Lockheed Martin will invest $142 million in its Camden-area operations and plans to add 326 jobs to its 650-person workforce in the coming years.
The announcement was made jointly by Lockheed Martin and Gov. Asa Hutchinson on Monday, the opening day of the Paris Air Show, where the governor is leading the state's delegation.
The defense giant's Precision Fire facility at Highland Industrial Park near Camden is the manufacturing, final assembly, testing and storage operation for the company's missile and fire control programs produced for the U.S. military and its allies.
The operation occupies manufacturing and support function floor space exceeding 1.9 million square feet spread out over more than 1,800 acres. Approximately 650 employees work in the facility's manufacturing and support buildings, accordin to the company's website.
The facility was established in 1978 as the home for production of Lockheed Martin's multiple launch rocket system, which is still produced there.
"Lockheed Martin is a leading technology firm with facilities and clients around the world," Hutchinson said in a news release issued Monday morning. "Lockheed's investment illustrates the fact that Arkansas continues to be a global player in the aero-defense industry."
The expansion will support new construction and improve existing facilities for products like Terminal High Altitude Area Defense, the Army Tactical Missile System, Patriot Advanced Capability-3 (PAC-3) and others, plus new machinery and equipment.
The announcement came after Lockheed Martin secured a couple of high-profile Department of Defense contracts.
In March, the U.S. Missile Defense Agency awarded a $945.9 million contract to Lockheed Martin to provide a Terminal High Altitude Area Defense system for Saudi Arabia.
The system, described as one of the most advanced in the world, provides the capability to defend against short- and medium-range ballistic missiles. Some of the work associated with the contract will be performed at Lockheed Martin's Camden-area operations, including the launchers and fire-control units.
"Our facility in Camden is a highly efficient, high quality center of excellence that contributes components and performs final assembly for products that are important to the defense of the United States and a growing number of allied nations," said Frank St. John, executive vice president of Lockheed Martin Missiles and Fire Control.
"The facility has a long record of precision manufacturing and on-time deliveries, which is the reason we continue to invest in and expand our Camden operations. This expansion will help ensure the availability, affordability and quality of systems we build for our customers around the world."
The announcement highlights the increasing importance of the aerospace and defense sector in the Arkansas economy. The sector includes 180 companies employing about 10,000 Arkansans. It was also the state's largest export in 2018, totaling $1.8 billion, according to the Arkansas Economic Development Commission.
It also is why the governor, industry and the commission participate in the annual air shows in Paris and London, according to Mike Preston, the commission's executive director.
Lockheed Martin's announcement is the second in less than a year on a major expansion of a defense industry facility at Highland Industrial Park, which began life as a U.S. Navy ordnance facility in the 1940s and 1950s.
Construction began in April on Aerojet Rocketdyne's $50 million rocket motor engineering, manufacturing and development plant scheduled to open next spring at the park.
The 17,000-square-foot facility will produce large solid rocket motors for, among other applications, the Ground-Based Strategic Deterrent. The next generation land-based intercontinental ballistic program is in the early stages of development. The U.S. Air Force program is designed to replace the aging Minuteman III ICBMs.
Aerojet Rocketdyne, based in El Segundo, Calif., has had a presence in Arkansas for 40 years. Its 800 employees produce solid rocket motors for missiles and other applications. The new facility will add 100 employees over the next three years.
Work on the Lockheed Martin announcement began in early December, according to local economic development officials, and included a series of state and local incentives worth several million dollars.
Brandi Hinkle, a spokesman for Preston's agency, said the state offered two separate discretionary incentives. One incentive is the income tax credit, known as Arkplus, which is "offered in highly competitive situations." It provides tax credits of 10% of the total investment in a new location or expansion project. It requires both a minimum investment and a minimum payroll of new, full-time permanent employees hired as a result of the project.
The business must reach the investment threshold within four years from the date of the signing of the financial incentive agreement and the payroll threshold for the tier in which it is located within two years from the date of the signing of the financial incentive agreement.
The income tax credits may be used to offset 50% of the Arkansas income tax liability in the tax year the credit is earned. Any unused credits may be carried forward for nine years beyond the tax year in which the credit was first earned.
The other state incentive, the Create Rebate program, is a cash rebate also "negotiated and offered at the discretion of the Executive Director of the Arkansas Economic Development Commission," according to the program's terms Hinkle provided.
Create Rebate provides annual cash payments based on a company's annual payroll for new, full-time, permanent employees. To qualify, the company must create a minimum of $2 million annually in new payroll.
The minimum payroll must be met within 24 months of the effective date of the financial incentive agreement. No benefits may be claimed until the $2 million annual payroll threshold is met.
The average hourly wages for the project exceed the statewide average of $20.45. At that figure, Lockheed Martin would have to add about 47 jobs within two years to have a qualifying $2 million payroll.
Create Rebate benefits are available after the business certifies to the Arkansas Department of Finance & Administration that it has fulfilled the minimum payroll requirements and the reported payroll has been verified. The percentage of the benefit depends on the tier assignment of the county where the job creation occurs.
James Lee Silliman, executive director of the Ouachita Partnership for Economic Development, said his agency board approved a $500,000 incentive package shortly after the announcement that includes almost $300,000 tied to the number of jobs created and a little more than $200,000 devoted to workforce training.
Lockheed Martin only gets the incentives after documenting the employees are hired and any training is completed, Silliman said.
"The company also will have a property tax abatement for new buildings and equipment in Calhoun County, where the industrial park is located," he said. That abatement, worth $9.9 million, will need the approval of the Quorum Court, Silliman added.
Floyd Nutt, the county judge of Calhoun County, said he doesn't expect any difficulty in getting that approval.
"I can't say enough good things about the contributions Lockheed Martin makes in aerospace and missile defense around the world along with our local economy," he said in the news release. "We're proud to continue our longstanding relationship."
Other local officials also believe the incentives are justified. They still remember the closing of the International Paper plant in Camden almost 20 years ago. A total of 600 hourly jobs and 60 salaried jobs, not to mention "many indirect jobs" were lost, according to Silliman.
The Lockheed Martin announcement "is the largest my agency has ever been involved with," he said. "It's going to have a major impact with the state's economy and the local economy. And it will have a ripple effect in retail and other areas."
Beth Osteen, executive director of the Camden Area Chamber of Commerce, called the announcement "absolutely wonderful news" for the town of about 10,000. "It will have a huge impact on this community."
U.S. Rep. Bruce Westerman, R-Ark., whose district includes the area, welcomed the announcement as "great news" for south Arkansas.
"By bringing new jobs and investment into a community with a capable and willing workforce, the company will be a part of significant economic development in the state," he said in a statement.
A Section on 06/18/2019