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New Jersey Battles for Bigger Share of Military, Avionics Sectors

State's strategy melds existing talent and infrastructure with innovation sectors and industry clusters.

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As the premier military installation in the United States, Joint Base McGuire – Dix – Lakehurst (JB MDL) contributes $7 billion dollars annually to the local economy. It’s not just the largest employer in South Jersey, it’s the No. 2 employer in the state -- second only to the state itself.

But New Jersey’s defense industry comprises far more than just the joint base. And those working to maximize its impact on the state economy say it's mission critical to leverage existing infrastructure and talent in the face of impending cuts to the federal defense budget. They also say it's crucial to grow profits and jobs in conjunction with New Jersey’s uniquely positioned aerospace industry.

It’s not going to be easy.

Congress has voted to reduce the federal defense budget by $500 billion over the next decade (the largest decrease since the drawdown at the end of World War II), with additional cuts approved for ancillary departments like veterans’ affairs.

Top military and political advisors are also recommending another round of base closures and consolidations. With Ft. Monmouth shuttered during the last Base Realignment and Closure (BRAC) in 2005 and JB MDL consolidating its three formerly independent units in 2009, threats to New Jersey’s military presence seem inevitable.

Last week, however, Gov. Chris Christie lightened the mood when he signed an executive order creating a task force to issue recommendations to “preserve, enhance, and strengthen” New Jersey’s military installations. New Jersey will join other states that have organized a comprehensive approach to saving their military installations, including, in some cases, sending lobbyists to Washington. The governor's action gives supporters of the state’s defense and aerospace industries another weapon in their fight to make New Jersey one of the nation’s leaders in this sector.

Hopes for a Soaring Aviation Industry

“There’s no reason New Jersey can’t set the global standard for aviation,” proclaimed Ron Esposito, executive director of the Next Generation Aviation Research and Technology Park (ARTP) in Egg Harbor City. He spoke at a conference hosted by PlanSmart NJ to explore the questions, “Is New Jersey Taking Its Aerospace And Defense Industry for Granted . . . At Our Peril? Can We Make It Hotter? And Why Should We Care?”

As home to the FAA's William J. Hughes Technical Center -- the agency's only facility for developing and testing new technologies -- New Jersey boasts a population whose avionics expertise already flies circles around everyone else’s.

Industry boosters, including the chair of the house subcommittee on aviation, New Jersey Rep. Frank LoBiondo (R – 2), are hoping to use this advantage to win one of six planned testing sites for unmanned aircraft (drones). New Jersey is competing against 36 other states. But because the main objective of the testing is to determine how to most safely integrate drones into the already crowded airspace, Hughes could prove the most natural fit. (The center is already home to the NextGen project, whose goal is to shorten the safe distance between in-flight aircraft.)

It's not just institutional knowledge and infrastructure; talent also is in ready supply. New Jersey boasts more scientists and engineers per square mile than anywhere else in the world. And Lockheed Martin, which according to the latest Aerospace and Defense Intelligence Report spent $616 million last year on R&D, houses two of its primary systems centers in neighboring Burlington and Camden counties.

Further, in April, the Richard Stockton College of New Jersey and ARTP signed a memorandum of understanding to hold formal discussions about ARTP becoming an auxiliary of the college. After years of delays in leasing a 400,000 square-foot center for aviation research and development, Stockton’s possible partnership allows the project to move forward. At the same time, it helps the college develop academic and degree programs and spearhead far-reaching vertical integration initiatives between academia, industry, the FAA, and regional governments. The center is expected to eventually generate 2,000 highly skilled NextGen support jobs.

And If drone testing touches down in New Jersey, it’s predicted to have $194.3 million in economic impact by 2025 With aviation making up 10 percent of the nation’s gross domestic product, Col. Anthony LaSure, senior military advisor to the director of the Hughes Center, said, “As aviation goes, so goes the nation.”

By the end of the current General Assembly session, New Jersey could become an even more welcoming place for aeronautical companies. The Christie-endorsed Economic Opportunity Act of 2013 specifically targets aviation and defense companies for extra bonuses for locating new facilities or retaining full-time jobs inside an aviation zone instead of elsewhere in New Jersey. As written, the bill creates only one such zone: a one-mile radius around the Atlantic City airport.

