Teeming with engineers, Alabama’s Rocket City USA is luring hot new industries to town – CNBC

KEY POINTS

The highly educated and highly skilled workforce that Huntsville, Alabama’s aerospace roots have helped establish have also become a selling point to other industries.
From 2000 to 2017, the Huntsville metro area grew employment by 32%, or twice the rate of the broader U.S., according to the Huntsville/Madison County Chamber.
Wage growth has also kept pace, increasing at nearly twice the rate of the country over that same period, according to the Bureau of Economic Analysis.

A new era for aerospace and defense has been emerging — and Huntsville is capitalizing on it.

Before the late 1950s, the northern Alabama community’s claim to fame was as the “watercress capital of the world.”

Then the Army’s nascent ballistic missile program moved to the shuttered World War II chemical weapons outpost that would become Redstone Arsenal. As the U.S. ratcheted up its space race with the Soviet Union, NASA established the Marshall Space Flight Center next door, developing the giant Saturn V rockets that would make Apollo moon missions possible.

Huntsville has been “Rocket City” ever since.

As a government town — Redstone Arsenal is its own Census-designated place — the high-tech hub has benefited from the recent resurgence in defense spending as well as new civil and commercial initiatives for human space flight.

The highly educated and highly skilled workforce those roots have helped establish have also become a selling point to other industries.

“We have legacy, so with our aerospace heritage, we work very hard on that to make sure that we maintain that,” says Chip Cherry, chief executive and president of the Huntsville/Madison Chamber of Commerce. “We have about 400 aerospace companies in our market, so a very rich concentration of them and a lot of expansion in that.”

It’s paying off. Huntsville has one of the highest concentrations per capita of degreed engineers in the country. The unemployment rate is a staggeringly low 2.1% as of September — the most recent Bureau of Labor Statistics data available — versus October’s national average of 3.6%, which is itself a near five-decade low.

From 2000 to 2017, the Huntsville metro area grew employment by 32%, or twice the rate of the broader U.S., according to the Huntsville/Madison County Chamber. Wage growth has also kept pace, increasing at nearly twice the rate of the country over that same period, according to the Bureau of Economic Analysis. The area is home to nearly 455,500 residents, a number that also represents a growth rate that is more than double the national pace since 2000. Even the city’s credit rating is enviable: It has touted a AAA rating, the highest possible score, from both Moody’s and Standard & Poor’s for 11 consecutive years.

New space economy

Boeing, Aerojet Rocketdyne and Lockheed Martin have all been constructing or expanding space-related facilities within the past two years.

Privately held Sierra Nevada Corporation is working with the city to begin landing its Dream Chaser space plane, which will carry cargo for NASA, at the Huntsville International Airport starting in 2023. Huntsville International will be the first — and only — commercial airport licensed by the FAA for a space plane landing.

Blue Origin is spending $200 million to build its rocket engine factory, a 350,000-square-foot facility in Huntsville that will employ 300 people and is expected to open early next year. Jeff Bezos’ space company will produce up to 40 engines per year, supplying not only its orbital New Glenn rocket that’s under development but United Launch Alliance’s next-generation rocket, Vulcan Centaur, under development at ULA’s rocket factory 30 miles east of Huntsville in Decatur, Alabama.

The company is also refurbishing Marshall’s historic Test Stand 4670 — once used for Saturn V rockets and Space Shuttle engines — where it is testing several engine variants.

Huntsville “has this great receptacle of talent there that you can tap into, and it’s been decades in building. So we wanted to go to where the talent is,” says Blue Origin CEO Bob Smith. “You get great support from the government, so everyone from Gov. [Kay] Ivey to Sen. [Richard] Shelby all the way down to Mayor [Tommy] Battle … have been great supporters of actually developing the space economy there.”

Smith adds, “It’s really going to anchor us into that space community, which is going to be really powerful for decades to come.”

Blue Origin also recently teamed up with Lockheed Martin, Northrop Grumman and Draper to bid for NASA’s lunar lander competition, which will comprise part of the agency’s broader Artemis initiative to send an American man and woman to the moon in 2024.

The lunar lander will be managed by Marshall. Already, the rocket currently tasked with the mission, the Space Launch System, or SLS, is under the center’s oversight. Parts of SLS are built all over the U.S., with the core stage, or backbone of the rocket, produced by Boeing. Elements of the rocket get shipped to Huntsville for testing.

“Our top priority right now is focusing on the Space Launch System, which is the next heavy lift vehicle that is required to take the Orion capsule, that takes our astronauts into space to the moon, and be able to deliver the systems that are required to support them,” says Jody Singer, Marshall Space Flight Center director.

But unlike Apollo or even the Space Shuttle program after it, Artemis increasingly represents the evolution of the business relationship between government and commercial space. “It’s no longer just the government saying, ‘This is what we want to build and the dollars that go with it,’ we have a true partnership that we work together to decide,” says Singer.

