Swiss Aircraft Firm to Open Palmdale Facility
Swiss aircraft company SR Technics announced plans Wednesday to locate its North American maintenance facility in Palmdale, a move that officials say could create 6,000 new jobs over the next five years.
The facility would be the largest single addition to California’s industrial base in at least 10 years, based on the number of new jobs, state officials said.
“This is a huge deal that greatly benefits the Antelope Valley,” said Gov. Gray Davis. “It also provides resources that will be spent throughout California.”
Zurich-based SR Technics is a subsidiary of S-Air Group, formerly Swissair.
At Palmdale, SR Technics will overhaul and maintain jets in addition to converting passenger aircraft to carry cargo.
Under the agreement, which also involves Boeing Co., the city of Palmdale, Los Angeles World Airports and the state of California, the Swiss firm agreed to buy Boeing facilities at Air Force Plant 42 on land the firm will lease from the city of Los Angeles at Palmdale Airport.
Lon Hatamiya, the Davis administration’s trade and commerce secretary, hailed the deal as “a huge creation of new jobs, especially in an industry that had been declining.”
The Palmdale site includes two hangars, a manufacturing building, office complex and various support buildings on 150 acres of land.
The first production line is expected to be operating by June, with about 1,000 workers. In five years, the company expects to employ 6,000 workers in Palmdale.
The state is offering S-Air Group significant tax breaks, including tax credits against sales taxes on the purchase of new equipment, and credits for training workers, hiring Californians and locating in a designated enterprise zone. Antelope Valley is designated by the state as an enterprise zone, and by locating there S-Air Group became eligible for the tax credits, said Mike Marando, a spokesman for the Trade and Commerce Agency.
“The total package, conservative value, is about $79 million [in tax breaks] over a 20-year period,” Hatamiya said.
State officials said the city of Palmdale helped sweeten the deal by putting in public works improvements and waiving business license fees in a package worth $3 million, while Southern California Edison agreed to reduce electrical charges by 25%.
Despite the incentives, Davis said the tax benefits designed to lure SR Technics to California will end up benefiting the state because of income taxes paid by workers.
The workers will be paid an average of almost $60,000 a year, which will result in an estimated $226 million paid back to the state over the first five years the plant is operating.
“It all feeds on itself,” Davis said. “This increases the likelihood that the Feds will do more business here. . . . All these jobs will generate an enormous amount of work for suppliers.”
SR Technics had been considering locating its facility in Texas, Arizona or the Midwest when Lydia Kennard, interim executive director of Los Angeles World Airports, contacted Davis’ Trade and Commerce Agency.
After that call, the deal came together surprisingly fast. In late October, while Davis was on a trade mission in Europe, he dispatched Hatamiya to Zurich to meet with SR Technics executives.
On Oct. 27, while Davis was in Cairo, the governor called SR Technics CEO and President Hans Ulrich Beyeler to urge that the company place its North American maintenance facility in Palmdale. Two weeks later, Davis met with Boeing CEO Phil Condit to suggest that Boeing sell its hangars to SR Technics.
“It wouldn’t have happened if he didn’t send Lon to meet with us,” said Beyeler. “Everyone working together can create enormous speed, and speed is what stands out in this deal.”
Alacrity or no, David Walter, manager of the Palmdale Economic Development Department, said that if SR Technics delivers its most optimistic estimate, it will be the largest manufacturing employer in the Antelope Valley.
Lockheed Martin is currently the largest employer in the Antelope Valley, with 5,000 workers. Boeing and Northrop Grumman, which also share Plant 42, provide an additional 2,700 jobs combined.
“Let me climb down off the ceiling and give you my reaction,” Walter said. “It’s a tremendous shot in the arm for the local economy because it provides stable, high-paying jobs, which aren’t subject to the ups and downs of defense contracts.”
Walter said the site is located in an existing business enterprise zone, which means SR Technics would be eligible for a hiring tax credit and sales or use taxes, which could mean $65 million in credits over a five-year period.
In addition, banks that lend to businesses within an enterprise zone also are eligible for reduced interest rates, which could translate to millions of dollars in additional savings for a company.
Walter added that the infusion of new jobs would boost the area housing market, including 12,000 new units at the Ritter Ranch and City Ranch developments in west Palmdale.
He also noted that the presence of SR Technics would have a “multiplier effect, for jobs.
“We’re assuming anywhere from 2 1/2 to four additional jobs for every one that SR Technics creates,” he said.
Andrew Blankstein reported from Chatsworth and Dan Morain from Sacramento.
