Tag Archives: Raytheon Missile Systems

satellite

Arizona’s aerospace industry may turn to space tourism

Arizona’s missile and space vehicle industry has faced massive cuts to its government contracts over the last four years, forcing some companies to explore other revenue sources.

Experts said the industry may turn to space tourism and commercial space programs to fill that gap.

The state has several advantages to expand in this market: good weather, a strong infrastructure and legislative support.

One Tucson-based company plans to start taking passengers to the outermost edge of earth’s atmosphere in high-altitude balloons by next year. Another recently won a contract to develop humidity control systems for commercial spacecraft.

“Government funding is on the decline, but space tourism is set to launch,” according to a 2014 industry report by IBISWorld, a Australian-based research company.

Arizona has 1,200 companies operating in the aerospace field, making the state America’s third-largest supply chain contributor for aerospace and defense, according to a 2012 study by the consulting firm Deloitte, which looked at the emerging industry trends.

These aerospace companies significantly impact Arizona’s overall economy, contributing $15 billion annually to the state’s gross domestic product, according to the Arizona Chamber of Commerce.

The industry is “very important to the overall economy of the state,” said Dennis Hoffman, an economics professor at the W. P. Carey School of Business at Arizona State University. “(But) its growth is dependent on its ability to diversify away from the historical way business has been done.”

Industry depends on military dollars

The military accounts for 63 percent of the missile and space vehicle industry revenue nationwide, according IBISWorld.

In 2011, federal funding for defense began to decline. Experts estimated funding has dropped 3 percent annually from 2009 to 2014. The federal government contributed $620.6 billion in 2014 to the missile and space vehicle industry, according to IBISWord.

Reduced combat operations in the Middle East and the federal sequester – automatic across-the-board budget cuts – caused the decline, according to experts.

In 2012, the state’s space and defense industry received $14 billion in federal contracts, and 91 percent came from the Department of Defense alone, according to the Arizona Chamber of Commerce.

With the decrease of federal funds, Arizona has billions of fewer dollars entering the economy, said Steven Zylstra, president and CEO of the Arizona Technology Council and a 20-year veteran in the aerospace and defense industry.

With the industry’s top customer spending less, industry stakeholders need to explore broadening their horizons to accommodate more than just the military, Hoffman said.

Tucson’s aerospace cluster

Tucson ranks fourth in the nation for the total percentage of manufacturing workforce dedicated to high-tech work, with more than 51 percent related to aerospace and defense, according to the Arizona Chamber of Commerce, which cited a 2012 report by Brookings Metropolitan Policy.

Metro Tucson is No.1 in the nation for the most employees active in a missiles and space vehicles trade cluster, according to the Economic and Business Research Center in the Eller College of Management at the University of Arizona. Clusters are geographically concentrated groups of connected companies, universities and related institutions.

But the industry has faced challenges. Direct aerospace manufacturing employment in Tucson saw a decline of about 4 percent from 2013 to 2014, said George Hammond, the director of the research center.

Tucson has been updating local infrastructure to accommodate the needs of the industry.

“Tucson is looking at ways to attract and gain firms in this cluster,” Hammond said.

In 2015, Pima County released a new economic development plan proposing a $600 million parkway-freeway combination, which would link Interstate 19 and Interstate 10. The road would cut through an area just south of The Raytheon Co., a major American defense contractor and missile systems facility in Tucson, Hammond said.

Officials said the plan may help prevent and slow some of the loss in employment by making it easier and cheaper for the suppliers and companies to do business in the area, Hammond said.

But the companies may need to change, too.

To remain competitive in the space industry, the government has encouraged increased competition in the commercial sector, IBISWorld reported.

The budget of NASA, the organization in charge of the U.S. space program and a major buyer of spacecraft and related equipment, has declined every year since fiscal 2011.

Still, IBISWorld predicted missile and space vehicle industry revenue will increase from 2014 to 2019, but only about 1 percent annually.

IBISWorld said companies should focus on several areas: developing contracts for commercial space flights, meeting the growing demand for communication satellites, increasing exports to allies, adding new missile and space development programs and advancing into space tourism.

Zylstra said Arizona officials have recognized the opportunities: “We pushed legislation to make it more appealing to do work here in Arizona.”

