to 500 disadvantaged and vulnerable children could lose access to child care.

HEALTH: About 2,500 fewer children will receive vaccines for measles, mumps, rubella, tetanus, whooping cough, influenza and Hepatitis B.

— The state will lose $611,000 for improving its ability to respond to public health threats, such as infectious diseases, natural disasters and other events. In addition, Arizona will lose about $1.9 million in grants to help prevent and treat substance abuse. The state also will lose $186,000 resulting in around 4,600 fewer HIV tests.

WOMEN: Arizona could lose up to $132,000 for services to victims of domestic violence, meaning 500 fewer victims could be served.

SENIORS: More than $1 million for providing meals to seniors could be lost.

BORDER: U.S. Customs and Border Protection will not be able to keep the same staffing levels of Border Patrol agents and CBP officers. Funding and staffing reductions would increase wait times at airports and weaken security between ports of entry. The White House didn’t provide specific financial figures on how the budget cuts will affect ports of entry in Arizona.