Air Force lab injects $2B into NM's economy - Albuquerque Journal

Air Force lab injects $2B into NM’s economy

Verus Research Managing Director Hank Andrews, left, and Dr. Sameer Hemmady talk September 13 at the engineering firm’s new Albuquerque facility. The Air Force Research Laboratory accounts for Verus Research’s second-largest source of contract revenue. (Mike Sandoval/For the Albuquerque Journal)

Copyright © 2021 Albuquerque Journal

Air Force Research Laboratory spending on space and “directed energy” technology like lasers and microwaves boosted the local economy by nearly $2 billion over the past three years, according to a new economic impact report.

The study shows the New Mexico branch of the AFRL, housed at Kirtland Air Force Base, now supports nearly 2,700 local jobs, including about 1,100 employed by the defense agency itself, plus 1,600 at local companies that either directly supply goods and services to the AFRL, or that benefit from spending in the local economy.

AFRL investments are, in turn, helping to build a robust local industrial base, as new technology firms emerge and local and national companies expand operations here to take advantage of development opportunities in space-related technology and directed energy created by defense spending, said Col. Eric Felt, director of AFRL’s Space Vehicles Directorate.

“AFRL is proud to be part of the thriving innovation economy in New Mexico,” Felt told the Journal in an email. “The report confirms that New Mexico is a great place for space and directed energy, with a significant and growing industrial space, skilled workforce, and tremendous opportunities to shape the future of space and directed energy for our state, our nation and our world.”

The Journal received an advance copy of the report, which analyzes the AFRL’s local economic impact for the three-year period from fiscal year 2018 to FY 2020. It shows a total of $1.25 billion in direct local spending during those fiscal years, which run from Oct. 1-Sept. 30.

That spending generated an additional $730.5 million in economic activity by firms that supply goods and services to the AFRL, or that depend on AFRL-induced spending in the local economy.

In addition, at the federal level, AFRL pumped another $36.5 million into dozens of local businesses through technology-related research and development grants awarded from FY 2018-FY 2020.

AFRL accounts for only a small portion of total spending by all defense-related and U.S. Department of Energy-related entities housed at Kirtland. Overall, the base contributed about $4.6 billion to the local economy just in FY 2020, according to a separate report released earlier this month.

But AFRL-specific activities offer a huge, outsized boost to local industry, contributing to a surge in private sector investments here in recent years in space technology, and in research and development of laser and microwave systems. Defense spending in those areas through AFRL’s Space Vehicles Directorate and its Directed Energy Directorate, which are both located at Kirtland, have provided a powerful magnet for emerging companies to build new facilities in Albuquerque, or for existing firms to expand operations here.

Verus Research, for example – an Albuquerque engineering firm that does design, test and evaluation work for high-power microwaves and nuclear engineering – moved in September into the old Babies R Us building at I-40 and Eubank after renovating the 44,000-square-foot facility into a high-tech research and development space. The company has grown exponentially since launching in 2014, from $8.2 million in revenue and 30 employees in FY 2016 to nearly $32 million and 106 employees in FY 2021.

AFRL accounts for the company’s second-largest source of contract revenue, said Verus Managing Director Hank Andrews.

“About 41% of the value of our current contracts tie back to the AFRL,” Andrews told the Journal. “AFRL is helping to build and grow the business ecosystem in Albuquerque.”

Likewise, Virginia-based engineering firm BlueHalo announced this summer that it will invest $60 million to build a new, 200,000-square-foot innovation and manufacturing center for space technology and directed energy systems at Kirtland, where it expects to employ about 320 people.

When it opens next fall, BlueHalo will become the first industrial tenant to locate at a planned 70-acre mixed-use site known as MaxQ, now under development on Kirtland property along the south side of Gibson between Carlisle and Truman. The MaxQ complex aims to attract a lot more high-tech companies to the base, which is now a central location for U.S. Department of Defense efforts to modernize space technology, and to fully prepare microwave and laser weapon systems for battlefield deployment.

The AFRL has also established two local programs to help companies win government contracts. That includes an annual business accelerator called the HyperSpace Challenge, which launched in 2018 for select firms to pair up with government customers to explore new technology development that can support mission needs.

And this year, the AFRL and the U.S. Space Force partnered with the city of Albuquerque and local entities like the New Mexico Trade Alliance to establish a co-working space in Nob Hill where companies focused on space and directed energy can connect with Kirtland entities.

The steady advance in local industry development allows the AFRL to pump a lot more money into the New Mexico economy rather than flow out of state, said AFRL Technology Engagement Office Director Matt Fetrow.

“The report reflects only AFRL dollars that came to New Mexico and stayed in New Mexico,” Fetrow told the Journal. “New Mexico-based companies and national firms with local operations are effectively taking advantage of opportunities here, and they’re flourishing.”

AFRL-sponsored science, technology, engineering and math, or STEM, programs are also benefitting thousands of local K-12 pupils each year, plus hundreds of high school and college students through summer internships at Kirtland.

“That adds future value to the local economy by inspiring more students to pursue STEM careers and help expand New Mexico’s skilled workforce,” Fetrow said.

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