Even on the military side, as the U.S. prioritizes space as a national security issue, Huntsville is in the running for the Department of Defense’s newly activated Space Command against a handful of sites around the U.S. SPACECOM is the military’s 11th warfighting command and seen as a precursor to President Donald Trump’s proposed Space Force.

From rocket science to genomic sequencing

It isn’t just aerospace, either. When the Apollo program ended in the 1970s, the area slipped into recession. It’s perhaps not surprising that officials focus closely on attracting investment from employers across a swath of sectors.

When Polaris, a maker of off-road sports vehicles, snowmobiles and motorcycles, decided to expand capacity stateside, it vetted 100 sites across 14 states. It looked primarily in the southeastern part of the U.S., where a significant portion of its customer base is located. The company settled on Huntsville, spending $190 million to open an assembly plant in 2016 for Slingshot and Ranger vehicles.

“I do think they have some natural advantages which they built over the years with railway infrastructure and with the highway system running right through there,” says Scott Wine, chief executive and chairman of Polaris, Inc. “But really I think the longstanding commitment to engineering that’s been in Huntsville for so many years — since World War II, really — there’s really just a good infrastructure of personnel there.”

“And I cannot understate the importance, from the governor on down, of the entire state and city being committed to business and making it easy for us to do business there,” Wine said.

Wine said roughly 1,300 employees work in Huntsville and the company plans to continue to add to that as it grows the business.

Earlier this year Toyota announced a multimillion-dollar expansion of its engine factory. Its joint venture with Mazda is constructing a $1.6 billion plant that will employ 4,000 people and produce up to 300,000 autos annually when it opens in 2021. LG Electronics opened its new solar panel facility in February, and Facebook is building a data center.

“I think one of the reasons we’ve been as successful … you can call it picky. We call it selective,” says the Chamber of Commerce’s Cherry. “There are certain types of companies we do not pursue, and we’re also looking for companies that have a track record of being good corporate citizens.”

Huntsville is also home to one of the biggest research parks in the world. Cummings Research Park touts more than 300 companies, including a nonprofit collective called HudsonAlpha Institute for Biotechnology, which focuses on genomics research.

Serina Therapeutics, an associate company of the institute, has developed a polymer technology that could cut daily doses of certain medications down to a single shot per week. The first drug, which Serina has taken through Phase I, is focused on Parkinson’s disease, but CEO Randall Moreadith says his company has a pipeline of five drug candidates. The technology could impact treatment of everything from epilepsy to opioid addiction.

“I really love the fact that I have real rocket scientists working in my lab now, because they come from that industry to work here as well,” adds Richard Myers, HudsonAlpha Institute president and science director.

Missiles 2.0

Huntsville gave birth to America’s ballistic missile capabilities. Now it’s ground zero for the next generation: hypersonics, or missiles that travel five times the speed of sound or faster.

Defense contractor Aerojet Rocketdyne moved its defense headquarters to Huntsville this year to lower costs and be closer to potential partners on contract work. And homegrown company Dynetics, which is privately held and employee-owned, won key hypersonics development contracts.

Lockheed Martin recently broke ground on its new two-building Advanced Hypersonic Manufacturing facility in Courtland, on the city’s outskirts. So far Lockheed has snagged some $3.5 billion in contracts to develop prototypes.

Rick Ambrose, executive vice president of Lockheed’s Space business, says a low labor cost and decent tax rates help the company develop the new capabilities affordably — something its “customer,” the Pentagon, likes.

The Huntsville area is “trying to become the innovation hub of the South with [artificial intelligence] and other technologies, like quantam computing. The merger of those is important because we talk about hypersonics, but space is faster, and all of these technologies can be brought together with AI,” says Ambrose.

That confluence of capabilities is in focus across the national security landscape. Energetics is the study of transformation of energy, the science behind rockets and missiles but also explosives and bullets. An entrenched specialty in the field has driven federal law enforcement to take up residence here in a meaningful way as well.

The Federal Bureau of Investigation is currently spending $1 billion to build out its footprint on Redstone. Once the new campus is complete in 2021, the FBI’s presence will jump by 1,500, from its current 400.

“It’s really the future of the FBI, and it’s all about technology, innovation, talent and resiliency,” says Associate Deputy Director Paul Abbate, who is overseeing the expansion, which includes cyber capabilities. “We really look at it like an HQ2, a backup for the footprint that we have here in Washington, D.C.”

The Bureau of Alcohol, Tobacco, Firearms and Explosives, or ATF, also operates in Redstone, via its National Center for Explosives Training and Research. It teaches specialized explosives classes to some 4,000 elite members of military special operations, terrorism experts and law enforcement bomb squad personnel per year.

According to John Underwood, ATF special agent in charge, “The Tennessee Valley and in Redstone, the science piece and in the education of everybody in our community, it’s just a great knowledge base here.”