In 2014, Arizona passed legislation that opened the door for commercial spaceflight in the state. HB 2163 allows companies to obtain waivers of liability for passengers on commercial spaceflights, in compliance with federal standards. The bill defines the potential risks of spaceflight to passengers and sets the terms and conditions of a waiver.

“Thanks to this bill, space tourism is able to find a home in Arizona,” Katelyn Mixer, a spokeswoman for World View Inc., said in an email.

World View provides commercial services for educational and research flights. But the company plans on entering the space tourism game in 2016.

The company has high-altitude balloons that can reach 100,000 feet in 90 minutes, with a total flight time of four hours.

The company will allow customers to take a space flight for $75,000 per person, compared to Richard Branson’s $250,000 Virgin Galactic’s space flight.

World View is taking reservations for manned flights and private tours.

People are investing time and money into space tourism to position themselves as leaders in “an industry destined to be the largest, most prestigious and profitable industry ‘off’ world,” said John Spencer, founder of the Space Tourism Society, a California-based organization that works to make space tourism readily available faster.

Experts predict that companies that meet the new demands of commercial space will find success and survive government budget cuts.

Major industry players don’t feel as much impact

Raytheon Missile Systems is largest private employer in southern Arizona.

The loss of government funds has caused problems for Raytheon, whose missile systems division is based in Tucson. IBISWorld estimated steep revenue declines for the company. In 2014, Raytheon’s space vehicle and missile manufacturing operations revenue was $6 billion, down $705 million from 2010, according to the research group’s estimates.

However, Raytheon officials said the global company does not feel the cuts like other aerospace companies because it manufactures weapons, not platforms, spokesman John Patterson said. He added that the government will continue to manufacture weapons.

Raytheon has a 26 percent national market share for guided missiles, making it one of the Top Four companies nationally active in this industry, according to IBISWorld.

But even Raytheon, which “does not do too much from a commercial standpoint,” Patterson said, sees its future in space operations.

Raytheon recently completed a 9,600 square foot, $9.2 million expansion of its Space Systems Operations factory at its Tucson International Airport plant complex. The “space factory” was created to boost the company’s ability to create rocket-propelled “kill vehicles” that hunt and destroy ballistic missiles in space.

energy.bill

Fortis boosts power with Acquisition of UNS Energy

Fortis Inc. completed its acquisition of UNS Energy Corporation, adding UNS Energy subsidiaries Tucson Electric Power (TEP) and UniSource Energy Services (UES) to its growing international family of electric and gas utility companies.

TEP and UES will remain headquartered in Tucson under local control with current management and staffing levels and no planned changes to existing operations. Under the terms of a written order issued by the Arizona Corporation Commission (ACC) on Aug. 12, both companies will have enhanced financial strength and other benefits as part of Fortis, while their Arizona customers will receive $30 million in bill credits over the next five years.

“Joining the Fortis family will generate benefits for our company, our customers and the communities we serve,” said David Hutchens, President and CEO of UNS Energy, TEP and UES. “While this transaction opens a new chapter in our company’s history, our story remains the same. We will continue working every day to provide the safe, reliable and affordable service our customers have come to expect.”

With the $4.5 billion acquisition, which includes the assumption of $2 billion in debt, UNS Energy becomes the second largest subsidiary of Fortis and expands that company’s customer base to more than 3 million. Fortis is Canada’s largest investor-owned electric and gas distribution holding company, with regulated utility holdings in Canada, the United States and the Caribbean.

“TEP and UES are well-run companies whose employees are committed to serving their customers and communities,” said Fortis President Barry Perry, who will succeed H. Stanley Marshall as the company’s CEO effective December 31, 2014. “We welcome both companies to the Fortis team and look forward to supporting their continued success in serving their customers’ energy needs.”

Local, Independent Board Majority

The UNS Energy Board of Directors was reconstituted today as a result of the acquisition. In addition to Perry and John C. Walker, Fortis’ Executive Vice President of Western Canadian Operations, the board’s nine members include Hutchens and six other longtime Arizona residents who will continue on as independent directors from the previous UNS Energy Board:

• Lawrence J. Aldrich, Chairman and Executive Director of the Arizona Business Coalition on Health.
• Robert A. Elliott, President and Owner, Elliott Accounting.
• Louise L. Francesconi, former President of Raytheon Missile Systems.
• Ramiro G. Peru, former Executive Vice President and Chief Financial Officer of Phelps Dodge Corporation.
• Gregory A. Pivirotto, former CEO and Director of University Medical Center.
• Joaquin Ruiz, Dean of the University of Arizona College of Science, Executive Dean of the Colleges of Letters, Arts and Sciences.

