Tulsa World- Business Viewpoint
By: Jim Mason
09/17/09

A stable aerospace industry is one reason Oklahoma has fared better than most states during the recession.

Aerospace is one of the state's largest industries, employing more than 143,000 people in military, commercial, space and general aviation careers. General and commercial aviation have suffered significant economic hits recently, but the effects are mostly short term.

In August, the General Aviation Manufacturers Association released data indicating a 46 percent drop in airplane shipments nationally for the first half of the year; billings dropped nearly 22 percent.

By the second quarter, approximately 30,000 aviation jobs were lost, an equivalent to 4.5 percent of the industry's work force. Layoffs are expected to continue into 2010 but with an expected cap of 10 percent of the work force — far below the 40 percent decline experienced in the 1990s following the Cold War.

Long term, a global backlog of 7,000 aircraft on the books are waiting to be delivered. In 2008, aviation sales nationwide topped a record $204 billion, $95 billion of which was exported. This gave the U.S. aerospace industry a positive trade balance — the largest of any manufacturing sector.

American aviation has tightened its belt and downsized during the recession, but the industry is well positioned to capitalize on the opportunities that will accompany the recovery. Oklahoma may be better positioned to benefit than most states due to its commercial and military strengths in maintenance, repair and overhaul of existing aircraft.

In recent years, Oklahoma has become more aware of the impact aerospace makes on the economy and has worked to meet the sector's growing needs. The Oklahoma Aerospace Alliance, the Oklahoma Aeronautics Commission, the Oklahoma Department of Commerce, the Aerospace Institute and the State Chamber of Oklahoma have all become strong advocates for and promoters of the state's aerospace industry.

The state Department of Commerce estimates that aerospace brings more than $4.7 billion in payroll and adds more than $11 billion in industrial output to Oklahoma. Those numbers equate to 7.6 percent of the state's total payroll and 10 percent of its total industrial output.

The state of Oklahoma is prepared to assist the industry as it gets back on track through a number of programs and incentives specifically marked for aerospace companies. Established programs like the Quality Jobs Program, Training for Industry and Ad Valorem tax abatement are available, as are new programs such as the Aerospace Industry Engineering Workforce Act. The act provides tax credits to engineers hired by aerospace companies and to the companies that hire them. Oklahoma has also developed a new incentive program for prime contractors who create jobs in Oklahoma.

With all of these changes, Oklahoma aerospace may be experiencing turbulence in the short term, but thanks to legislative foresight and intervention, clear skies are ahead.

Jim Mason is director of the Oklahoma Nanotechnology Initiative and vice president for technology initiatives at the State Chamber of Oklahoma.