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Tucson 7th in Nation for U.S. Defense Dollars

15 Feb 2014 by BizDESIGN in Aerospace & Defense, FEATURES, WINTER 2014

By David B. Pittman

The U.S. military and the defense contracting industry fly high in Tucson and Southern Arizona as an economic driver like no other.

Nearly $5 billion in federal defense dollars flows into Tucson annually, according to a comprehensive Bloomberg Government Study released in 2011. That national analysis shows the Old Pueblo is the seventh top recipient of defense dollars among all U.S. cities – and number one in Arizona.

Arizona receives about $15.3 billion in federal defense dollars annually, ranking it eighth among the 50 states. That’s 2.9 percent of total U.S. defense spending, which works out to $2,321 per Arizona resident.

“It’s clear to me that the Department of Defense is the state’s largest and most important employer,” said Dennis L. Hoffman, professor of economics at the W.P. Carey School of Business at Arizona State University. “I don’t want to think about what Tucson would look like without defense spending.”

According to company officials, Raytheon Missile Systems – with 13,500 workers as of 2014 – is the Tucson region’s largest employer, followed by The University of Arizona, with 10,846, according to Arizona Daily Star’s Star 200.

The third and 11th largest employers in the area are Davis-Monthan Air Force Base and Fort Huachuca in Sierra Vista, which employ 9,100 and 5,096, respectively.

In fact, if you put D-M, Fort Huachuca and the 162nd Fighter Wing of the Air National Guard at Tucson International Airport (which has 1,039 employees) into a single category of U.S. military installations, it would be our region’s largest employer with 15,235 employees.

There are nine major military installations in Arizona, and eight of them, including installations operated by the Marines and the Army, have flying operations. What puts the air in Arizona? Two things: Vast air space and warm, sunny weather.

“There is air space over land in Arizona that is not matched anywhere in the United States. In fact, I think it is fair to say that it is unmatched anywhere in the world,” said Brig. Gen. Ted Maxwell, commander of the Arizona Air National Guard. The Barry M. Goldwater Range is a national treasure to the military that stretches essentially from Kitt Peak to the California border, from the Mexican border all the way to Interstate 8, with service to 50,000 feet.

“The big kicker is the weather,” he said. “We plan for about five non-flying days a year. You can’t do that anywhere else.”

Despite abundant air space, a near-perfect climate and the currently robust condition of aerospace and defense in Arizona, political and budgetary clouds are gathering that could threaten key military assets – particularly Tucson’s Davis-Monthan Air Force Base and the 162nd Fighter Wing at TIA.

Business and community leaders have banded together to defend the defense assets in Southern Arizona. Leading the charge on the business side is Tucson Metro Chamber, Southern Arizona Leadership Council, Tucson Regional Economic Opportunities, Tucson Association of Realtors, Southern Arizona Home Builders Association, Visit Tucson and Metropolitan Pima Alliance.

These business groups have joined with Southern Arizona military support groups, including DM50, the Air Guardians and the Fort Huachuca 50, to form the Southern Arizona Defense Alliance, with the goal of preserving military assets in the region.

TREO and SADA have also taken business leaders on recent missions to the nation’s capital to learn more about the mood in Congress and at the Pentagon.

A growing problem for the Department of Defense is federal budget cuts mandated by sequestration, which requires $1.2 trillion in automatic spending reductions to be split equally between defense and various domestic spending programs over the next decade. The reductions began kicking in this year. There is widespread belief among military officials that in order to meet sequestration budget reductions, Congress will authorize a Base Realignment and Closure process.

“There is a danger in a BRAC,” said retired Air Force Maj. Gen. Donald Shepperd, who makes his home in Tucson. “I do not think a BRAC will come before 2017 – but you will start hearing about it being set up because the nation has 30 percent too many bases, according to the Department of Defense.”

Shepperd, who formerly served as a military analyst for CNN, said the coming BRAC “means Davis-Monthan is now in competition with every other base in America.”