UNS Energy remains the parent company of TEP and UES and will continue to oversee their local operations. UNS Energy’s stock will not trade on the New York Stock Exchange after today. Shareholders will be notified by transfer agency Computershare with instructions on how to redeem their shares.

TREO-Chairmans_Circle_2013

TREO adds to leadership

The TREO Board of Directors announced the following new leadership additions:

> New Vice Chairman of the Board/Chair-Elect: Guy Gunther, Vice President and General Manager, Tucson and Greater Arizona, CenturyLink. The Vice Chairman serves a key leadership role in partnership with the Chairman of the Board, and serves as Chair-Elect for the 2013-2014 Fiscal Year.

New Chairman’s Circle Members:
> Karen D. Mlawsky, CEO, University of Arizona Medical Center
> Sandra Watson, President & CEO, Arizona Commerce Authority

“We’re thrilled to continue adding top business leadership to our ranks,” said Steve Eggen, retired CFO, Raytheon Missile Systems. “We have put together the right critical mass of leaders to accelerate our economic growth.”

As CenturyLink’s Vice President and General Manager, Guy Gunther is responsible for Northern and Southern Arizona markets for voice, data, entertainment and managed services, including P&L, field operations, customer experience, direct and indirect sales channels, network development and community relations. Gunther has over 20 years of senior management experience in telecommunications, consulting firms and finance. “I am honored to become part of the leadership of this effective organization,” said Gunther. “TREO is the connective tissue in the region – promoting our assets and creating value for companies looking to establish or expand operations in Southern Arizona.”

As CEO of the Hospital Division of The University of Arizona Health Network, Karen Mlawsky oversees both The University of Arizona Medical Center – University Campus and The University of Arizona Medical – South Campus, as well as dozens of affiliated clinics and physicians’ offices. She previously served as vice president of oncology services for University Medical Center in Tucson and spent more than 13 years at the Ohio State University Medical Center. “Health care will likely be one of the top job-creating industries, regardless of a slow economic recovery,” said Mlawsky. “There is tremendous opportunity to contribute to our region’s economic development through teaching and training our future health-care workforce.”

Sandra Watson, president and CEO of the Arizona Commerce Authority (ACA), brings more than 20 years of economic development leadership and experience to Arizona. She and her teams have successfully attracted hundreds of companies that have invested billions of dollars in capital and created more than 65,000 quality jobs. With Governor Brewer’s visionary leadership, and a private sector board of directors made up of some of the state’s most successful CEOs, the ACA has established an aggressive five-year plan and is experiencing strong results in strengthening the state’s overall economy. “Partnering with regional groups such as TREO is critical to our overall success. TREO is central to a larger, collaborative movement in the state,” said Watson. “As a result of our strong, long-standing working relationship, we will continue to attract quality companies creating high-wage jobs in the Tucson region, benefitting the statewide economy.”

TREO Officers include:
> Chairman of the Board – Steve Eggen, (ret.) Chief Financial Officer, Raytheon Missile Systems
> Vice Chairman of the Board/Chair-Elect – Guy Gunther, Vice President and General Manager, Tucson and Greater Arizona, CenturyLink
> Immediate Past Chairman – Paul Bonavia, Chairman and CEO, UNS Energy Corp. & Tucson Electric Power Company
>  Secretary/Treasurer – Lisa Lovallo, Market Vice President, Southern Arizona, Cox Communications

TREO is governed by a 16-member Chairman’s Circle, which serves as a key advisory group for business development strategy and represents the Tucson region to national business prospects, and a 46-member Board of Directors.

TREO continues its Chairman’s Circle/Board of Directors expansion efforts begun in 2010. Economic development is a high priority, demanding increased engagement from the key companies, organizations and people that drive the Southern Arizona economy. TREO leadership recognizes the importance of providing strong thought leadership for community development and strengthening the Tucson “product” and positioning as a business center.

The above new members join other leaders providing both private and public sector perspective in accelerating economic development. For a complete listing of the TREO Chairman’s Circle and Board of Directors, visit http://www.treoaz.org/About-TREO-Board-of-Directors.aspx.