The narrative around the health of California's economy changes depending on where you are. But as U.S. manufacturing’s fortunes rise, so too does the outlook for California's economy. Yes, the state may earn its notoriety as a high-cost place to do business, but if your company makes things, California's production ecosystem is a calling card.
That's especially true in aerospace, and the companies atop California's bluechip sector are determined to remind anyone who listens that the epicenter of U.S. aerospace manufacturing tilts decidedly West.
Alongside the California Manufacturing and Technology Association (CMTA) and the Aerospace State Association (ASA), California's largest aerospace companies are hosting Aerospace Day, August 3, in Sacramento. The program is organized through CMTA's Aerospace Defense Alliance of California (ADAC) committee.
We recently caught up with Joe Ahn from Northrop Grumman, Mark Taylor from Boeing, and Eric Fox from Lockheed Martin to talk about California aerospace and the event.
CompanyWeek: Tell us what's at stake here. Why an Aerospace Day, and what are you trying to accomplish?
Joe Ahn: I'd begin by just providing a 50,000-foot view of the aerospace industry in California. The numbers speak for themselves: $100 million in economic activity, 511,000 high-paying jobs, $11 billion in wages and benefits, $2.9 billion in payroll taxes, and $7 billion in state and local taxes paid.
As for Northrop Grumman, we're the largest aerospace organization in the state of California, with 32,000 employees in 120 locations. And like my colleagues from Boeing and Lockheed, we make everything from military aircraft to long-range strikes, hypersonics, satellites, and components. Probably our most recognizable system right now is NASA's James Webb telescope. We're happy to say it was built, manufactured, and designed here in California.
Mark Taylor: Boeing also has a rich history in California today, with about 13,000 employees at our four main sites and dozens of other smaller sites including a couple high-profile joint ventures and subsidiaries.
We have the world's largest satellite manufacturing facility, we provide 24/7 support to 14,000 in-service airplanes for 900-plus operators worldwide, and we can't forget about all of the design and engineering support our teams in California provide across our enterprise. We are also building for the future in areas such as autonomous systems, all here in California.
Just to circle back to the event, Aerospace Day is to remind the Capitol community how important aerospace is. Joe did a nice job of summarizing the high-level statistics, and they open people's eyes to the fact that aerospace, as an industry in California, is larger than entertainment and agriculture combined!
I think there's a misconception that aerospace has left California, and that couldn't be farther from the truth. In addition to all the big companies that are still here with a huge presence, Boeing has more than 2,200 suppliers in the state of California, and it's the number two state in the country in terms of our supply base, both by dollar value and by number.
Far from being gone, aerospace has a huge presence here. We're the backbone of the economy. And we're here to ensure the future is equally bright for aerospace in California.
Eric Fox: Lockheed Martin has been in California since 1912, flying a seaplane in San Francisco Bay. We've got about 10,000 folks in California as well, prominent in Sunnyvale for our space systems and, of course, the iconic skunkworks in Palmdale. That was in Burbank, California, after World War II. Across our footprint we're also working on batteries and energy sources for the future.
To amplify what Mark said to give you an idea of the scope of the F35 program -- which Joe Ahn (Northrop Grumman) is a partner on and is helping California employment there as well -- Lockheed has more F35 suppliers in California than our next four states combined: Texas, New York, Florida, and Connecticut. And if you just saw the headline, we think we got a spit-and-a-handshake deal for 375 more F35s with the federal government. And then, of course, we're selling them internationally quite quickly given what's happening in Ukraine. So, it's a long-storied history in California that's getting even better. As Joe mentioned, hypersonic (weapon systems) are going to be born and raised in California; everyone's competing on that. We're adding jobs; we're wide open for business.
And also, even though they're not on the call, I'd put a plug in for our good friends at Raytheon, who've announced they want to hire another 1,000 people in their El Segundo facility. California is thriving and growing because of the leadership of Governor Gavin Newsom and Dee Dee Myers at CalCompetes. California is the birthplace of next-generation aerospace.
CW: I wanted to touch on Mark's comments about Boeing's rich California supply chain. It's obviously integral to your operations. I'd assume the care and feeding of America's top aerospace supply chain is important?
Joe: Yes! Without our suppliers, we wouldn't be able to manage back to the OEMs. In fact, depending on what systems and products you're talking about, sometimes half the work is actually done by our supply base. It's very important.
Just to bring CMTA into the conversation, the reason we have an affiliation and partnership with CMTA is that a lot of our suppliers don't have the ability to articulate or share their thoughts about public policy that are important to them and us. By working through CMTA, we're able to amplify to policy makers those things that are important to us and, by default, to our suppliers. We talked about hiring and recruiting. I don't think there is any question that the challenges we're facing with workforce are shared by our suppliers.
In the next 10 years, at Northrop Grumman, we're going to lose half our workforce. We hear similar concerns from our supply chain. So, it's very important that the supply chain remains robust to achieve our goals of supporting civil space, the military, and other applications.
Eric: Workforce development is obviously a focus within all our states. With California having the worldwide leader in higher education in the form of the University of California system, we're going to find our engineers here.
But you also have to have the people to put together aircraft, hypersonics, and whatever the next generation "thing" is. What we've found is that we also have to partner with community colleges -- not everybody needs a four-year degree. We need to work with these entities to get the curriculum we need to start the feedback pipeline.
As our workers start to mature out, we're working with CMTA through ADAC to lay the groundwork for the workforce of the future. And today it's a different game. These are well-paying, high-quality, long-lasting jobs. The days of a dirty factory are gone. Everything today is high-tech, high-skilled -- including the defense industry in California.
Mark: Just to mention ADAC again, in addition to regulatory and competitiveness issues, workforce is one of the key things we focus on. There's a lot of competition for skilled labor in California. We're spending a lot of time, as an organization, at the high-end of the engineering spectrum as well as the trained, hands-on workforce we'll need to build things in California.
Bart Taylor is publisher of CompanyWeek and the CA Manufacturing Report. Reach him at email@example.com.