“I call this the Goldilocks Effect,” said attorney Ted Zangari, who chairs the Public Policy and Governmental Affairs Practice Group for the Princeton firm Sills Cummins & Gross. “It’s not too stingy, it’s not too generous. I can say confidently it will be a rare occurrence where we sit awkwardly with a company telling the lieutenant governor that another governor is offering a larger pot of money. It’ll be ‘game over’ for any company considering locating in another state.”

The Cluster Connection

The aviation district speaks to an increasingly popular concept in urban planning and job creation – the “regional innovation cluster.” PlanSmart NJ has designated aviation and defense as targeted growth industries, and New Jersey is seeking ways to encourage like companies to locate close together (sometimes even within the same tech center, business incubator, or accelerator facility). While some clusters emerge organically or thanks to private interests, the proposed aviation zone is defined by government.

The aviation district abuts Stockton College, which earns it the designation of an “innovation district.” This is an area in which leaders at all levels of New Jersey government are learning to intensify efforts to encourage R&D relationships between university science and engineering programs and neighboring firms that apply lab procedures in the real world.

Conference panelist Shreekanth Mandayam spoke of the emerging defense cluster near Rowan University, which is concentrated in Rowan’s South Jersey Technology Park, of which Mandayam is executive director. Mandayam connects Rowan students with project-oriented internships at the park’s 16 sponsored research labs, some of which emerged out of university initiatives. His goal is to focus on defense firms, delivering $100 million in funding over the next decade and convincing them to hire his best students.

His message to the state and its future corporate tenants? “As you plan to sustain and grow the defense industry, please partner with universities. This is where you’re going to get your future employees.” . Those employees should be well compensated. According to a joint PlanSmart NJ and NJ Chamber of Commerce report released earlier this year, workers in the state’s aerospace and defense industries earn an average $93,120 per year, making them the sixth-highest-paid employees in this cluster in the United States. In terms of volume of direct employment in this cluster, New Jersey ranks 16th.

Thinking Regionally

But if the state can encourage municipalities to think regionally and cooperate to plan wisely around their commercial, industrial, and military bases, panelist Lara Schwager, development principal for the Ingerman Group real estate agency in Cherry Hill, says that ranking can rise. She argues that higher-density communities cost less to build, less to service, and less in commuter costs. They also pay lower taxes. That, she says, lowers operating costs for companies considering locating in these communities, while their employees pay less for housing. This is the approach she’d like the communities that surround the Joint Base to take.

Scott Rowe, manager of sustainability and plan development for the North Jersey Transportation Planning Authority, explained that with so many municipalities and so many layers of government, it can be frustrating to coordinate regional land-use policies, much less communication between government, private industry, and academia.

“It literally takes the armed forces to commission a joint land-use study,” he grimaced.

He was referring to a study funded by the defense department that explored land-use options around JB MDJ to minimize encroachments on base operations. The study was conducted in conjunction with Burlington and Ocean counties and their constituent municipalities around the time that the three bases were consolidating, and base brass took the opportunity to examine how they too could better integrate – and ingratiate – themselves and those under their command into the communities that surround them.

Ocean County Planning Director David McKeon worked with base personnel to open a dialogue with county and municipal leaders that resulted in better promotion of community services on base -- town events and promotions that aim to entice soldiers and civilians to off-base businesses -- and the mutual understanding that the transient nature of military posts, combined with sometimes short election cycles for elected officials, may inhibit military and civilian leaders from forming lasting working relationships.

What’s more, McKeon says every mayor in Burlington and Ocean county, plus the Pinelands, willingly signed on to work together implementing plan recommendations to consider the base’s needs when zoning. In return, the defense department continues to purchase and preserve open land around the base to form buffer zones, and base command made changes to become better neighbors -- realizing that a high-intensity shooting range may not work well across the street from a school and that flight paths generate less criticism when they don’t take planes directly over residential neighborhoods.

Though they may appear relatively minor, these kinds of quality-of-life measures could make all the difference in whether New Jersey can charge into the coming century as a leader in the defense and aerospace industries. The state’s reputation as an incubator for a highly educated workforce and its convenient access to major international airports, plus trains and highways that lead quickly to the government and banking centers of Washington, D.C. and Manhattan, certainly make it more attractive to industry.

And the passage of the Economic Opportunity Act, may herald a new age in high-tech incentives. So that leaves state and local governments to make up the difference -- addressing corporate grievances over needed tax reform and what’s perceived to be an unfriendly regulatory environment.

As Zangari said, “Financial incentives only move the needle when all other conditions are roughly equal. We need an educated workforce, stable taxes, a friendly regulatory environment, and good schools.”

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