Sikorsky’s deal to replace Black Hawk could be one of CT’s ‘best investments,’ says official

0

New incentive deal with Sikorsky reveals Gov. Ned Lamont’s administration is redoubling its efforts on a pay-as-you-go philosophy that avoids borrowing money, but carries the risk of other states poaching popular manufacturers with deals that promise money up front.

If approved by the General Assembly, Sikorsky and Lockheed Martin would receive $75 million in sales tax exemptions and tax credits, subject to ongoing audits to ensure compliance with jobs and expenses base from its Connecticut suppliers. This would be on top of the $220 million given to the company in 2016 as it prepared to produce a new fleet of helicopters for the US Marine Corps.

Sikorsky and Lockheed Martin are vying with Texas-based Bell, a subsidiary of Textron Industries, for a future replacement for the Sikorsky Black Hawk utility helicopter. Sikorsky is teaming up with Boeing on the Defiant-X, while Bell is offering the V-280 Valor, featuring the tilt-rotor technology it pioneered with the V-22 Osprey.

The Defiant-X is designed to improve the maneuverability of the nimble Black Hawk, but won’t reach the cruising speed of the Bell V-280, which spins its wing-mounted rotors to fly like an airplane. The Pentagon has not yet indicated whether it could choose both the Defiant-X and the V-280 Valor, which would give commanders on the ground additional mission flexibility – while providing stable work for Sikorsky and Boeing as well as Bell.

“The hope is that the next-gen Black Hawk is the Defiant-X, and you have the same…50 years of racing that the Black Hawk had,” David Lehman, commissioner of the Connecticut Department of Economic and Community Development, said in an interview on Tuesday. “If so, it will be one of the best investments ever made in Connecticut.”

Sikorsky and Bell are also bidding to produce a new armed reconnaissance helicopter for the US military. Sikorsky’s Raider-X prototype is a smaller version of the Defiant-X, while Bell offers Invictus, a modernized take on traditional helicopter design.

Sikorsky has approximately 8,100 employees at its Connecticut facilities at a corporate headquarters plant in Stratford, a plant in Bridgeport, offices in Shelton and Trumbull, and a warehouse in North Haven. As part of the 2016 deal, the company agreed to have around 8,500 workers from 2032.

The new incentives target is set at 7,750 more jobs if Sikorsky wins both contracts, or 500 less if the company receives only one of the bids. The deal sets a baseline of 7,000 jobs each year of the deal if Sikorsky wins contracts for both helicopters, and 6,000 jobs if the company receives just one.

The agreement also includes a commitment by Sikorsky to spend more than $1.1 billion over the next decade with its nearly 250 suppliers across Connecticut, including Bridgeport, Stamford, New Haven, Hartford, Danbury, Middletown , Torrington and New London.

Higher company and worker spending under the deal would support 30,000 total jobs, generating some $70 billion in economic activity from payrolls, according to Hickey & Associates estimates. capital expenditure, taxes and other expenses.

Lockheed Martin would maximize Connecticut’s full incentives only if the Pentagon selects Sikorsky as the winning bidder for both the Black Hawk replacement and the armed reconnaissance helicopter. Connecticut’s deal drops to $50 million if the manufacturer gets just one, according to Lehman.

In the event of a Department of Defense delay in launching production, the DECD would have the option of extending the window of time during which Lockheed Martin would be eligible to claim incentives.

Lehman said the Lockheed Martin pact marks a departure for Connecticut, providing incentives that depend on the award of a specific contract. He added that he envisions the deal could serve as a model for similar packages, reducing the need for the state to borrow to support job-creating business incentives.

“I think it’s new,” Lehman said. “If they win the contract, the deal would be in place.”

Former Governor Dannel Malloy suggested in 2016 that Lockheed Martin was considering “many” states to build CH-53K King Stallion helicopters for US Marines, prompting Connecticut to offer the $220 million incentive program. dollars.

To date, Lockheed Martin has mined less than $45 million of that amount as it slowly ramps up production of the King Stallion. The Pentagon wants up to 200 cargo helicopters for the Marines. Lockheed Martin is also considering international sales of the King Stallion over time, beginning with the Israel Defense Forces.

The new $75 million package remains large by national standards. Wavteq noted just a dozen larger state incentive packages out of the more than 2,200 it has registered nationwide, as reported in February by Site Selection.

But other states have been willing to increase cash grants to land the most sought-after new plants, including Tennessee, which last year awarded $500 million in grants as part of an $884 million package. dollars to win a Ford electric vehicle plant that will support nearly 6,000 jobs.

While Lockheed Martin has pledged to keep Sikorsky in Connecticut until 2042, there is no contractual obligation to do so, Lehman confirmed Tuesday. If another state suspended a massive package to support the construction of a new Defiant-X plant, Lockheed Martin would have the option of reimbursing Connecticut for all the incentives it had earned and leaving the state.

There is recent precedent for this in the Northeast. After General Electric took a package deal in 2016 to move its headquarters from Fairfield to Boston, the company sent millions of dollars back to Massachusetts after slashing its staffing forecast.

Lehman said he does not see such a scenario with Lockheed Martin, given the company’s continued investment in Stratford and its experienced cadre of Sikorsky workers who may be reluctant to move.

“You have a sticky capital investment and a workforce that does very specialized things,” Lehman said. “We are important to Lockheed, and more broadly in defense, which I think is a real strength of the state.”

The data confirms this. In the federal fiscal year ending September 2020, the Department of Defense spent $4.1 billion on contracts awarded to Lockheed Martin facilities in Connecticut.

But Texas continues to rack up the wins, last year landing a $17 billion Samsung factory to be built outside Austin with the backing of $677 million in incentives – the largest contract ever. his state’s history, albeit largely in the form of property tax breaks over time and only $27 million in grants.

Dan Haar contributed to this report.

[email protected]; 203-842-2545; @casoulman

Share.

Comments are closed.