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Aviation sector tops development wish list

This photo greets visitors to Air USA’s website. The combat-training contractor is moving its headquarters to Albuquerque. (COURTESY of AIR USA )
This photo greets visitors to Air USA’s website. The combat-training contractor is moving its headquarters to Albuquerque. (COURTESY of AIR USA )
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Several city and state officials said the aviation industry tops their list of economic development initiatives during roundtable discussion at the Albuquerque International Sunport on Oct. 24.

“We’re working closely with Albuquerque Economic Development on this,” said the city’s economic development director, John Garcia. “Of the eight or so industry clusters we want to build on, this is No. 1 on our list.”

The meeting brought together about 65 public officials, aviation representatives and national leaders to discuss ways to expand the industry. It’s the first such effort pushed by the New Mexico Aviation Aerospace Association, said co-founder and President Bill McMillan.

The association originally formed in January 2008, but when the recession hit later that year, the industry slowed substantially. Many local businesses cut back activities and laid off workers. Some went down in flames, such as Eclipse Aviation, which declared bankruptcy in 2009.

But with aviation and aerospace regaining traction, the association has become much more active this year. It’s now working with state officials on legislative initiatives to lower taxes and ease regulatory burdens, improve educational opportunities to build a broader pool of trained workers, and jointly recruit more companies to New Mexico.

Those efforts have generated some high-profile successes in 2012, including avionics firm Bendix/King’s decision in April to move its headquarters from Kansas to Albuquerque, and the September decision by aircraft tactical-services company Air USA to relocate here from Illinois.

McMillan told the Journal that more such announcements are coming, thanks to joint efforts with AED to bring a European aircraft manufacturer, and a firm that retrofits military planes, to the state. Those firms’ identities remain confidential, but McMillan said they could add another 230 aviation-related jobs in New Mexico within a couple of years.

The European company wants to build a new turboprop plane at Double Eagle II airport.

“That company is still struggling with the Federal Aviation Administration on a certification issue, but they’re getting closer to resolution,” McMillan said.

The other company is a defense contractor based in Texas.

“That firm provides manufacture, repair and overhaul service for military aircraft. They’ll start out here with 25 to 30 employees,” he said.

AED President Gary Tonjes said the organization has hired a “lead generation” firm to focus, in part, on potential aviation recruitment.

The roundtable presented an opportunity to develop a strategic plan for New Mexico’s aviation and aerospace industry, he added.

Speakers stressed that New Mexico’s aviation-related assets are huge draws for companies, including vast, open airspace, 355-plus days of flying weather and high-tech aerospace research and development centers, such as the Air Force Research Laboratory and White Sands Missile Range.

A recent study by the Aviation Aerospace Association reports that between 200 and 300 companies now operate in New Mexico, encompassing everything from maintenance and repair to avionics manufacturers and charter companies. Those businesses generate about $1.7 billion in revenue annually and employ nearly 7,000 people statewide. Another 6,000 people work for airports here, or for aviation-related businesses at airports.

To attract more business and investment, roundtable participants said the state must eliminate tax and regulatory disincentives.

Participants said lowering the corporate income tax and supporting a single sales factor – which would allow companies to pay taxes only on what they sell in New Mexico – are important. For aviation in particular, reforming the gross receipts tax is critical, given that aviation and aerospace firms here pay the tax on both parts and labor. That puts them at a competitive disadvantage with surrounding states, because Colorado has no gross receipts tax on either one, and Texas and Arizona tax only one or the other, but not both.

On the regulatory side, Virgin Galactic’s senior program manager, Mark Butler, appealed to participants to push the Legislature to expand the “informed consent bill” for space flights out of Spaceport America to include supply companies that offer parts and services to flight operators.

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