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"Aviation business ready to take off"



Monday, July 21, 2003

Aviation business ready to take off
Cecil Field, climate, workforce are the lures, but is that enough?
By Christopher Calnan
The Florida Times-Union


Four years ago, Jerry Hernandez and two of his co-workers at a Miami
aircraft maintenance company decided to start their own business.

They ended up in Jacksonville in 2000 after failing to find adequate hangar
space in Miami, Homestead, Tampa or Orlando. The Jacksonville Port Authority
moved some of its tenants around to make room for Hernandez's company,
called Flightstar Aircraft Services Inc.

The business has since grown from 80 employees and $8 million in annual
revenue to 250 employees and a projected $28 million in business this year.
The company has outgrown its facilities at Jacksonville International
Airport and plans to move next year to Cecil Commerce Center and add 500
jobs during the next decade.

Flightstar does the type of work that industry observers expect to grow as
cost-conscious airlines outsource more of their work to save money.

It's also the type of work that economic development officials would like to
see done on the First Coast as they target the aviation industry in
marketing efforts.

The recent announcement that Brazilian aircraft manufacturer Embraer's plans
to operate a plant in Jacksonville underscores the question of whether
there's a future here for aviation businesses.

City officials said it's too early to tell. But some industry experts say
Embraer's results may be a determining factor.

It could be a one-time deal or the start of a First Coast trend.

"At this point, it's purely dependant on one enterprise," Washington
D.C.-based analyst Richard Aboulafia said. "Success breeds success. If it
fizzles and nothing happens, it will be a short-lived dream."

Future flights

The former Cecil Field Naval Air Station on Jacksonville's Westside is being
used by educators and others to go back to the future.

Florida Community College at Jacksonville has turned a hangar built in 1943
into a training center for 21st Century aviation-industry workers. The
college's Aviation Center of Excellence opened 19 months ago to train
aircraft mechanics, pilots and airport managers.

Program Manager Richard Rozanski said the program began at Cecil to supply
existing aviation companies with workers, but also to get others, such as
Embraer, to consider setting up shop in Jacksonville.

"The whole intent is to attract jobs," he said. "I think if you show an
aviation company you have an ability to train a workforce and you have an
existing infrastructure, then those companies can enjoy a competitive
advantage because of those two things."

Rozanski expects Embraer to create at Cecil 300-400 jobs with a starting pay
of $17 an hour.

The First Coast's aviation-related businesses were marginally affected when
Cecil closed in 1993 because all the aircraft were built elsewhere, said Sam
Houston, the air station's former commanding officer who now works for Duval
County.

However, the military's presence here does provide a skilled labor pool for
employers looking for workers with experience on aircraft.

"The demographics are good for aviation," he said.

Last year, aircraft supplier Kaman Aerospace Corp. decided to move its
manufacturing operations, and nearly 500 jobs, from Connecticut to the
Northside's Imeson Industrial Park.

In January, the Boeing Co. said it would add 80 jobs to its Cecil Commerce
Center operations to upgrade 15 large communication planes for the Navy with
a $150 million contract. The project to change the cockpit instruments of
E-6 Mercury planes from analog to digital was expected to take two years.

Defense company Northrop Grumman Corp. employs about 1,250 workers in St.
Augustine. Earlier this month the $25 billion company received a $91 million
contract to upgrade 10 U.S. Navy radar-jamming planes in St. Augustine.

Another 40-50 planes are expected to be added to the contract in coming
years, the company said.

Unison Industries and its predecessor company have manufactured engine
ignition systems in Jacksonville since the early 1980s. Unison has 500 First
Coast employees, spokesman Jim Melvin said.

Technology has lessened the importance of suppliers being located near their
customers. So being geographically close to Embraer won't guarantee getting
its business, Melvin said.

Marshall Heard, chairman of the Florida Aviation-Aerospace Alliance trade
organization, said the First Coast is well-regarded by the aviation
industry.

"Jacksonville is in the top three [areas] in terms of aviation in Florida,"
he said. "Jacksonville has everything going for it that you could ask for in
the aviation industry."

The area's quality workforce, transportation and low manufacturing costs
make the First Coast fertile ground for aviation companies, Melvin said.

Flightstar's Hernandez agreed. The region has a good climate that allows
aircraft mechanics to work in open-air facilities year-round. It also isn't
too far from major airline hubs, has a steady supply of former
military-trained workers and finally, Cecil Field.

"All the ingredients are there," Hernandez said.

Good standing

If the First Coast has the goods, why isn't Jacksonville considered a
frontrunner for Boeing's proposed plant to build a 7E7 wide-body jet?

Enterprise Florida said Boeing has requested confidentiality about the
details of the project code-named "Project Olympus."

More than a dozen states are vying for the plant where Boeing will assemble
its next-generation passenger jet.

Michel Merluzeau, an analyst at the San Francisco-based Frost & Sullivan
Aerospace and Defense Group, said Jacksonville would be a second-tier
candidate. Texas and Washington have an inside track for the plant, he said.

But John W. Douglass, president and chief executive officer of the Aerospace
Industry Association, said the First Coast's history of being industry
friendly and Gov. Jeb Bush's family connection to the White House don't hurt
its chances with Boeing.

"Jacksonville has a lot to offer and is certainly in contention for that
competition," he said.

Back at FCCJ, Rozanski is counting on Embraer bringing other such companies
in its wake and his students filling the jobs.

"It would draw other aviation companies -- they always cross-pollinate," he
said. "The aerospace industry draws other companies like a magnet."

Embraer's experiences in Jacksonville may create on the aviation industry
with a long-term effect, said Brian Finnegan, president of the
Virginia-based Professional Aviation Maintenance Association.

"If you guys make yourself a good place for Embraer, then other people may
want to come in and do the same thing," he said. "I think you're going to
have to make some kind of commitment as a city."

Package deals

Cecil Field alone is not enough to attract aviation businesses, the experts
said.

Aboulafia said several former military bases have closed in recent years and
a number of comparable sites are available to such companies. So financial
incentives are an important factor in site selection.

"These days it comes down to offering a package of incentives," he said.

Jacksonville aviation consultant Jack Karibo said localities need to be
prepared to land aviation companies.

"You've got to find them when they're just starting to look [for a location]
to work with each other and put together a good package," he said.

That task falls to the Jacksonville Economic Development Commission, the
public group that has said aviation is one of its targeted industries for
Cecil Commerce Center.

City incentives are all "backloaded," meaning companies enjoy benefits only
after they make investments and meet certain goals, Hernandez said. It would
be better if the city could spend money up front to help new aviation
businesses get established, he said.

"There are no resources set aside for aviation," Hernandez said. "They're
chasing businesses trying to lure them here with rubber stamp incentives.
They need more of a proactive plan that says, 'What can we offer?'"

But JEDC Executive Director Kirk Wendland said aviation companies must be
treated like any other industry vying for financial incentives. That means
plenty of stipulations and required job creation levels.

"There no investing unless there are guarantees and unless we can tie it to
what will benefit the city," he said. "We're not willing to waive those
requirements."

To Wendland, Embraer isn't a make or break situation for the future of
aviation in Jacksonville.

"I don't think we're at a crossroads yet," he said. "I hope we have enough
patience to take a long-term approach."

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