Friday, January 26, 2018

Firm to build jet-powered drones in Oklahoma City, bring 350 jobs

A California-based jet-powered drone manufacturer is moving at least 350 employees and part of its engineering, design and manufacturing operations to Oklahoma City, company and state leaders said Friday.

Kratos Defense & Security Solutions Inc. develops and manufactures jet drones used for military missile tests and other applications. The new Oklahoma City facility will be home to much of the company's design and manufacturing of a new version of offensive jet drones intended to be used in combat along with manned aircraft.

"We can fly our aircraft as a wingman for an F-22," Steve Fendley, president of Kratos' unmanned systems division said in a news conference on Friday. "The manned pilot can fly to a proximity and deploy the unmanned aircraft farther without having to threaten himself."

Kratos has four engineers and 25 support employees at a temporary Oklahoma City location. The company is looking for a permanent facility near Tinker Air Force Base where it will house its expanded research and production offices. The new location also will be home to some of the company's manufacturing operations.

Fendley said he expects the company to be in the new facility by the end of the year and to have 350 to 500 Oklahoma City employees within five years.

Gov. Mary Fallin leads a press conference at the state Capitol on January 26, 2018.

"We're close to reaching our production capacity in California," Fendley said. "Our intention here is to install our tactical performance capability, both the development and production of those systems. For those tactical aircraft systems, their home will be here. We will develop and produce them here in Oklahoma."

Aviation and aerospace is Oklahoma's second largest industry behind the energy sector, but Kratos represents a portion of the industry new to the state.

"These are cutting-edge components of technology and aviation coming to Oklahoma City," said Roy Williams, president of the Greater Oklahoma City Chamber. "It represents the future of the industry. Much of what we have in Oklahoma City is maintenance and overhaul, which is taking care of everything that is old. This is the next wave of growth in the sector. We think this is a home run."

Kratos also represents the revival of aerospace manufacturing in the state, said Vince Howie, aerospace and defense director at the Oklahoma Department of Commerce.

"This is the beginning of a long and fruitful relationship," he said. "We've brought aircraft manufacturing back to Oklahoma."

Kratos executives chose Oklahoma City after meeting with Rep. Steve Russell, R-Oklahoma City, Gov. Mary Fallin and other state and local leaders, Fendley said.

"All of the pieces in Oklahoma fit what we were looking for," he said. "We wanted a state that is supportive of the business we're in, supportive of the military, supportive of advancements of our capability testing, have a close proximity to military bases and have the potential for a flight test facility."

Fendley said his company is negotiating with the Federal Aviation Administration for the ability to run flight tests at the Oklahoma Air & Space Port in Burns Flat, which is home to the third-longest civilian airport runway in North America.

"We hope to eventually do ground testing and possibly eventually flight testing there," Fendley said. "If we can do that, Oklahoma is really our center focus for all the development work we do."

Kratos has conducted most of its tests on military bases in California, where it must work around military schedules.

"The opportunity to take advantage of a facility like (Burns Flat) with the proximity we have with the size and capacity and ceiling all the way to space, is incredible," Fendley said.

Besides the proximity to Burns Flat and Tinker Air Force Base, Fendley said the company also was drawn by the state's engineering and Quality Jobs tax credits.

Oklahoma has a checkered history of providing tax credits to aerospace companies based at or interested in Burns Flat. Rocketplane, for example, took in $18 million in state subsidies before filing for bankruptcy in 2010.

Gov. Fallin pointed out, however, that Krotos is an established company that operates in 20 states and five countries and has more than 3,000 employees and close to $1 billion in contracts.

"This is not a startup company," she said.

Earlier this month, Kratos announced a $23 million unmanned aerial drone system production award from an unnamed customer, and a $93 million contract to supply target drones to the Army. This most recent contract makes Kratos the sole supplier of jet-powered, sub-scale target drones to all branches of the U.S. military.

Aerospace firms produced about $4.9 billion in goods and services in the Oklahoma City metro, according to a 2016 study by the Greater Oklahoma City Chamber.

Tinker Air Force Base is a major driver for the local aerospace industry, which includes firms such Boeing Aerospace, Pratt & Whitney, Lockheed Martin Aircraft, Northrop Grumman, General Electric Aviation and AAR Aircraft Services.

While Kratos is a strong benefit to the Oklahoma economy on its own, it also will help state and economic leaders attract additional businesses to the state, Fallin said.

"When you get a company like Kratos to locate in Oklahoma, they have suppliers that will look at the possibility of coming to Oklahoma because they want to do business with a major supplier of unmanned aerospace and the latest technology," Fallin said. "It's great for Tinker and all of our other military installations to be able to partner with a company like this."

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