A project to help Northrop Grumman Corp.’s rocket-like growth in Utah has gotten a financial boost from the state of Utah.
The Governor’s Office of Economic Development (GOED) board, at its January meeting, approved a $59.9 million tax credit incentive over 20 years for the company, tied to the creation of 2,250 high-paying jobs over the next two decades.
The $380 million project is expected to result in new wages of more than $4.48 billion over the next five years and new state tax revenues of nearly $200 million during that time. The average wage for the new jobs is $102,140.
“This is a great opportunity for Utah,” said Jerry Oldroyd, chairman of the GOED board. “This is as important an incentive as we’ve ever done.”
According to GOED documents, 92 percent of the new jobs are associated with the Northrop Grumman team supporting the Department of Defense’s Ground Based Strategic Deterrent (GBSD) program, the replacement for the nation’s current aging missile defense system, and 8 percent is tied to other Northrop Grumman growth. Salt Lake City will be the site for 176 of the jobs, with the rest at either Ogden or at the Falcon Hill Aerospace Research Park, a U.S. Air Force public/private partnership to develop 550 acres with retail, hotel, office and restaurant space on the western edge of Hill Air Force Base.
Northrop Grumman in 2018 acquired Orbital ATK Inc., which became Northrop Grumman Innovation Systems. Groundbreaking for a new facility, called the Northrop Grumman Roy Innovation Center, took place last fall just south of the Hill Aerospace Museum, along Hill’s border with Roy.
Justin McMurray, a Northrop Grumman vice president, said the follow-on contract for the GBSD program will run until 2075. Its deterrence will come in the form of the U.S. being able to shoot rockets halfway around the world and hit their targets.
The project will feature “real rocket scientist jobs and real folks that are producing that accurate, very important work that protects our way of life every day,” he told the GOED board.
“We’ve been working on this [project] a long time,” said Ben Hart, GOED deputy director, “but it also represents a significant project that’s going to have a tremendous impact on Northern Utah for generations to come.
“I don’t mean to overstate this, but if we have a single, most important employer in the state of Utah right now, I think it is Northrop Grumman. The reason I say that is because this will bring their total [Utah] job numbers up to closer to about 8,000. But it also represents the fact that here in the state of Utah we obviously are very patriotic, we know what Hill Air Force Base means, but for us to continue to play a role in some of our important missile defense programs for the safety of our country is a significant thing. So, on so many levels, this announcement is meaningful and it’s impactful.
“I made this comment before, but I believe that 20 years from now, we will look back on today’s meeting and we will understand the true significance and the impact that this announcement will have, not only for the company [and] the community, but the number of smaller businesses that will do supply chain work for Northrop Grumman. In all of its entirety, this really is a significant project.”
Northrop Grumman is already the largest security and defense company in Utah, with its employees primarily in Bacchus, Clearfield, Ogden, Promontory and Salt Lake City.
“We are proud to expand our presence in Utah by bringing new, high-paying jobs to the state,” Greg Manuel, vice president of ground-based strategic deterrent enterprise at Northrop Grumman, said in a prepared statement.
Development near Hill Air Force Base’s Roy gate is expected to have over 2 million square feet of leased space in its first phase, with additional phases planned. Lease revenues will allow the Air Force to replace aging World War II-era buildings on the base and revitalize other infrastructure.
In 2017, Northrop Grumman was one of two companies awarded a Technology Maturation and Risk Reduction contract for the new GBSD weapon system program by the U.S. Air Force. The Air Force released a request for proposals for the next phase of the program in 2019 and announced it expects final award in the third quarter of 2020.
Hart said the Northrop Grumman project has several benefits for Utah.
“Without question, having Northrop Grumman and many of their operations related to this program in the state of Utah gives us a huge advantage, I think, when it comes to bringing in other businesses that will potentially contract with them, but also it improves our level of sophistication as a state when it comes to being a defense community. … The other thing that this does for us is it brings a lot of talent into the state that we wouldn’t have otherwise.”
Theresa Foxley, president and CEO of the Economic Development Corporation of Utah, confirmed the project’s broad impact. “We have a handful of other projects that are waiting for this announcement — suppliers that would like to be located in proximity to the prime contractor,” she said. “So I think it will reverberate for a very long time.”
The GOED board meeting also featured the awarding of an incentive to Procter & Gamble over 20 years, tied to the creation of 221 jobs in a $310 million expansion of its manufacturing plant in Box Elder County.
“For any economic developer anywhere in the world, either of these two projects would be incredible,” Foxley noted. “To have both on the same day is really terrific.”