An upcoming threat to the Air National Guard at TIA is the introduction of the F-35, a fifth-generation stealth fighter jet that is the aircraft of the future for the U.S. Air Force. The F-35, the most heavily software-driven aircraft in history, will replace the F-16. The 162nd Fighter Wing is the International F-16 Training Center for the U.S. Air Force.

Members of SADA say it would be disastrous if F-35 training is not undertaken in Tucson.

“Among a list of priorities is convincing the U.S. Air Force that the people of Tucson fully support the 162nd Fighter Wing and Davis-Monthan Air Force Base to include the assignment of the F-35,” said Ron Shoopman, president of SALC and retired brigadier general. He went on to say that “both the 162nd Fighter Wing and Davis-Monthan could be in jeopardy without the full support of the community.”

The economic impact of the 162nd Fighter Wing is estimated between $280 million and $325 million annually.

“We are trying to grow the aerospace and defense industry in Southern Arizona,” said Michael Varney, chamber president and CEO as well as chair of SADA. “Having the F-35 here is a critical component of the future of that industry.”

There has also been discussion among Air Force brass about parking the A-10, the main aircraft stationed at D-M, and replacing it with the F-35. That prompted U.S. Rep. Ron Barber, a Tucson Democrat, and U.S. Sen. Kelly Ayotte, a New Hampshire Republican, to fire off a strongly worded letter on Nov. 13 about the importance of keeping the A-10 active to Defense Secretary Chuck Hagel and Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff. The letter was also signed by 31 other members of Congress.

“The A-10 plays an essential role in helping our ground forces and special operators accomplish their missions and return home safely,” Barber and Ayotte wrote. “We oppose any effort that would divest the A-10, creating a CAS (close air support) capability gap that would reduce Air Force combat power and unnecessarily endanger our service members.”

Shepperd said the A-10, nicknamed the Warthog, is the best jet for providing low-flying support to ground forces. However, he said economics favor the F-35.

“The A-10 is a single-mission aircraft. But it is the single best close-air support aircraft anywhere in the world. The problem is with budgets looking like they do for the future, we are not going to be able to afford single-mission aircraft. The F-35 is a multi-mission aircraft that can do the same mission as the A-10, but in a different way. It will do it from high altitude with smart weapons and sensors.”

Many observers believe the A-10 will not be retired for another 15 years or more, in part because new wings and electronics have been installed on the aircraft to extend their lifespan. But Shoopman called the A-10’s future uncertain.

“Air Force officials are not just hinting at these things. They said they are seriously looking at parking the A-10s,” he said. “The timetable is unknown. The assumption was they would be around until at least 2025 – but that is not necessarily guaranteed under the current situation.”

Business leaders applaud Barber’s efforts in support of the A-10, yet refrain from giving national security or procurement advice to Congress or the military. They say Tucson needs to embrace whatever mission the U.S. government sends our way.

“If the Air Force does decommission the entire A-10 fleet, we need the F-35 here to replace it,” Varney said. “Otherwise we leave a large hole in the entire mission of D-M, which would increase the base’s exposure to BRAC measures.”

The F-35 has been endorsed for deployment at D-M and TIA by Barber and by Republican U.S. Senators John McCain and Jeff Flake. Marana, Oro Valley, Sahuarita and Pima County have endorsed the use of the F-35 in Tucson as well, leaving just one local government jurisdiction conspicuously absent from the list – Tucson itself.

While the Tucson City Council has taken no position on deploying the aircraft, Mayor Jonathan Rothschild said he must hear the F-35 firsthand before he decides his position.

Local opponents of the F-35 primarily complain that the aircraft is too loud. Proponents say it is only slightly louder than the F-16.

“I have made it very clear that I am going to listen to the F-35. I’ve gone once to listen to the F-35 and they couldn’t get one in the air. That was at Lockheed Martin in Dallas,” Rothschild said. “I know from my own personal view, for my own conscience, I have to hear the plane.”

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