By Jeff Rice

Journal-Advocate staff writer

Joe Kiely of Foreign Trade Zone No. 293 explains the benefits of an FTZ designation to those attending the Progressive 15 manufacturers expo in Sterling Friday. (Jeff Rice / Sterling Journal-Advocate)

Breaking into the manufacturing big leagues will take time and is only for those willing to make the commitment, according to a couple of heavy hitters at Friday's Progressive 15 Manufacturing Expo.

Joe Rice, director of governmental relations for Lockheed Martin Space Systems in Littleton, told those attending the conference that it's a long process to become a Lockheed Martin supplier, but the company is looking to diversify its supply chain.

"We have to get our costs down," Rice said. "We have grown up with suppliers in certain areas, primarily the East Coast and California, but they have become very expensive. If we can diversify our supplier base a little bit, we can lower our costs.

The company doesn't want to set any false expectations, however, and Rice emphasized that becoming a Lockheed Martin supplier can be a long process.

"Nobody decides they want to build a satellite tomorrow. It's designed years out, so the supply chain for it is designed years out," he said. "The good news is that we have found a lot of skills in agriculture, in the oil and gas industries out here that transfer to our technicians."

Rice pointed out that Lockheed Martin has recently found parts fabricators in Grand Junction and in Trinidad.

"There's no reason we can't find them out here, in Sterling, or in Julesburg," he said.

Lockheed Martin isn't the only aerospace company in the state, and Rice said Colorado is now the No. 2 "aerospace state" in the nation. There are 52,860 Coloradans employed in aerospace, he said, and Colorado will soon become first in the nation in terms of per-capita aerospace employment.

The industry sprang up in Colorado in the mid-1950s when Glenn L. Martin Co. built its intercontinental ballistic missile laboratory and factory in Colorado because it was believed that Soviet submarine-based nuclear missiles couldn't reach this far. Since then the Maryland-based company has been through a number of evolutions, first merging with Marietta-American to become Martin Marietta, and then with Lockheed in 1995.

Rice said Lockheed Martin wants to lead the U.S. back into space exploration, an area the American people have largely ignored since the end of the Space Shuttle program.

"Aerospace has become so common that people don't think about it," Rice said. "There are consequences to that. At beginning of space age, only two countries could put astronauts into space, the United States and the USSR. Today, there are still just two nations who can put people in space, and the U.S. isn't one of them. Russia and China can put astronauts in space. We still have astronauts, but we pay Russia to put Americans in space. Why? Because we as a society took our eye off of space, we didn't fund space shuttle or the next generation of technology."

Rice said his company wants to lead the U.S. back into space exploration, and in the process make Colorado the center of the American return to space. And, he said, small companies all over Colorado can be part of that effort. He said companies that can provide an innovative product or an existing product with better quality, faster or cheaper has a shot at becoming a supplier. He said aspiring aerospace suppliers should consider starting as a partner of an existing supplier. And it doesn't happen overnight.

"It typically takes two to three years to get through the process, and then only if there is a need that matches," he said.

Rice suggested potential suppliers go to Lockheed Martin's web site and "poke around in the part about to do business with (us.)"

Earlier in the morning Joe Kiely of Limon, director of Foreign Trade Zone No. 293, told expo attendees that manufacturers who are interested in taking advantage of Colorado's free trade zone can save money on import and export duties, but it can take up to a year to gain a designation as a sub-zone or "magnet site" attached to the foreign trade zone.

The purpose of an FTZ, Kiely said, is to avoid paying customs duty when importing raw materials to be used for manufacturing goods for re-export. He used the example of Vestas Corp, which makes wind turbines at its plants in Windsor, Brighton and Pueblo. Vestas imports much of its manufacturing technology and some raw materials, then builds the turbines for sale overseas. According to federal law, an FTZ is a "geographic area where goods may be landed, stored, handled, manufactured or re-configured, and re-exported under specific customs regulations."

Colorado's foreign trade zone covers Adams and Arapaho counties and major parts of Elbert, Lincoln, and Morgan counties. Kiely said he wanted to do all of eastern Colorado but regulations say an FTZ cannot extend beyond 90 minutes of the Denver Port Office. He said Vestas was able to take advantage of the FTZ by setting up sub-zones for its plants and showing compelling reasons why the factories couldn't be moved into the existing FTZ.

Another option, Kiely said, is to get a "magnet site" designation, but that can take up to a year. A magnet site would be, for instance, a business park set up to attract companies that want to use FTZ procedures. Magnet sites must be able to attract multiple users, Kiely said, and the designation must be in use within five years of being issued.

Afternoon sessions at the expo included a presentation on apprenticeships, a women in manufacturing panel, and a young manufacturing entrepreneur panel.

Jeff Rice: 970-526-9283, ricej@journal-advocate.com

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Aerospace beckons manufacturing sector - Journal Advocate