1. © Confidential, All Rights Reserved. Aerospace and Defense Industries in Arizona Sector Profile Aerospace Innovation Forum 2011 December 5, 2011

2. Arizona Aerospace and Defense Commission  Improve Arizona’s Business Environment  Create a Robust Pipeline of Business & Entrepreneurial Opportunities to Fuel Growth  Build Arizona’s Research Competitiveness  Attract, Educate, Retain & Retrain Arizona’s Skilled Workforce  Annual Report Sent to AZ Governor’s Office on 12/31/2011

3. AZ Aerospace Commission Key Focus 1.Completed A&D Economic Impact Study 2.Developed A&D Value Proposition –“Arizona has always attracted a certain type of person – the pathfinder, the builder, the explorer. That is why industries that depend on innovation to survive, like Aerospace and Defense, have prospered in Arizona. World class universities, large prime contractors and low operating costs are only part of the story. Find out more about Arizona.” 3.Participated in the Arizona Commerce Authority A&D Growth Sector Public Hearing & Recommendation Development

4. 2011 AZ Aerospace Commission Actions 1.Selected Host for 2012 Arizona Aerospace, Aviation & Defense Requirements Conference – AZ Technology Council a)January 25 – 26, 2012 b)Focus to “Link Large Contractors with Supply Base” For more information: Requirements Conference for Arizona’s Aerospace, Aviation & Defense Community (http://bit.ly/vucpHO) 2.Unmanned Aerial Systems (UAS) – Arizona Advisory Council Established Promote enhanced UAS-related collaboration and communication between industry, government agencies and officials, the military and academia; Drive economic development by establishing a statewide Center of Excellence in UAS flight testing, training, and research and development that establishes Arizona as a nationally recognized leader in safe UAS integration into the NAS; and Position Arizona for designation as a national UAS test range

5. Industry and Trade Associations in AZ 1.Aerospace Industries Association 2.Air Transport Association 3.Aircraft Electronic Association 4.American Institute of Aeronautics and Astronautics 5.Arizona’s Aerospace and Defense Commission 6.Arizona Aerospace Institute Initiative 7.Arizona Technology Council 8.Aviation Distributors and Manufacturers Association 9.Aviation Suppliers Association 10.General Aviation Manufacturers Association 11.Light Aircraft Manufacturers Association 12.National Air Transportation Association 13.National Business Aviation Association 14.National Defense Industrial Association 15.Satellite Industry Association 16.Southern Arizona Industry & Aerospace Alliance 17.Space Enterprise Council 18.Space Foundation 19.Space Transportation Association

6. Arizona Trends in A&D  Arizona Defense Spending  Total Department of Defense contracts in 2011 (through December) amounted to US$313.9 billion.  US$11.6 billion in contracts and grants from the Department of Defense went to AZ in 2011 (www.USASpending.gov).www.USASpending.gov

7. Employment & Impact  Aerospace Employment in AZ  Direct Employment: 39,400 (AIA, 2009)  Payroll: US$4.3 billion (2009)  Department of Defense Employment: 30,934 (U.S. OPM, 2009)  69% of which are military workers (non-civilian)  Aerospace and Defense Industries  Direct and Indirect Employment Accounted for 93,800 employees in 2009  Contributed US$8.8 billion to Gross State Product in 2009

8. 10 Largest AZ A&D Employers (2010) Arizona's Top Aerospace and Defense VLM's by # of Employees Company # of Empl. Location in AZ Primary Products Raytheon Missile Systems11,835TucsonMissile & Space Systems, Maintenance, Advanced R&D Honeywell Aerospace9,716PhoenixGas Turbines / Jet Engines, Fuel System Components The Boeing Company4,853MesaAircraft Components General Dynamics C-4 Systems 4,000Scottsdale Defense Electronics & Communications Equipment, Maintenance, R&D Orbital Systems Corp.1,550ChandlerSpace satellite systems L-3 Electro-Optical Systems753PhoenixAviation Communication & Surveillance Systems (ACSS) Bombardier746TucsonGas Turbines / Jet Engines Goodrich Interiors630PhoenixSpecialty Products for Aircraft, Specialty Systems BAE Systems607TucsonUnmanned Aircraft Programs Hamilton Sundstrand Aerospace 520PhoenixSpecialty Products for Aircraft, Specialty Systems

10. Defense Contracting Activity  Arizona received more than $11.6 billion (3.7%) of total DoD contracts  AZ was the 4th largest recipient state for DoD contracts in 2011  Top Arizona Defense Contractors

12. Arizona A&D Exports

13. Breakdown of Arizona Aircraft Exports, 2010: Q1 – Q4

14. Arizona A&D Exports to the World

15. Arizona Exports to Canada

16. Arizona Aerospace Exports to Canada

17. Arizona Imports from Canada

19. State-level A&D Business Incentives  Corporate Income Tax  100% Sales Factor  R&D Incentives  Angel Investment Tax Credit  Personal Property Tax Reform  Arizona Competes Fund  Commercial Property Assessment Ratios  Job Training Program  Quality Job Tax Credit  Arizona Competes Fund  Military Reuse Zone Program:  Use Tax Exemptions:  Foreign Trade Zone

20. Maintenance Repair and Overhaul Major Companies: -Embraer -Cessna -AeroTurbine -General Dynamics -Raytheon -Honeywell -Boeing Important Areas in AZ: -Phoenix Mesa Gateway -Goodyear Airport Research Areas: -Embry Riddle: Aviation Maintenance Science (AMS) program

21. Avionics Major Companies: -Honeywell -Universal Avionics -Arizona Air-Craftsmen -Aspen Avionics -Atlantic Avionics -Sandel Avionics Research Areas: -ASU/UA: Go For Lunar Landing Program

22. Unmanned Aerial Systems Major Companies: -Orbital Sciences Corp. -Lockheed Martin -Alliant techsystems Inc -Boeing -BAE Systems -Ducommun Technologies -Kutta Technologies -General Dynamics -Honeywell Important areas in AZ: -Fort Huachuca -Yuma Proving Grounds Research Areas: -NAU: UAS retrieval system -NAU: Reverse thrusters for UAS -UA: Aerial vehicle for autonomous target acquisition and recognition -ASU: Sol Invictus- small –scale autonomous solar UAV -ASU: Remote Control/Autopilot UAV with video capabilities

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