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November 10. 2012 11:21PM

F-35 jet project has pumped millions into New Hampshire's economy

Temco Tool in Manchester has been working with BAE Systems in Nashua on the F-35 since 2001. The high-precision machine shop produces antenna arrays and other finely engineered components for the stealth aircraft designed to be the fighter jet for the new millennium.

Over the decade, the contracts have added up to millions of dollars for the relatively small BAE supplier, with about 45 employees. At this point, F-35 work accounts for only 20 percent of the activity at the Holt Avenue machine shop.

"With ramp-up to full production, that 20 percent would probably go up to 40 percent, and we'd probably add another five to 10 people to start with," said Temco President Norm Gagne.

While the F-35 has poured millions of dollars into the New Hampshire economy during its 10-year development phase, the ramp-up to full production, as Gagne calls it, is the brass ring of economic development for the Granite State, given the key role played by BAE, the trickle-down effect for its many subcontractors and suppliers, and the multiplier effect when all those dollars flow back into the retail and service economy.

But at this point, no one is sure what a full ramp-up will mean (see related story).

"The numbers go up and down every day," Gagne said. "How many the Air Force wants, how many the Marines want. There are a lot of other countries ordering them, as well. This is an international thing."

The program appears stalled at the end of its development stage, waiting for key political and economic decisions to be made in the United States and abroad to set the stage for full production.

According to Lockheed-Martin, the general contractor for the project, the key to affordability for the F-35 is to ramp up to full-rate production and build about 200 to 220 of the jets each year. At that rate, it would take well over 15 years to build and deploy the 2,443 jets projected for the U.S. military and the roughly 700 projected for purchase by Canada, Australia, Turkey, Italy, Norway, Denmark, Netherlands and the United Kingdom, along with possible sales to Israel, Japan, Singapore, South Korea and Spain.

The jet comes in three variations - one that lands on an airstrip; one that lands on an aircraft carrier; and one that takes off and lands vertically like the British Harrier Jump Jet. It's taken nearly 10 years of research, development and testing to get 43 jets into the air today, none of which has been deployed for military service.

"All of the aircraft that have been delivered are being used for testing or training," said Deb Norton, program director of the F-35 program at BAE in Nashua. "There are no aircraft that have been delivered to the services for deployment."

The 10-year development phase itself has been an economic boon for New Hampshire, but the real payoff, in terms of creating well-paying manufacturing positions, will come with the full-scale production, Norton said. "If you look at it from an economic perspective, the development projects employ the engineers," she said. "The production programs employ the assemblers and test techs."

The research and development years, from 2004 to 2011, generated $287 million in salaries at BAE. If the jet went into full-scale production at currently projected rates, it would bring $1 billion in salaries to BAE from 2012 to 2032. BAE suppliers in New Hampshire have so far benefited from $38 million in contracts from 2004 to 2011, and they stand to see $136 million in contracts over the next 20 years.

Final decisions about the jet project will affect the employees at BAE, the state's largest manufacturing employer, and workers at BAE's many subcontractors, including Temco in Manchester, Technical Research and Manufacturing in Bedford or Linear & Metric in Londonderry.

"The program plays a major role in the economy of New Hampshire, not just through BAE Systems, but the dozens of suppliers in the state," said Jeffrey J. Rose, director of public affairs for BAE in Nashua.

Tense negotiations between Lockheed-Martin and the Pentagon, decisions to be made in foreign capitals and congressional debates in the months ahead are likely to determine just how big a role that will be over the next 20 years.

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Dave Solomon may be reached at dsolomon@unionleader.com.



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