Arizona Offers Tax Aid to Attract Hughes Jobs : Aerospace: State hopes for a major expansion in Tucson when company buys General Dynamics’ missile unit.
Spurred by Hughes Aircraft’s proposed purchase of General Dynamics’ missile business and enticed by the prospect of a consolidation of jobs at Hughes’ Tucson plant, Arizona Gov. Fife Symington Wednesday unveiled a package of tax incentives designed to persuade the defense contractor to expand operations in his state.
The tax incentive package, which one San Diego official described as the first salvo in a “bidding war” for thousands of aerospace jobs in Southern California thrown into limbo by the Hughes-General Dynamics deal, includes a mix of corporate tax credits, capital equipment purchase incentives, as well as property and sales tax abatements.
Symington also announced that he will call a special session of the Arizona Legislature, probably in June, to vote on the package, which he said is designed to “enhance the competitiveness of Arizona’s defense contractors.”
At a Tucson press conference on Wednesday, Symington said he had talked to unnamed executives at Hughes Aircraft who told him that Arizona “stood to gain” 1,000 to 4,000 jobs as a result of Hughes’ planned acquisition of General Dynamics’ San Diego and Pomona-based missile operations.
In announcing its plans to pay $450 million in stock for the General Dynamics unit, Hughes said it would consolidate missile operations but did not say where. The General Dynamics missile unit employs 4,500 in San Diego and 4,300 in Pomona and Rancho Cucamonga. Symington said Hughes will decide in 30 to 60 days where the consolidation is to take place.
Hughes has a 2.2-million-square-foot plant on Tucson’s outskirts that will be half-empty at the end of this year and that is the rumored site for the consolidation.
On Monday, a General Dynamics official said it is a “reasonable likelihood” that 2,000 General Dynamics Convair employees who work on the Tomahawk cruise missile will be moved out of San Diego in a consolidation.
About 2,500 others will be terminated by August, 1993, when the advanced cruise missile program dies.
Describing the Arizona tax package as the beginning of a “bidding war” for Southern California defense jobs, San Diego Economic Development Corp. President Dan Pegg said Wednesday that the state and San Diego are limited in what they can offer to compete with Arizona because of California’s restrictive laws.
San Diego officials, including Mayor Maureen O’Connor and Chamber of Commerce President Lee Grissom, are seeking a meeting with Hughes officials to learn the company’s intentions and to possibly offer the defense contractor their own set of incentives.
James Marsh, director of the Arizona Department of Commerce, said his state’s incentive package had been in the works for two months, but the Hughes proposal to buy General Dynamics’ missile unit had “taken it over the edge.”
