Two of Arizona’s capstone industries, aerospace and defense, are facing new funding threats that could damage the state economy and future job market for graduating university students.
The aerospace and defense industries are worth $15 billion and are directly or indirectly employing near 152,500 people, according to the Arizona Commerce Authority.
But the 2011 Budget Control Act, also known as sequestration, is a $1 trillion federal budget reduction that will reduce government contracts to Arizona’s aerospace and defense companies.
The act went into effect this year, and its damaging effects on Arizona’s defense and aerospace industries are expected to appear within the next six to 12 months.
ASU economics professor Dennis Hoffman is the director of the L. William Seidman Research Institute at the W. P. Carey School of Business, an applied business research center that coordinates with businesses in the Arizona community. He said these sequestrations are not to be taken lightly in Arizona.
“They are a big deal, and it’s up to Congress and whether the Arizona firms can adapt to new lower (Department of Defense) budgets,” he said in an email. “The DOD is arguably the largest and most important employer in the state of Arizona.”
ASU aerospace engineering professor Timothy Takahashi spoke about the dramatic effects of these cuts, based on his professional experience working as an employee of government-funded programs such as NASA and the U.S. Air Force, as well as for the private Raytheon Missile Systems company in Tuscon.
Takahashi said the sequestration will have a negative impact on employment and productivity within these industries, especially for Raytheon Missile Systems in Tuscon and Orbital Sciences in Chandler, which largely depend on government contracts. However, he added that more well-known companies that are only partially dependent on government funding, such as Honeywell, will also likely be hurt.
“The sequester will cause new contracts to be postponed or current contracts to be cut back,” he said. “So for students trying to get jobs in this industry or for their parents who work in this industry, this is a strain.”
Takahashi said he knows several aerospace students who graduated in May who are still looking for a job because of employer caution after the Budget Control Act.
“Everywhere managers sit on their hands not knowing what’s happening, so they don’t want to commit to hiring people,” he said. “It really hurts.”
Still, many in the industry are calling for a deeper commitment to investing in aerospace programs within Arizona universities in order to combat the cuts.
Taylor Lawrence, the president of Raytheon Missile Systems, which holds a large facility in Tuscon, said in an Arizona Republic opinion piece that investing in Arizona’s university education is key to combatting this funding crisis.
“We must adequately fund our universities to keep the talent pipeline filled and to provide solid opportunities for our existing workforce,” Lawrence wrote.
Many aerospace students see ASU doing just that, with a commitment to not only helping those in the aerospace programs be talented engineers but also attractive professional employees.
Aerospace engineering senior Kyle Testerman said the cuts make him only somewhat nervous, as the private sector of aerospace engineering still has room for growth and he feels he is being well-prepared at ASU.
“Instead of idealized engineers, we’re going to be more realistic and professional engineers,” he said.
ASU has a unique program called the Security and Defense Systems Initiative, which allows the University to partner with the government and the industry to give its students a more realistic, broadened experience. Werner Dahm, the program's director, said in an email that this method is something no other university can do.
“It is fair to say that there is no major university in the U.S. that is reconceptualizing the role of a modern university more than ASU,” Dahm said. “These types of President's-level decisions at ASU are positioning the University to be a major contributor to maintaining and growing the aerospace and defense industry in Arizona.”
He said he believes the aerospace and defense industries are perfectly suited to Arizona because of the state’s wide open spaces, ideal climate for year-round testing and metropolitan resources, which is why these industries have remained so prevalent in Arizona. Arizona’s forward-looking universities are also reliable sources to sustain the aerospace and defense workforces, he said.
“Arizona has an unbeatable combination, if we can put these pieces together in the right way,” Dahm said.
Reach the reporter at elmahone@asu.edu or follow her on Twitter @mahoneysthename
